It might be corny but it’s true: nothing feels as good as helping others. Of course, if you can also benefit from giving back to those in need, that’s a win for everyone. At Prometheus Private Advisory Group, we believe that’s exactly what makes charitable donations so powerful: both the donor and the recipient reap significant rewards.
Most importantly, giving money to charities is a valuable, generous and high-impact way to allocate extra funds. You can choose an organization you believe in and see the direct impact of your support. But when you donate, you also save big on taxes and can even leave behind a legacy to make sure your gift keeps on giving after you’re gone. Here, we’re sharing everything you need to know about charitable giving, including:
- Why you should make charitable donations part of your financial plan
- How to claim charity donations on your taxes
- How to set up legacy giving
- Vancouver charities to support
Giving to Charity: A Valuable Part of Any Financial Plan
The benefits of giving to charity are many and obvious: your money goes towards supporting people and causes who need it most, it teaches your children the value of giving, and it straight up makes you feel good. For those reasons alone, everyone can benefit from making charitable giving a part of their lives.
But from a financial planning perspective (which, of course, is what we’re all about), charitable giving makes smart financial sense. When you donate to a registered charity in Canada, you receive a tax receipt for your donation. You can then submit your receipt(s) with your annual tax return and receive up to 53% of your donation as a tax credit. The rate is 29% at the federal level and up to 24% at the provincial level, depending on where you live.
Since the more you donate, the more you get back, it can be valuable to hold onto your receipts and claim them all in the same year. In any given year, you can claim donations made by December 31st of the current tax year, as well as any unclaimed donations made by you or your spouse for the last five years.
How to Claim Charitable Tax Credits
To make a charitable tax claim, you’ll first need to determine that all your donations are eligible for credits. Remember, you can only claim donations made to registered charities and other qualified donees. If you’re unsure, the government website has a handy list of eligible charities in Canada. Once you’re sure that your donations qualify, you can calculate the amount you’re entitled to claim.
At the federal rate, donations up to $200 get you 15% credit. For additional amounts over $200, you’ll receive 29%. Each province also has its own charitable tax rate, ranging from 4% to 24%. Be sure to check the provincial charitable donation tax credit rates and use the tax credit calculator to get a better idea of how much you’ll receive.
How to Set Up Legacy Giving
So now that you’re up to speed on how charitable giving can help you save on taxes, let’s talk about how to make sure your money goes to good use — for now and for the future. Your donations can make a big difference, both during your lifetime and after you’re gone. Legacy giving can ensure this happens.
Also called planned giving, you can plan ahead to leave a portion of your wealth to a charity or organization of your choosing. This means you’ll be able to support causes that matter to you, even after you’re no longer able to make regular donations. Planned giving can also give you the opportunity to make donations that you wouldn’t be able to afford while you’re alive. You can even discuss your legacy donation with your chosen charity to decide how the funds will be used. It’s a powerful way to guarantee the causes you want to support have the funding they need for many years to come.
You might be wondering if there’s any benefits of legacy giving to the family you’re leaving behind. In a word, yes! The money that you give to a charity in your will does not take away from the money you leave to your children. Instead, Canada’s tax regulations allow donations to come from the amount you’d typically pay in taxes to the CRA. If you haven’t already included legacy giving in your will, talk to one of our financial advisors in Vancouver to learn more.
Charities to Support in Vancouver
I think we can all agree that giving to charity is a good thing for everyone involved. Whether you’re donating to cancer research or supporting organizations that seek to end homelessness, charitable donations make our world a better place for all of us. But deciding to donate is only one part of the equation. There are so many worthy causes out there, so choosing where to donate can be a challenge.
Choosing a charity to support is a very personal decision. It comes down to deciding what causes matter to you most — whether it’s animal rights, children’s health or equality for BIPOC people — and then researching charities in that sector. We can’t tell you where to give your hard-earned money, but we can guarantee that you’ll feel great about supporting a cause that’s close to your heart.
The best part about charitable giving is that you really can’t go wrong. Just be sure to stick to registered charities and organizations so you can claim your tax credits. If you’re not sure where to start, check out this helpful list of Vancouver charities to support. And if you still have questions about donating to charity in Canada, contact Prometheus Private Advisory Group to talk to an expert today.