These daily financial tips are designed to be short ideas covering different aspects of family and business finances. They are short pieces intended to provide information to enable individuals, families and businesses to make informed financial decisions. Not all tips will apply to every situation, but over the course of a year, most financial topics will be covered. Check in regularly and share with friends and associates.
The Christmas season and end of year is a peak time for gifting/giving, both physical gifts and monetary gifts. There are many reasons to also consider charitable gifts to charities of your choice. Canada has one of the most favourable tax treatments for charitable gifts. So as you consider what to give friends and families, perhaps including an element of financial support for charities should be part of your giving plans. It not only provides financial support for those in need or less fortunate, but also align with your values and priorities.
In Canada, you can claim gifts up to 75% of your net taxable income. In order to qualify, ensure you are contributing to a recognized registered charity. All contributions must be supported by an eligible charitable contribution receipt. On the first $200 of contributions, you receive a 15% tax credit and on amounts exceeding $200 you receive a tax credit of 29%. So charitable donations not only support worthy causes, but also reduce your taxable income significantly. A win/win strategy.
In addition to making cash donations to charities, there are other charitable contribution strategies that can have tax advantages. Gifting stocks or securities to charities minimizes/eliminates capital gains payable on the securities as well as qualifying for the charitable donation credits. There are also life insurance strategies that can enhance gifts. These will be discussed in a separate future Daily Financial Tip blog post.
To maximize your charitable donation credits and minimize taxes payable, it is best to discuss your individual situation with a tax specialist.
Share these ideas with friends and family and come back to check out daily financial tips and ideas. If there are subjects you wish covered or questions, please email me and I’ll include them in future posts.