Charitable Giving Checklist

It is the time of year that we must begin thinking about Year End Tax Planning, and one area that is often given little thought is the planning for charitable donations. In a vast majority of work places, the push is on to give to the United Way through either payroll deduction or a lump sum payment, so now is a good time to review what tax deductible gifts are and what the benefits are from a tax viewpoint:

Tax deductible charitable gifts include the following:

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Money or other property

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Gifts of ecologically sensitive land (get Certificate for Donation of Ecologically Sensitive Land)

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Capital propertyócottages, securities, land, buildings, equipment at their FMV

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Listed personal property

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Inventory of a business

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Gift of certified cultural property to a designated institution or public authority under the Cultural Property Export and Import Act

Federal and provincial credits can be claimed with official receipts:

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Claim eligible amount of gifts made in the year or you can carry forward for 5 years

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Claim carried forward gifts first; then current year gifts

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Gifts in kind: donation appraisal must be from knowledgeable appraisers and follow Uniform Standards of Professional Appraisal Practice.

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Gifts of less than $1,000 usually do not require appraisal

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File Schedule 9 with your Federal tax return

Deductibility:

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15% of the first $200; 29% thereafter plus provincial portion

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Up to 75% of net income can be given as charitable donations; 100% in year of death or immediately preceding year

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the individual's total Crown gifts

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the individual's total cultural gifts

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the individual's total ecological gifts

Gifts can be made to:

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A registered charity

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Registered Canadian amateur athletic association

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Tax exempt housing corporation providing low-cost housing for seniors

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Government of Canada, province or territory, municipality

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The United Nation and its related agencies

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Prescribed university outside Canada

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Charitable organization outside Canada to which our government has made a donation in the tax year or previous tax year

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Gifts to US charities if you have US income

Note: Gifts to Canada include monetary gifts made directly to the federal Debt Servicing and Reduction Account, sent to the Receiver General requesting this. A tax deductible receipt will be issued.

Special Rules: Gifts of capital property:

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FMV at time of gift can trigger capital gains consequences

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Gifts of publicly traded shares should be initiated before December 21 and can be transferred on a tax free rollover basis to registered charities and private foundations (after March 19, 2007).

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Zero inclusion rates for purposes of capital gains and losses apply if you donate:
  • Shares, debt obligations or rights listed on a designated stock exchange
  • Shares of a mutual fund corporation
  • Units of a mutual fund trust
  • Interests in related segregated fund trusts
  • Prescribed debt obligations
  • Ecologically sensitive land

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Gifts can be made to a registered charity or after March 18, 2007 to certain private foundations.

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Gifts of depreciable property can trigger recapture or terminal loss

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Gifts of significant movable cultural property to Canadian heritage institutions or public authorities must be certified under the Canadian Cultural Property Export Review Board, which determines its FMV and provides you with a certificate for tax credit purposes (Form T871). In this case no capital gain is required to be recorded.

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Artists: to qualified donee, the gift is a disposition from ìinventoryî rather than capital property. The value is calculated as the cost amount or an amount not greater than the FMV and not less than the cost and any advantage received.

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Art or Antique dealers: objects donated are considered to be a disposition of inventory, not capital property and must be based on FMV at the time of donation.

Non-qualifying gifts:

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Shares you control

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Obligation or securities issued by yourself

So start planning now to meet your charitable donation goals and the receiving the best tax deduction based on your charitable giving.

Attend the Knowledge Bureau's January 2009 Line by Line Tax Update and Debt Management Workshop in cities across Canada for more tax planning ideas and information on recent changes to the tax laws.