This is intended to give Canadians an idea of tax savings obtainable when you donate to this Society - but please note that we are a maritime and nautical foundation, not chartered accountants. We strongly urge you to double check your benefits with your own accountant.
Canadians often underestimate the true value of tax credits for charitable donations because of the complicated way of calculating them. Here are some basic principles:
Donations up to $200 reduce basic federal taxes by 16 percent of the amount donated.
Any sum donated beyond the first $200 reduce basic federal taxes by 29 percent of the amount donated.
Provincial income taxes are calculated as a percentage of basic federal taxes, so the federal tax credit reduces provincial income taxes (in Quebec and Ontario donations get a separate provincial tax credit.)
The tax break for a charitable donation is a credit, not a deduction from taxable income; it is subtracted directly from your taxes.
Q. What is the "general rule" on how much an Ontario taxpayer will save on donations to a charity.
A. For individuals, a charitable donation is not a tax deduction but a tax credit that is applied against federal and Ontario taxes payable. The donation limitation is generally 75% of net income for tax purposes. For donations up to $200, the federal credit is 16% of the donation, the Ontario credit is 6.16% of the donation for a total of 22.6%; for donations in excess of $200, the federal credit is 29% of the donation and the Ontario credit is 11.6% of the donation, for a total of 40.6%.
As an example, suppose you donate $500. You save at least $45 on the first $200 plus at least $120 on the remaining $300. That's a total tax reduction of $165 [1]
Q. Can an unused (by a "low income spouse") part of this Charitable Donation tax credit be transferred and claimed by the higher income spouse?
A. Either spouse may claim the donation on their tax return however it is best to have the receipt made out to the spouse who will claim the donation.
A donation by an individual can be claimed by either spouse. Normally, one spouse claims all the donations to maximize the credit. By splitting the donations between the spouses, each spouse would have the first $200 at the lower credit rate rather than one $200 for the couple.
Q. Can a tax credit can be spread over several years?
A. The donation can be used up to 75% of net income (or 100% in the year of death) and any balance can be carried forward and used to the same extent for 5 years.
There are also some specific cases:
Time or services that you donate to the Society are not eligible for the tax credit. However, if the Society pays you for your services and you later give the same amount back as a cash donation, you can claim your tax credit. The two transactions - payment and gift - must be separate. For example, do not simply endorse and return the cheque of payment for your time or services - deposit it and make a separate donation.
In order to issue a tax receipt for a donation of books, documents etc to be included in the Archive's collections, the Society must be able to establish fair market value. Please refer to our donation page.
[Note 1] According to your taxable income and province of residence, the exact value of the charitable donation tax credit varies slightly. Please visit the Revenue Canada Web-Based Resource for Charities at: www.rc.gc.ca/charities and for legal or accounting advice, consult your professional tax advisors. [Back]
