Introducing Amy: The Donation Tax Credit

In order to claim the donation on her annual tax return, Amy will require the charitable donation tax receipt issued to her by the charity.

Donation tax credits vary by province or territory. Since Amy lives in British Columbia, her donation tax credits are calculated as follows:

The first $200 of donation qualifies for a 5.06% provincial tax credit and a 15% federal tax credit
Amounts over $200 (in this case, the remaining $4,800) qualify for a 16.8% provincial tax credit and a 29% federal tax credit

The bottom line?

Amy’s $5,000 donation results in a $2,238.52 tax credit!

Additional Learning

Canada Revenue Agency publishes this information for all jurisdictions on their website. You can access it here.
No. Charitable donations can be carried forward up to five years and used to offset future tax liabilities. Work with your accountant to determine the ideal strategy for you.
You can donate as much as you want. However, you can only claim charitable donation tax credits in an amount up to 75% of your annual net income. So, if your annual net income is $150,000 you can claim a maximum of $112,500 in charitable donation in that specific year. (In Quebec, you can claim 100% of your annual net income.)

First $200

$200 x 5.06% (provincial tax credit) = $10.12

$200 x 15% (federal tax credit) = $30.00

First $200 TOTAL = $40.12

Next $4,800 ($5,000 - $200)

$4,800 x 16.8% (provincial tax credit) = $806.40

$4,800 x 29% (federal tax credit) = $1,392.00

Next $4,800 TOTAL = $2,198.40

TOTAL AVAILABLE TAX CREDIT

$40.12 + $2,198.40 = $2,238.52