Many people donate to nonprofit organizations and other philanthropic groups out of a personal desire to do good for others. Such charitable giving can improve the lives of others and may make donors eligible for tax deductions.
The Canada Revenue Agency lists registered charities, registered low-cost housing corporations, national arts service organizations, registered Canadian amateur athletic associations, and some educational universities among the organizations that may qualify donors for tax deductions.
Canadian individuals and businesses generally can claim deductions and gifts of up to 75 percent of net income.
Giving can constitute cash and non-cash donations. For example, deductions for donations of clothing and household items that are in “good condition or better” may qualify donors for tax deductions. Donors are advised to bring items to reputable charities that will issue a receipt for their value. An appraisal may be requested for more expensive items.
All donations require a paper trail and proof of a charitable contribution. The Government of Canada states that official donation receipts from registered charities and other qualified organizations should be kept in a safe place. While these receipts need not be submitted at the time of filing, whether on paper returns or electronic filings, they should be kept for five years in the event they are subjected to review.
Timing donations properly is key. Contributions made in cash or other property must be made before the close of the tax year to be deductible.
A tax treaty between the United States and Canada allows for some deduction of donations made to charities across the border. Again, it is best to consult with a tax professional in these matters as some contributions to foreign organizations are not deductible.
Charitable giving has many benefits, including feeling good about oneself, helping the less fortunate and the financial reward of qualifying for some tax breaks.