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Now that summer is drawing to a close, let’s look at reducing your taxes in 2010 (and in future years) while benefiting your favorite charitable organization like your local Community Foundation.
Cash, cheque and credit card donations are still the most popular methods of charitable giving in Canada. Many people are now using charitable giving in lieu of gifts (retirement parties, wedding anniversaries, etc.) for special occasions and of course donations made “in memory of” upon an individual’s death have been popular for a long time. Regardless of the method, an individual donor is entitled to a tax credit in the year in which the donation is made (a gift by a corporation is a deductible amount). Donations exceeding the annual 75% of net income limit can be carried forward for up to five years, to enable the taxpayer to enjoy the full tax benefit from a substantial gift.
A lump sum donation is the simplest type of donation. The charity has the use of the donation immediately, and the donor uses the donation receipt in determining the resulting tax credit against income tax payable. In situations where significant amounts are donated, the donor can direct the Charity as to how the funds are to be used. With the your local Community Foundation a donor can direct their funds toward a particular “field of interest”, establish a scholarship program, designate their funds to support specific charitable organizations funded by the Foundation, be actively involved with the Foundation Board in selecting recipient charitable organizations, or leave it up to the Foundation Board to address the most pressing needs of the community.
A donation made before December 31, 2010 will have an immediate impact when you file your income tax return in the new year. Since all charitable donations are totaled together for filing purposes, amounts in excess of $200.00 receive tax credits at the highest tax rate in Canada. A very significant tax saving indeed! Regardless of your ability or desire to give, all donations, large or small are important and appreciated.
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