Q: The past two years have been very difficult, with the coronavirus negatively affecting many individuals, families and businesses. I also know that countless charities have suffered because of decreased giving, while the need for their good works has likely increased. The year is nearly over and I just haven’t gotten around to making any donations to do my part. How can I scramble to make this happen and start making a difference?


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A: Your question is in the giving spirit of the holiday season and it’s very kind-hearted of you to make a donation to assist those who could really use the help.

To reward your generosity, both the federal and provincial governments offer tax incentives to Canadians who donate to charities. Generally, you can claim charitable donations up to 75 per cent of your net income, and unclaimed amounts can be carried forward for up to five years. The actual tax benefit depends on your income and province of residence.

It’s not too late to make a donation that can be claimed in 2021 and there are a number of ways to do so, but there is a deadline to be aware of.

Here are your charitable gifting options in what’s left of 2021:

1) A donation of your time. Perhaps you have a few hours to help by volunteering your time, talent or skills. You won’t receive a tax benefit, but you can make a real impact.

2) A donation by cheque or credit card. This is the most common type of financial donation. The funds must be donated to the charity by Dec. 31 for you to receive a charitable tax receipt for 2021 (the value of which will be equal to the monetary value of the gift). Don’t delay if you’re putting a cheque in the mail, as it will take time for Canada Post to deliver it. An online donation through a charity’s website will immediately issue a donation receipt, but often there are costs to the charity to process electronic or credit card donations, and every cent may not make it to your charity.

3) A corporate donation. If you own a company that is incorporated and you have available cash, you can make the donation directly from your company. Instead of you receiving the charitable tax credit, your company will receive a tax deduction for the amount donated. (Canada Revenue Agency recognizes differences between tax deductions and tax credits.) It may be more tax efficient for your company to receive the tax benefits than yourself personally, so be sure to ask your professional accountant which option is most beneficial to you. The charity won’t care, and will just be happy to receive the funds.

4) A donation of publicly-traded securities, in-kind. Most charities are able to receive the direct gift of investments, such as stocks or mutual funds. That is, you don’t sell the investment and then donate the cash proceeds; instead, you give the actual investment to the charity. Most often the charity sells the investment to use the cash for their good works, but there may be significant tax benefits to you to donate this way. You still get a charitable tax receipt for the fair market value of the investment, and you won’t have to report a taxable capital gain as might be the case if you sold the investment.

You’ll have to hold tight until my next Money for Life column for your 2022 charitable gifting options. These additional strategies can help you with your planning for future charitable giving, but they require a bit more time to implement. Meanwhile, you better hup to it for your 2021 donations. That Dec. 31 deadline is fast approaching, and you’re better off being a day early than a minute late!

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Kendra Sivertson
Certified Financial Planner
Perspektiv Financial
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