As Canadians, we have a long-standing tradition of giving to charity. In fact, according to Statistics Canada, in 2018, Canadians made over $14 billion in charitable donations. While the primary reason for donating is to support a good cause, there is also the added benefit of receiving a tax credit for your contribution. In this post, we’ll be discussing everything you need to know about cash donations and how they affect your taxes.

What are Cash Donations?

Cash donations refer to any monetary contributions you make to registered charities, which can be claimed on your tax return. To claim a cash donation, you need to provide a receipt or other form of proof from the charity.

How Much Can You Claim?

For cash donations, the federal charitable tax credit is 15% on the first $200 and 29% on the amount above $200. In addition, Ontario has a provincial tax credit, which is 5.05% on the first $200 and 11.16% on the amount above $200. Therefore, the maximum combined federal and provincial tax credit for a cash donation is 54.5%.

It is important to note that there are limits to the amount you can claim in a tax year. For cash donations, you can claim up to 75% of your net income in a year. Any amount over this limit can be carried forward and claimed in the following five years.

What Qualifies as a Cash Donation?

To qualify as a cash donation, the donation must be made in the form of cash, cheque, or credit card. Gifts of property or other assets do not qualify as cash donations and are subject to different rules for claiming tax credits.

Which Charities Qualify?

To claim a charitable tax credit, the charity must be registered with the Canada Revenue Agency (CRA). The CRA maintains a list of registered charities, which can be searched on their website. It is important to note that not all organizations that solicit donations are registered charities, and contributions to these organizations are not eligible for a tax credit.

In conclusion, making cash donations to registered charities is an excellent way to support a good cause and receive a tax credit for your contribution. It is important to keep track of your donations and obtain receipts from the charities you support to ensure that you can claim the full amount on your tax return. If you have any questions about cash donations or other tax-related matters, don’t hesitate to contact JTT Accounting, and our team of experts will be happy to assist you.