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Are You Giving to a Charity and Expecting Tax Credits? Read The Fine Print

Collection of coins in a jar labeled for donation

If you’ve donated to a charity this tax year, you could be eligible to receive a tax credit on your income tax. Giving money to a cause you believe in is a noble gesture, but if you’re expecting a tax credit for your donation, you may want to read Canada Revenue Agency’s (CRA) fine print.

Here are the rules regarding charitable giving:


You must give to a CRA registered charity that issues donation receipts


First, be weary of donation scams. There are plenty of charity scams, and people with good intentions can get sucked in. If you want to donate to a cause that’s important to you, do your research and make sure the charity is legitimate. The CRA has outlined some pointers for people, so that they can avoid fraudulent charities. Take a look at the tips here.

One thing registered charities do is issue donation receipts. With a donation receipt, you are eligible to receive a tax credit. The CRA has a list of charities registered under the Income Tax Act, which you can view here.


Qualified donees can also issue donation receipts


The Income Tax Act states that “qualified donees” can also issue you a donation receipt. Qualified donees include universities outside of Canada that ordinarily include Canadian students, listed Canadian municipalities or registered Canadian amateur athletic associations. The CRA has a full list compiled here.


Qualified donees do not have to issue donation receipts


If receiving a tax credit is important to you, make sure you ask the qualified donee if you can receive a donation receipt before you give. Qualified donees are not required to issue donation receipts, so ask first.


Giving personal property, land, shares or stocks is considered charitable giving


You don’t always have to give money to be eligible for a tax credit. Giving personal property, land, shares or stocks to qualified donees can earn you tax credits also.


Thinking of donating property? Check out the CRA’s information about gifts and income tax here. Thinking of donating securities? Check out the CRA’s info on capital gains on gifts of capital property here.


Don’t fall for donation schemes


What donation schemes do is promise that you’ll get a tax credit larger than the money you offer up as a donation, by funneling your money into a tax shelter arrangement. Please do not fall for this.


The CRA is strict and performs audits on gift tax shelter schemes, which could mean that your tax return assessment could be put on hold until the audit is complete. The audit could also take up to two years, and you run the risk of your donations being rejected as tax credits and being fined penalties.

At the end of the day, if you’re looking to donate and expect a tax credit, do your research, understand what is considered a qualified donee and ask for a donation receipt.


Remember that charitable giving extends beyond receiving a tax credit.


“No one has ever become poor by giving” – Anne Frank