What are the Tax Advantages of Donating to Charity as a Medical Professional?
Any Canadian medical professionals who make charitable donations are eligible for a significant tax credit. We Canadians are a helpful bunch, whether it’s donating food to a food bank, working at a shelter, or participating in a walkathon. Your donation may potentially result in a tax deduction, in addition to the wonderful satisfaction of knowing you’ve made a difference. Now is a fantastic moment to donate to your favourite charity if you’ve been meaning to do so.
At the federal level, the charitable donation tax credit can be up to 33% of the amount donated. Depending on your province of residency, you may be eligible for an additional amount up to 24 percent of your donation. There are a few rules that decide whether or not you are eligible, let’s dive into them.
Donations that qualify
Who is eligible for the tax credit for charitable contributions?
Anyone who makes a donation to a qualifying charity is eligible for the CDTC. A donation is described as a gift given without expecting anything in return. Your donation can be in the form of money or anything else of value, such as real estate, stocks, cultural and environmental gifts, and so on. If you receive something in exchange for your donation, such as tickets to a show, you must deduct the value of what you received from the amount you donated, and you can only claim the CDTC for the difference. For qualifying donations, go to this CRA page.
What exactly is a qualified donee?
A qualifying donee is a registered charity or one of several other public bodies that can issue tax receipts, such as an amateur athletic association, a nonprofit institution, a municipality, a province, or a territory. Confirm that you will receive a receipt and that the donee is legally permitted to do so. The Canada Revenue Agency maintains an online database that can be searched to see if a charity is registered and eligible to issue official donation receipts.
Getting the credit and calculating It
What is the procedure for claiming my donations?
Report your credit on your federal and provincial tax returns to claim it. At the federal level, your credit will typically be 15% of the first $200 in donations and 29% of subsequent gifts. If you are in the highest tax bracket, the credit can reach 33% under certain conditions. All provinces have equivalent credits, which range from 4% and 24%. To compute your credit, including the provincial component, the CRA provides an online tool. Calculate how much credit you can claim for your donations using the CRA page here.
Is there a limit on how much I can claim?
Yes, your total annual donations can be up to 75% of your net income.
What is the best way to acquire a list of my philanthropic contributions?
Each charity organization will send you a tax receipt for your total gifts for the tax year prior to the income tax due date. Because donations are at the top of the list for post-assessments, the CRA may request verification of the gifts. A tax receipt will be required from you. A copy of your original bill of payment will not be accepted by the CRA.
Previous year’s donations
Because the CDTC is higher for donations over $200, it may be wise to save up your donations and claim them all at once. You can accumulate gifts in two ways: you can combine them with your spouse’s on a single tax return, or you can claim donations from various years in the same year. Donations can be carried over for a maximum of five years.
You can use the CRA’s My Account online service to see if you have claimed donations in prior years. After logging into your account, go to the top of the website and pick the tax returns option. You can access past years’ tax returns from there.
If you can’t donate money, you can donate your time
Although volunteering at shelters is not a deductible expense, the benefits are immeasurable. Making another person feel safe and loved has an impact on his or her life and future decisions. Additionally, assisting a cat or dog enhances the likelihood of adoption. To learn more about how you can help, contact your local shelter today.
If you need help customizing your financial portfolio and learning other tax savings tips, reach out to one of our experts at imperiallife.ca.
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