Vu CPA | Online Chartered Professional Accountants, Canada
Online Chartered Professional Accountants, Canada
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Straight off the press

2 Things to Consider When Making a Charitable Donation

The other day a cute little boy came to my door with his mom. Turns out they were going door to door raising awareness and support for breast cancer research. I knew I was going to donate before he even gave his pitch. Breast cancer runs in my family so the society’s focus hit pretty close to home.

I started to fill out the donation details and decided to donate this personally instead of corporately.

Why did I do this?

Donations are a tax credit when donated personally and a deduction when donated corporately. The donations are limited to 75% of your net income for the year.

Tax credits give you a dollar for dollar reduction of your income tax liability (for donations this is 15% for the first $200, and 29% thereafter).

Tax deductions reduce your taxable income.

Let’s say you gave a donation of $10,000 to a registered charity and your province of taxation is BC. Your personal net income for the year is $75,000 and your corporation is eligible for the small business deduction. Your effective personal tax rate for 2017 is approximately 20% and your corporate tax rate is 13%.

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This is, however, a very simplified scenario. There are many situations where it can actually be more beneficial to donate from within your corporation.

Talk to your CPA before making a large donation to a charitable organization.