How Can Giving to Charity Affect Your Taxes?

Contributing to nonprofit organizations and charities helps to make the world a better place by funding the essential work these organizations do. There are many other benefits to making charitable donations, including financial benefits for you. In this article, we’ll cover how charitable donations can improve your tax efficiency.

In Canada, charitable contributions can provide deductions that can be applied toward business taxes, and tax credits that can be applied towards personal taxes. For the sake of this article, we will focus on tax credits that you can receive as an individual who contributes to a charitable organization.

Tax Credits for Charitable Donations

When it comes to charitable donations and taxes, things aren’t always crystal clear. Let’s be honest, they can be downright confusing. First, let’s answer the common question, “Can charitable donations reduce taxes?” The short answer is “yes,” but there’s also more to it.

As mentioned above, tax deductions apply to business taxes in Canada, while charitable donations can provide tax credits for individuals. So, how much do charitable donations reduce taxes? Here’s some of the most important information you need to know about tax credits:

• Tax Credits - In Canada, if you make a charitable contribution to a registered charity or a qualified donee, you may be able to claim various tax credits when you file your income tax and benefit return. You are generally able to claim part or all of the eligible amount, which is up to 75% of your net income. Here is more information that can help you determine potential charitable tax credits and how to calculate them.
  
• Carry Forward - While you are usually eligible to claim all of the tax credits available to you each year for the donations you made during that year, you don’t have to. It can actually be more beneficial for you to carry them forward and claim them on a future tax return. The time limit for most donations is within 5 years. It’s also important to note that you have to claim any tax credits for gifts you carried forward before you claim tax credits for gifts made during the current year.
  

Whatever you choose to do, making charitable donations can help you support the causes you care about most and also provide tax benefits for you. It’s also important to note that the tax credit rates vary depending on the province you live in, so you should calculate the tax credit amount you are eligible to claim based on where you live.

The Canadian National Christian Foundation provides philanthropic advice and wants to connect God’s money with God’s work. Our staff, our leadership, our board, and our donors are all believers who want to help you manage your assets and guide you through creative giving solutions that also benefit you. We can handle non-cash gifts quickly and effectively, getting the money into the field as soon as possible with 100% of your principal always available to grant out. You can get started by contributing to a donor-advised fund today!

About Canadian National Christian Foundation

CNCF is a community of givers who are seeking to advance the Kingdom of God by connecting the resources God has entrusted to them with His work on earth.

Similar to other public foundations, CNCF’s difference is the commitment of its staff and directors to the Word of God, its non-denominational history and status as a Christian foundation, and its ability to allow donors to donate anonymously, at a time and gift value of their choosing.  Learn more by visiting our website.