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Canada Charitable Donations Tax Credit Guide

the charitable donations tax credit in Canada. The charitable donation tax credit is a non-refundable tax credit with a two-tier structure: the "first tier" is 15% (federal) on the first $200 of the total annual donations, and the "second tier" is 29% (federal) on the donations above $200. The 33% rate applies to the donations above $200 when the taxpayer has the taxable income in the 33% federal income bracket (above $253,414). The annual donation limit is 75% of the net income (the taxpayer cannot claim the donations exceeding 75% of the net income in a single year; the excess can be carried forward for 5 years). The 100% limit applies for the donations of the certified cultural property and the ecological gifts. The gift-in-kind donations (the appreciated securities, the real estate, the art) can generate the tax credit at the fair market value — the donation of the publicly traded shares (the "listed securities") is exempt from the capital gains tax (the taxpayer does not pay the tax on the capital gain when the appreciated shares are donated directly to the charity). The political contributions (the federal and the provincial) generate the separate tax credits (the federal political contribution tax credit at 75% on the first $400, 50% on the next $350, and 33.33% on the next $525). The international gifts to the qualified donees (the UN agencies, the foreign universities, the international charities) can generate the tax credit if the recipient is registered as the "qualified donee" by the CRA.

Donation Credit Tiers

• First $200 (federal): 15% federal credit on the first $200 of the total donations. The credit is $30 (15% of $200). The provincial credit on the first $200 varies by province (5.05% to 25.75%).
• Over $200 (federal): 29% federal credit on the donations above $200. For the taxpayer with the income in the 33% top bracket, the rate is 33% on the donations above $200. The higher rate applies automatically (the taxpayer does not need to elect the top bracket).
• Provincial credits: The provincial donation credits are calculated at the provincial rate (typically 4% to 11.5% for the first tier and 11.5% to 25.75% for the second tier, depending on the province). The combined federal+provincial credit can reach 50%+ for the high-income donors.
• Donations by the couple: The spouses can claim the donations jointly (the "spousal donation" — the credit is calculated on the combined donations and allocated to either spouse). The couple should claim the donations on the return of the higher-income spouse to maximize the value of the second-tier credit.

Donation Limits & Carry-Forward

• Annual limit: 75% of the taxpayer's net income (Line 23600). The excess donations above the 75% limit cannot be claimed in the current year but can be carried forward for 5 years.
• 100% limit: The donations of the certified cultural property (the "cultural gifts") and the ecological gifts (the "ecological gifts program" — the gifts of the land, the conservation easements, and the certified ecological property) are eligible for the 100% of the net income limit.
• 5-year carry-forward: The unused donations can be carried forward for up to 5 years. The taxpayer must claim the donations in the order they were made (the "first-in, first-out" rule).
• Donations at death: The donation limit is increased to 100% of the net income on the final tax return. The donations made by the will (the "bequests") are treated as the donations made by the deceased immediately before the death.

Gift-in-Kind Donations

• Appreciated securities: The donation of the publicly traded shares (the "listed securities" — the shares listed on the TSX, NYSE, NASDAQ, LSE, and the other designated stock exchanges) is 100% capital gains exempt — the taxpayer does not pay any tax on the capital gain when the shares are donated directly to the charity. The charity receives the full fair market value. The donor receives the tax credit at the fair market value.
• Real estate: The donation of the real estate (the land, the building, the conservation easement) is treated as the gift-in-kind at the fair market value. The capital gain on the real estate donation is taxable (the principal residence exemption may apply if the property is the primary home).
• Art and cultural property: The donation of the certified cultural property (the "cultural gifts program" — the art, the artifacts, the historical documents) is 100% tax-exempt (the donor does not pay the capital gains tax on the donated property). The donation must be certified by the Canadian Cultural Property Export Review Board (CCPERB).
• Ecological gifts: The donation of the ecologically sensitive land (the "ecological gifts program") is 100% tax-exempt. The donation must be certified by the Minister of the Environment and Climate Change Canada. The ecological gift can be claimed at the 100% of the net income limit.

Qualified Donees & Receipting

• Qualified donees: The CRA-registered charities (the "registered charity" — the organization with the BN registration), the registered Canadian amateur athletic associations (RCAAAs), the registered national arts service organizations (RNASOs), the housing corporations that provide the low-cost housing for the seniors, the municipalities, the United Nations agencies, and the prescribed foreign universities.
• Charitable registration (BN): The charity must have the Business Number (BN) and the "charitable registration number" from the CRA. The taxpayer can verify the charity's registration on the CRA website (the "Charities Listing" page).
• Official receipts: The charity must issue the official donation receipt with the charity's BN, the date of the donation, the amount of the donation, and the description of the gift. The receipt must state the "eligible amount" (the fair market value of the gift).
• Non-cash receipts: The gift-in-kind donation receipts must include the fair market value of the property and the name of the appraiser (if the value exceeds $1,000). The CRA requires the appraisal for the gifts valued at $1,000+.

For the estate planning and the testamentary donations, see our Estate Planning Guide →. For the income-splitting and the family tax strategies, see our Income Splitting Guide →.