It is generally agreed upon that charitable giving is a good thing. That is why the government rewards charitable giving by being charitable with your taxes. Which is nice. Free money from the government is always good.
In the 2013 Budget, the government created a First Time Donor’s Super Credit. This is a credit that can be claimed between the tax years of 2013 and 2017.
For any charitable donor (those who have already donated before, and first time donors who donated before Budget 2013), you get a non-refundable tax credit of the lowest personal tax rate on the first $200 you donate, and the highest tax rate federally and provincially on any amounts over $200. So in British Columbia where I live, I get a 15% federal tax credit on any amount I donate up to $200 and 29% on the remainder of my donation past $200. In addition, I get a 5.06% amount up to $200 and 14.7% on the remainder past $200 of a provincial tax credit.
So basically, if I donated $400, I get a tax credit of $127.52 and hence, the actual cost of donating is $272.48. If you live in B.C. the University of British Columbia has a convenient tax credit calculator here. Check out one of my favourite tax related websites, Tax Tips for more details.
What is the First Time Donor Super Credit?
Well, my friend, the First Time Donor Super Credit allows you to have up to an extra 25% of non-refundable tax credit on your donation. You must not have donated in the past five years (the government of Canada is rewarding stingy and non-generous people, goes to show!) in order to be eligible for the First Time Donor Super Credit.
For any values up to $200, you may be eligible to get up to 40% of a tax credit and up to a 54% tax credit on the amount past $200 (up to a maximum of $1000). These numbers are variable depending on the province that you live in.
Some of the rules according to the Canada Revenue Agency Website are:
- That the person claiming the First Time Donor Super Credit has not donated in the past five years
- Their common law partner or married spouse must not have donated in the past five years either
- You can only claim it once between the years of 2013 to 2017 (so make it count!)
- The maximum amount of the Super Tax Credit that you can claim is up to $1000 in donations
- It has to be a registered Canadian charity (well, of course!)
If you have not donated in the past five years (now is the time!) and you are interested in seeing how much your first time donation reward you when it comes to claim your taxes, Canada Helps has a handy First Time Donor Super Tax Credit calculator. Alternately, if you want to be more legit, you can go to the Canada Revenue Agency First Time Donor Super Tax Credit calculator too.
So, if you have never donated and you donate $400 after 2013, you are eligible for a tax credit of $127.52 as your standard donation credit, and an additional $100 One Time super credit. That means, that $400 donation really only costed you $172.48.
Pretty amazing huh?
How to Make the First Time Donor Super Tax Credit Count
Go big or go home, right? Isn’t that life’s motto?
In order to maximize the First Time Donor Super Tax Credit, you might want to save up your donations to make sure that you accumulate as much donation amount as you can. This may mean deferring claiming your donations against your taxes until 2017 if you don’t plan to donate a large amount in certain calender year…otherwise known as carrying forward your donations. Some people may find that too cumbersome. Alternately, if you have a spouse or a common law partner you can amalgamate your donations in order to maximize the amount donated for the year in question.
The First Time Donor Super Tax Credit sounds pretty amazing to optimize your taxes, unfortunately I am often approached by friends asking to donate for something they are doing for charity so I won’t be able to take advantage of this tax credit.
Readers, are you planning to take advantage of the First Time Donor Super Tax Credit?