Fiscal and Financial Planning Guide 2024-2025
General > Charitable donations
Charitable donations tax credit
The following table shows the tax credit rate based on the amount of donations and the taxpayer’s income.
Public corporation shares
If you think about selling stocks and you make donations, it might be more interesting to donate these stocks rather than to make donations in cash.
Indeed, if you give the shares, you will be exempt from the 25% tax on capital gains when you are taxed at the maximum rate.
For example, you hold Bank XYZ shares paid $6,000 and whose current value is $10,000. Their sale would result in a $ 1,000 income tax corresponding to 25% of the realized $4,000 capital gain.
If you instead donate these shares, you will be entitled to the usual $10,000 donation receipt corresponding to the market value of $10,000 and save $1,000 on the exempted capital gain tax.
Large donation in culture
A significant monetary donation in culture (e.g., museum, cultural organization) from $5,000 to $25,000 entitles you to an additional 25% credit in Quebec. For example, a taxpayer with income over $246,752 would be eligible for a total credit of 78% (53% + 25%). Please note that this additional credit can only be applied to one donation and can only be used one time.
Cultural Patronage Donation Credit
A donation of at least $25,000 in the field of arts or culture qualifies for a 30% credit in Quebec for a total credit combined with the federal government of 58% in the case of a taxpayer with an income of more than $246,752.
Donation of ecologically sensitive property
A tax credit may be claimed for the donation of ecologically sensitive property (generally land), including a minimum 100 year easement, to one of the following organizations:
- Government of Canada
- Municipality
- Registered charity approved by the Minister of Environment and Climate Change Canada (ECCC)
A private foundation cannot receive a donation of ecologically sensitive land.
Eligible lands
The Minister of ECCC must have certified that the conservation of the land and its protection are important to the preservation of environmental heritage. The Minister also determines the fair market value of the land.
The donation amount is not subject to an income limit and can be carried forward for 10 years instead of the usual 5.
Donation credit for life insurance
If you wish to make a more substantial donation to a charity, using a life insurance policy may be an interesting strategy. The charity will naturally have to be patient, waiting to collect the life policy proceeds following the donator’s death. Charities generally refer to the concept of Planned Donations for this type of donation.
There are two main strategies for using a life policy.
Annual premiums deduction
If the Charity is the owner and the beneficiary of the policy, annual premiums paid by the donator are tax deductible (ex: $500 yearly). The insurance proceeds eventually paid to the Charity (ex: $100,000) will however not give right to a tax credit since the insurance contract already belonged to the Charity.
Deduction of insurance benefits
If the donator is the owner of the insurance contract and the Charity is named beneficiary, annual premiums (ex: $500) will be not tax deductible because the donator remains the owner of the contract. The insurance benefits
(ex: $100,000) received by the Charity upon death of the donator will give right to a significant tax credit to the donator estate.
This last approach may be particularly useful when a high tax bill is anticipated upon death. For example, for someone who owns real estate, a business, etc.
Other strategies
There are more targeted ways to make donations with tax benefits. For example:
- Donations of works of art by Canadian artists to museums and public institutions;
- Some organizations such as the Foundation of Greater Montreal matches donors and organizations that offer grants. Donations thus lead to a multiplying effect of the sums received by the Charity, often in the art and culture activities;
- Donations of a building for cultural purposes to accommodate artists or cultural organizations.
Official donation receipts
In its 2024 budget, the government proposes to expressly authorize charities to issue official donation receipts electronically. In addition, to simplify the preparation process, certain information that must appear on receipts will no longer be required (e.g., date of receipt remittance, donor’s middle initial).