The holiday season is a time for giving not only to our friends and family but also to charitable institutions. This meaningful act enables us to make a difference while receiving tax credits in return — funds that make this a sustainable undertaking. Make all donations count by taking the following precautions:
1. Do a background check.
Criminals use names that sound similar to well-known charities. Look through the list of registered institutions compiled by the Canada Revenue Agency to verify. Ask for a receipt as well as this will be a requirement for claiming tax credits.
2. Go beyond charities.
There are a number of qualified donees that may give receipts even though they are not charitable organizations. These can also be used to gain tax credits according to the Income Tax Act. Examples are municipalities, national art clubs, and amateur athletic federations.
3. Donees have discretion on receipts.
These groups are not mandated to provide a receipt to their donors. People must ask them explicitly to acquire this proof of donation for tax purposes. Inquire about it before handing any funds to avoid any confusion.
4. Some non-cash donations can lead to tax credits, too.
Stocks, land, and personal property all merit credits when it’s time to pay for tax. Note that donated securities are not subjected to capital gains tax while donated properties are. Helping charities through volunteer work does not result in tax credits. The CRA has published guidelines on this so be sure to browse their website. TurboTax Canada also has helpful information on the matter.