Looking to reduce how much you spend on taxes? When you give to charity, you also give yourself the chance to reduce your income tax obligation. But in order to take advantage of that opportunity, you need to hold on to your tax receipts and report your donations on your tax return.

We’ll walk through how charity tax receipts work, and how you can apply them to your returns so your bank account benefits. But first: what does a tax receipt do?

The Role of the Tax Receipt

Any time you donate to a registered Canadian charity, it’s their job to send you a receipt for your donation.

The receipt allows you to prove to the Canadian Revenue Agency (CRA) that you made a donation. The CRA deducts a portion of that donation’s value from your taxes.

How Tax Receipts are Issued

You may receive a tax receipt in either electronic or paper form. Charities are free to issue a receipt at any time—whether immediately after receiving a donation, or at the end of the year.

The Canadian Revenue Agency (CRA) recommends charities send out tax receipts for the preceding year, no later than February 28th.

Tax Receipts from CHIMP (Charitable Impact)

If you use CHIMP, the moment you make a donation to your CHIMP Account, you can access a tax receipt for it.

Tax receipts you get from the CHIMP platform are are labelled as being from CHIMP—not the charity or charities you sent the money too. That’s because, when you give with CHIMP, you give using your own personalized Donor-Advised Fund (DAF). The tax receipt is issued by the fund. Learn more about accessing tax receipts through CHIMP.

What can’t be tax receipted?

Generally, you can only receive a tax receipt for a voluntary transfer of value. You can’t receive a tax receipt for volunteering your time, or loaning an organization part of your property.

You also won’t receive a receipt if you pay a charitable organization for goods or services—for instance, a ticket to a fundraiser dinner.

How long receipts are valid for

You can file unclaimed tax receipts for any or all of the previous five financial years. Every financial year ends on December 31.

Keep copies of all tax receipts in your files for at least six years, in case the CRA needs to verify that you made a donation.

How tax credits work

Portion of your income tax

You can only deduct up to 75% of your income tax. In some cases, if your donations included “certified cultural property or ecologically sensitive land,” you may be able to write off up to 100%.

Provincial and federal rates

You can apply your charitable gift tax credits two times: once to your federal income tax, and once to your provincial income tax.

The two rates are different, but both, like your income tax, are bracketed. While the federal deduction rate is the same for all Canadians, the provincial one differs according to your province or territory.

To find out how much you can deduct from your taxes this year, check out the CRA’s deduction table, or use their charitable donation tax credit calculator.

The first-time donor super credit

If you’ve never reported charitable gifts on your tax return, you may be able to claim an extra tax deduction, thanks to the federal government’s first-time donor’s super credit (FDSC).

The FDSC is being phased out, and 2017 is the last tax year for which it applies. So, this could be your last chance to take advantage of it.

You can learn more about the FDSC, and how to apply for it, from the CRA’s website.

The paperwork

To report your charitable gifts on your tax return, you must file Schedule 9. The total amount of of your donations is also entered on Schedule 1, line 349.

You do not need to submit your tax receipts along with your filing. However, the CRA recommends you keep them on hand for six years after filing, so you can back up your claims in case of an audit.

 

How to Deduct Charitable Gifts on your Tax Return

Category: How To