The real cost of a charitable donation

The real cost of a charitable donation

 

 

    

 

We are called upon from all sides to contribute to fundraising campaigns for various organizations whose causes are as numerous as they are varied. While all causes are excellent in themselves, we are instinctively drawn to those that affect us most.

For reasons usually emotional, we are persuaded to make a charitable donation in favor of various organizations without focusing too much on the true cost of our gesture.

 

Since the amount is not necessarily significant, the primary goal is not to reduce our taxes, but rather to contribute to the cause. But do you know how much your donation really costs you? Would this information encourage you to give more? Let's take a closer look!

Planning is worth the effort

Since it comes with both a federal and provincial tax credit, your gesture can significantly reduce your tax bill. The charitable donation can therefore pay off. It pays off at two levels: contribute to the success of the cause you have chosen and reduce your tax bill. A spontaneous gesture made while alive, a charitable donation can also be a very important component of your will and estate planning.

Planned giving is a strategy that can be very helpful in reducing the tax effects that can result from a death. So let's try to establish the real cost of your donation as well as the beneficial effects it could have on your tax bill.

The cost of your donation

Since tax laws give a tax credit to someone who makes a charitable donation, your donation will provide you with tax savings that will reduce the actual cost.

Your tax credit will be based on the amount of the donation and your income. Up to $ 200 donation, the credit rate will be 32.53%. If you donate $ 100, for example, your actual cost will be $ 67 since you will receive a credit of $ 33.

Your generosity will be more rewarded if you donate more than $ 200 since the credit can be between 48% and 52% (53% in 2017) depending on whether your income will be more or less $ 200,000. For example, a donation of $ 500 will only cost you $ 290.

Donation of listed securities

One of the most tax-efficient ways to donate to charity is one of the most tax-efficient ways to donate to charity. since this type of donation comes with advantages, in particular by allowing the capital gain accumulated on the securities being donated to not be taxable.

It is therefore more advantageous to transfer securities directly to an organization than to donate the proceeds of their sale.