In the 2013 federal budget the government offered us one more reason to donate to charitable causes with the introduction of the First-time Donor's Super Credit.
Ideal for young Canadians, the new credit is available for any first-time donor, as well as persons who have not donated since 2007. It offers a one-time 25% tax-credit for donations up to $1,000, and it is valid until 2017.
Added to the regular tax credit for charitable donations, the new tax credit results in a 40% federal credit for the first $200 donated, and a 54% tax credit for amounts between $200 and $1,000. For example, a first-time donation of $500 would mean a return of $242.
"It's great because every time a tax credit for charity has been introduced by the government it has paid off," said Marvi Ricker, vice president and managing director of philanthropic services at BMO Harris Private Banking. "Back in 2006 they eliminated capital gains tax on donations, and donations shot up. So, it'll be interesting to see how this pays off."
 |
|
 |
|
| Scott Sather | |
|
|
|
|
|
And Canadians are taking note. According to a recent BMO Harris Private Banking Study, 50% of Canadians aged 18 to 34 say that they will contribute more to charities because of the new credit.
However, not everyone is as optimistic. "I'm a huge supporter of charitable giving, but most people won't get anything from this," says Scott Sather, an investment advisor and financial planner at RBC Wealth Management.
"In fact, I'm a little disappointed because when I first read about the credit I thought it was generic, for anyone who donated to a new charity," says Sather.
Regardless, one factor is certain: charities are in need of new donors. According to Statistics Canada, in 2011 Canadians gave $8.5 billion to charitable causes, an average of $1,500 per tax filer; however, the percentage of those donating is down 6% from 1990.
Ricker attributes this to the economy. "It's a reflection of what's happening right now, there's a bigger gap between rich and poor, so the middle class is being squeezed. This credit is intended to help bring those people back."
 |
|
|
|
| Marvi Ricker | |
|
|
|
|
|
One way to start incorporating charitable donations into your life is to include them in your budget. Alongside your monthly expenditures for investments, groceries and entertainment, try to save something for charitable giving.
"It's important to keep track of the one-off stuff," says Sather. So, that $20 that you donated for Movember, or that $50 that you gave to the Red Cross, all of these donations are relevant, so keep track of them.
When deciding on a charitable cause, ask yourself the following questions:
- What matters the most to me? It could be anything, such as clean water or heart health; if the answer doesn't come easily, figure out your hobbies and your interests.
- Are my core beliefs in line with my charities? Do research and find out what your charity stands for.
- How much of my money goes to the cause? This should be available on the charity's website; if not do your own research.
- Do you want to support a large charity or a small charity? Statistics on the charity's size and reach should be available on its website.
If the tax credit has inspired you to give for the first time (or for the first time since 2007) find a charity that means something to you and that truly inspires you. From a tax perspective, the money that you'll get back most likely won't make or break your budget, so if you do donate, it's best to do it in the spirit of philanthropy.
:quality(80)/cloudfront-us-east-1.images.arcpublishing.com/morningstar/EAAEIIRVVNE7HNVXBSGTD3WPSI.jpg)
