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Charitable giving is making a gift to a charitable organization in a
way that maximizes your tax and estate planning benefits. A gift may be a
one-time donation, a series of payments over a set period, or ongoing
support. It may be a gift the charity can use now or a “deferred gift
” available to the charity in the future.
You have many choices when it comes to making a charitable gift. To
learn about your options, the tax benefits and other considerations, take
a moment to review the following frequently asked questions:
What is considered a gift for tax purposes?
A charitable gift is a voluntary transfer of money or property for which
you expect and receive nothing of value in return. Gifts can include:
- Cash
- Gifts in kind such as stocks, bonds or real estate
- A right to a future payment (e.g. life insurance)
- Certified cultural property (significant works of art and
artifacts)
- Land that is considered to be ecologically sensitive and
important to Canada's environmental heritage
What is not considered a charitable gift?
Certain donations are not considered gifts for tax purposes:
- Time or services
- Property of little value, such as worn-out furnishings
- Gifts for which personal benefit is received
What are the tax benefits?
With minimal planning, tax savings can fund close to 50% of your gift
in some provinces.
There is a 16% federal tax credit on the first $200 donated each
year. Amounts over this threshold earn the maximum 29% federal tax
credit. Your tax savings are then increased by reduced provincial taxes.
Is there a limit to what I can claim credit
for?
Yes. Generally, each year you can claim credit for donations not
exceeding 75% of the “net income” reported on your federal
tax return. For donations of ecologically sensitive land and Canadian
cultural property, the limitation is 100% of your net income for the
year.
What are my charitable giving options?
The following includes some of the gift options mentioned previously,
as well as additional methods appropriate for unique circumstances and
large or ongoing gifts:
- Simple cash gifts including a one-time cheque or regular payments
deducted from your paycheque
- Gifts in kind such as tangible property (stocks, bonds, mutual funds
or real estate)
- Bequests under a Will
- Donation of a Registered Retirement Savings Plan (RSP) or Retirement
Income Fund (RIF)
- Donation of an existing life insurance policy, typically a whole life
policy that has a cash surrender value
- Deferred gift of a life insurance policy
- Charitable gift annuity, which enables you to give a lump sum to a
charity in exchange for periodic income
- Charitable remainder trust (This is a living trust that you establish
by contributing cash or other property. Throughout your lifetime you
receive income from the trust. Upon your death, the "remainder"
passes directly to the charity.)
- Endowment fund, which allows you to make a very large donation to help
an institution fund scholarships, fellowships and more
- Private charitable foundation (This is a non-profit organization that
can be established by an individual, family or small group to award grants
or make contributions to registered charities. It offers the most
flexibility in charitable giving, but can require a significant amount of
time and money.)
What should I consider before making a
charitable gift?
Most charitable gifts that qualify for tax credits are one-way
transactions. You cannot take back the donation. Before making a large
commitment, make sure you will have enough money to meet your future needs and
those of your family.
Is there a simple and convenient way I can leave
a lasting legacy?
Yes. RBC Dominion Securities offers a
Charitable Gift Program for
those who want to support charitable causes in a meaningful way, but
don't have time to establish a private foundation or endowment fund. It is
an easy, convenient way to support charitable causes, today and in the
future, while receiving important tax benefits.
Take the next step…talk to an advisor.
Our Investment Advisors
are here to help recommend the solutions that are best for you. To learn
more, please contact an advisor
today. Or, ask an advisor to contact
you.
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