17 Mayıs 2012 Perşembe

The 12 days of Christmas, a time for giving

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To continue on with my theme of giving during these holidays, this post is about donations and their tax treatment.

With the 12 days of Christmas here, it is time to be giving presents.  Those presents could be a donation to a charitable organization. 

For personal tax purposes a charitable donation gives rise to a tax credit.  The credit obtained,
is 15% federally and 10% provincially (Alberta) on the first $200 of donations.
The credit then increases to 29% federally and 21% provincially on any amounts above $200.

Another benefit of donations is that you can claim both your own and you spouse's donations on one return, therefore benefiting from the higher credit on the amount above $200.

As a household if you contributed a total of $500.  The tax dollars you would receive back would be:
($200x 25%) = $50  plus ($300 x 50%) = $150.  Total = $200.     So on a donation of $500 you would be giving to a great cause; then at tax time reducing your tax bill by $200.  You only have to pay a net $300 and the charity gets $500.  Everyone wins,  awesome.

If you own and operate a corporation.  Charitable donations are a fully dedcutible expense for tax purposes.

So if you are thinking of giving these season,  from a tax perspective it is a smart thing to do.  Any donations made before December 31, 2011 would be credits on your 2011 tax return.

Have a great giving season

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