Tax Credits Rules for Donations

2020 Tax Credits rules for Donations

  1. You can claim tax credits for the amount of your donations, provided they do not exceed 75% of your net income for the year.
     
  2. You must determine the amount of donations for which you would like to receive a refund. For any year, you can include:
  • donations made before December 31st of the year;
     
  • all donations that have not been claimed and were made within the last five years;
     
  • all donations that have not been claimed by your spouse in the year or within the last five years.

You therefore have 5 years to spread out your donation, depending on what is most advantageous for you.

Note that the organization receiving the donation cannot spread the amount received; it must issue a single receipt in the year it receives the donation and for the total amount of the donation.

 

Tax credit calculation for charitable donations

There are 2 tax credit rates for the federal government and 2 for the provinces. Any donation over $200 entitles you to a higher rate.

2020 Tax Credit Rates Table

.

Province / Country Credit Rate
(– than $200)
Credit Rate
(+ than $200)
Canada 15% 29%
Ontario 5,05% 11,16%
Quebec 20% 24%

Example of credit calculation:

A Quebec resident donated $10,000 in 2020:

  • The federal tax credit rates for charitable donations are 15% on the first $200 and 29% on the remaining $9,800. His federal tax credit is therefore:
    (15 % x $200) + (29 % x $9,800) = $2,872.
     
  • The provincial charitable tax credit rates for Quebec for the year 2020 is 20% on the first $200 and 24% on the remaining $9,800. Its provincial tax credit is therefore:
    (20 % x $200) + (24 % x $9,800) = $2,392.
     
  • Its combined charitable donation tax credit is:
    ($2,392 + $2,872) = $5,264.

This credit is a non-refundable tax credit. As such, it can only be used to reduce outstanding taxes

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