Ten tax tips for charitable giving as December deadline nears

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8. Pool your donations

You and your spouse or partner can combine your charitable donations, regardless of whose name appears on the donation receipt, and one of you can claim all the donations up to the allowed personal 75 per cent of income limit. This is also an easy way to avoid doubling up on the lower, $200 donation credit threshold.

9. Corporate donations

If you have a corporation, donations made by the corporation are tax deductible. When your privately-owned corporation makes a charitable gift of appreciated publicly-traded securities in-kind, there are actually three benefits: the corporation receives a tax deduction for the FMV of the shares donated, there’s no tax on the capital gain, and the amount of the tax-free capital gain realized is added to the company’s notional capital dividend account, allowing a tax-free capital dividend to be paid out subsequently to the shareholder.

10. Set up a donor-advised fund

Donor Advised Funds are an alternative to setting up your own private foundation. DAFs are useful if you’re not quite sure where to donate this year but still want your tax receipt for 2020. DAFs essentially piggyback on public foundations, such as community foundations or foundations established by some of the major financial institutions or investment management firms, allowing a donor to create a “mini-foundation” as a subset of the larger, public foundation.

The donor starts by making a gift of cash or appreciated securities to the DAF and gets an immediate donation receipt. The funds can grow inside the DAF tax-free and each year the donor can recommend distributions (typically a minimum of 3.5 per cent of the opening fair market value of their fund each year) to be made from the DAF to any of the 85,934 registered charities in Canada.

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