Charitable Donations: 3 Things to Consider for your Tax Return


Making a donation to charity is a great thing – and it will make you feel good about yourself while helping others. Charitable organizations will often incentivize you to make a donation by reminding you of that tax break you’ll get. But is that always the case?

Unfortunately, not every single donation is eligible for the donation tax credit on your personal tax return. The extra dollars you add to your grocery bill or the kid down the block you sponsored for the 10K run last week are donations – but they won’t make it onto your tax return.

Here are 3 things to consider before making a donation – if you want the tax benefit, of course.

Make sure the Charity is a Registered Charity.

Not all charities are made equal. Only donations made to registered charities are allowed to issue donation tax receipts and therefore can be included on your tax return.

The Canadian government defines registered charities as: charitable organizations, public foundations, or private foundations that are created and resident in Canada. They must use their resources for charitable activities and have charitable purposes that fall into one or more of the following categories:

  • the relief of poverty
  • the advancement of education
  • the advancement of religion
  • other purposes that benefit the community

Registered charities are also assigned a 9-digit registration number that usually ends in “RR0001”. This must be printed on the official tax receipt you are given.

So, if you’re not sure, check using the CRA’s registered charity listing here. If it’s not on the list, then it’s not registered. If it’s not registered, you can’t include it on your tax return.

Make sure you’ll get an Official Tax Receipt.

An e-mail print out saying “thanks for you donation!” won’t cut it, unfortunately.

The CRA has specific rules about what needs to be printed on an official donation tax receipt. A few key pieces of information you’ll want to look for:

  • Title of document (“Official Tax Receipt”)
  • Name and address of the charity
  • 9 Digit registration number
  • Amount of the eligible donation
  • Date of donation

Furthermore, if the CRA ever asks to see the support for the donations claimed, they’ll be looking specifically for the Official Donation Receipts. Make sure you have them (and keep them for 6 years).

Make sure you include only the “Eligible Portion” of the donation on your tax return.

In most cases, the amount of the total donation is the same as the eligible portion of the donation, especially if you gave them cash. However, the full price paid for a ticket to an Evening Gala that includes a dinner is not entirely going to be part of the eligible donation.

For example, if you paid $500 to attend a gala for a registered charity that included a dinner and gift valued at $150, the eligible portion would be $350 ($500 – $150).

Some charities show it as an “eligible portion” or provide the “taxpayer advantage” – the advantage being the portion which cannot be claimed.

Also remember that donations can be carried forward 5 years. Having your prior year tax returns or access to My Account are the best ways to keep track of your balance going forward.

Need assistance with your personal taxes? Contact us today for a quote!

This information is for informational purposes only. As it is impossible to include all situations, circumstances and exceptions, please consult with a qualified professional.

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