Here is a wonderful way to encourage charitable giving. CRA has just introduced a Charitable Donation Tax Credit Calculator where donors can see exactly how much tax they will save when donation amounts are entered. Many taxpayers don't understand the difference between deductions and tax credits, or how amounts for non-refundable tax credits translate into tax savings. This is a great place to start the discussion. A link is included to the charitable donation rates for all provinces so it is a great teaching tool as well!
Advisors can help their clients plan strategically for charitable giving. Encourage clients to take advantage of provisions to donate appreciated securities on a tax free basis, and to group donation receipts with those of a spouse or common-law partner to maximize the high tax credit rate on one tax return. The higher rate is available when donations exceed $200. It often makes sense to save donation receipts for up to 5 years to use in a single tax year, so more donations will attract the higher tax credit.
