In the Spring of 2013 the budget announced by the Federal Government included more financial incentive or motivation for you to start giving to charitable organizations.
They introduced a Super Credit for first time donors.
Let’s first find out what a first time donor is… For the 2013 tax year, you qualify if neither you nor your spouse or common-law partner has claimed the Charitable Donation Tax Credit in the previous five years (2008 to 2012 tax years inclusive).
Anyone who claimed a donation on their 2012 tax return is excluded indefinitely from this Super Credit.
So how much is it worth? Let’s say you do qualify as a first time donor; if you donate a total of $1000 (to maximize the Super Credit) to one or more registered Charitable organizations, you will get a combined federal and provincial tax break of $672.80 (additional refund or reduced taxes payable). So it really only cost you $327.20. That is quite a deal.
Consider a donation to the Ste Anne Hospital Foundation (or other organizations you care about). They could get the $1000 and it really only costs you about one-third of that! You have forced the federal and provincial governments to contribute too!
For the rest of us who do not qualify as a First-Time Donor, for a $1000 donation our tax break is $422.80, so the net cost to us is $577.20. This is still a good incentive to make donations, even if you are not a First-Time Donor.
Here’s what you need to keep in mind.
First, it can only be claimed once during the 2013 to 2017 tax years. So if you qualify as a First Time Donor and haven’t contributed the full $1000 in 2013, you can carry forward that unused donation to future years (as late as 2017) and claim all at once and maximize the Super Credit.
And the donation of money (cash) must be made after March 20 2013. So if you made donations January 1 to March 20 2013, we may need to claim them in a year or two after you claim your “Super Credit”; donations can be carried forward up to five years.
Also remember that donation credits don’t help you if you have no taxes payable. I see this often with some seniors or single parents that have lots of credits to offset any taxes payable. So if you do not have any taxes payable (not to be confused with “owing taxes”), don’t make donations thinking you are going to get some tax refund.
One more thing to remember: say you last claimed a donation in 2008 to 2011; you can wait a couple of years since the Super Credit is good till the 2017 tax year; you can still take advantage of it in the near future.
This strategy will be good if you didn’t claim a donation on your 2012 Personal Income Tax Return. You can wait as late as 2017 to claim your donations and take advantage of the First Time Donor’s Super Credit. If you claimed a small donation only on your 2012 taxes, it may be worthwhile to adjust your taxes to remove it and become eligible for the Super Credit in the future.
If you are not sure if and when you qualify for First Time Donor’s Super Credit, give me a call and we can review your taxes going back to 2008 to see if you (or your spouse) claimed any donations (this is easy for anyone that has filed taxes with me since 2008 or earlier; I have your information.) We can also make sure you will have some taxes payable in the future that will be offset by this Super Credit.
Encourage your adult children to become regular givers to organizations they care about. This might be the kick start or incentive they need.
Anni Markmann is a tax professional and owner of Ste Anne Tax Service, working, living, and volunteering in our community. Contact Anni at 204-422-6631 or firstname.lastname@example.org or 36 Dawson Road in Ste Anne.