Gifts to charities qualify under section 118.1 of the Income Tax Act for tax credits during a taxation year. Gifts to charities, Crown gifts, cultural gifts and ecological gifts all qualify and are added to other personal credits and deducted directly from taxes owing. The following lists the types of donations that qualify for credit:

-Cash

-Securities (Publicly-Traded and Employee Stock Option Shares)

-Real Estate

-Canadian Cultural Property

-Ecologically Sensitive Land

-Life Insurance Policies

-Residual Interest of a Trust or Estate

Conversely the following are not entitled to credit under the Act:

-Donations to non-registered organizations

-Donations to charitable organizations outside of Canada (Note: there are some exceptions)

-Donations to individuals

-Gifts in form of services provided

-Amounts paid for card parties, bingos, and lotteries

-Donations of Blood

-Gifts for which you receive a personal benefit

The first $200 of donations gets a credit that is calculated at the lowest marginal tax rate (depending upon province of residence); donations in excess of $200 receive a credit calculated at the highest marginal tax rate.

The annual general donation claim limit is 75% of one’s net income, although donations in excess of the annual limit may be carried forward and claimed in any of the following 5 years. Donation receipts of spouses can be combined and claimed on one tax return, since the donations qualify as tax credits rather than deductions from taxable income.

The donation limit in the year of one’s death is 100% of net income.

Gifts of Canadian Cultural Property and Ecologically Sensitive Land are exempt from the general donation limit of 75%.

The following organizations qualify as recognized charities for taxation purposes:

-Registered Charities

-Canadian Amateur Athletic Organizations

-Charitable Trusts

-Non-profit Corporations

-Low Cost Housing Corporations

-The United Nations and related agencies

-Canadian Municipalities

-Certain Foreign Universities

-U.S. Charities (restrictions apply)

-International organizations to which the government of Canada has made a gift during the year or preceding year

-Canadian, Provincial, or Territorial Governments