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Understanding the First-Time Donor Super Credit for Charitable Donations

Canadians are generous with their charitable giving. One reason is that Canadian tax laws grant people who donate to charity generous tax credits for their donations. One particular credit, called the first-time donor super credit (FDSC), is an extra enticement for first-time donors or those who haven’t donated to charity in a while. Under the FDSC program, qualifying donors received an extra tax credit worth up to 25% of their donation. As of 2018, the FDSC tax credit has expired, and you can only claim it if you’re filing back taxes.

Tax Incentives for Donors

The federal charitable donations tax credit provides a tax incentive for Canadians who donate to charities. This tax credit is valued at up to 29% of the value of the donation, along with additional amounts that vary from province to province, but reach as high as 24%. To maximize the credit, contributors can group their donations among spouses. This is because donations below $200 are eligible only for a 15% credit, while those over that limit get a credit of 29%. By grouping the donations, your family becomes eligible for a higher tax credit.

To claim your credit, you must have a proper receipt from the charity to which you made a donation. The receipt must include the charity’s full coordinates, its Canada Revenue Agency registration number, your coordinates, and the dollar amount or value of the donation.

The First-Time Donor Super Credit

The FDSC, which was introduced in the 2013 budget, gave new donors an additional 25% credit on qualifying donations to registered charities. This was on top of the already-existing basic federal and provincial credits. Taxpayers who were eligible for the FDSC could only claim it once between 2013 and 2017. After that, the credit expired.

Contrary to what the name might suggest, it’s not necessary to be a true first-time donor if you’re filing back taxes and want to qualify for this tax credit. Rather, anyone who didn’t claim a charitable donation credit since 2007 is deemed a first-time donor and may meet eligibility requirements.

The FDSC applies only to a gift of money made after March 20, 2013, up to a maximum of $1,000. Gifts in kind are not eligible for the credit. If you have a spouse or common-law partner, you can share the claim for the FDSC, but the total combined donations that you and your spouse or partner claim cannot be more than $1,000.

For example, assume you give $1,000 in cash to a registered charity and the rate of your provincial credit is 20%. Your federal tax credit is $30 on the first $200 (15% x $200), $232 on the $800 (29% x $800), and a $250 FDSC for a total of $512. Or:

  • ($200 x 0.15) + ($800 x 0.29) + $250 = $512

Additionally, you get a $200 provincial tax credit (20% x $1,000).

  • $512 + ($1,000 x 0.20) = $712

The combined federal-provincial total credits of $712 mean your out-of-pocket cost of this $1,000 donation is therefore only $288.

You may qualify for many other tax deductions and credits as a small business owner in Canada. Turn to QuickBooks Online to learn about these credits. QuickBooks Online can also help you maximize your tax deductions. Keep more of what you earn today.

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