How Much Can a Person or Business Donate to Charity for Tax Credit?
As of 2018, charitable donation deduction rules are similar whether you’re filing a personal Canadian income tax return or a corporate income tax return.
You can claim a nonrefundable tax credit of up to 75% of your net income as an individual. Your individual limit goes up to 100% of net income in the year preceding your death and in your year of death.
If you’re donating gifts as a corporation, you can claim up to 75% annually, applying your donation as a deduction against taxable income. This tax treatment applies to cash and in-kind gifts.
Gifts in kind are gifts of tangible property that are not cash. In-kind donations include:
- Real estate
- Works of art
- Motor vehicles
- Watercraft
- Stocks and bonds
If you make a gift in kind, its value is the fair market value of the item on the day you make the donation. If you’re not sure what your property is worth, consider hiring an appraiser to provide an estimate of value, keeping your receipts for any appraisal cost to document your tax deductions. Donations of time or services don’t qualify for a charitable tax receipt, though.
Whether you’re making personal or business donations to charity, you can’t claim charitable donations to create a net loss or increase a current loss. However, you’re permitted to carry forward unused charitable donations for up to five tax years.
If the government classifies your business as an investment holding company, there’s an additional incentive to donate through your business enterprise.
Since these entities pay taxes at a higher rate than other businesses, if you make a charitable donation from an investment holding company, as a business owner, you get more bang for your buck than if you make it from a traditional business or personal account.