You can claim donations made by either you or your spouse. Enter your claim (line 349) from the calculation on schedule 9 and attach it to your return.
The following donations and gifts do not include contributions to political parties.
Allowable charitable donations and government gifts
Add up all of the donations made in 2001, plus any donations made in any of the previous five years that have not been claimed before. Don't forget any donations you made through payroll deductions — these donations will be shown on your T4 slip. Generally, you can claim all or part of your total donations, up to the limit of 75 percent of your net income reported on line 236.
It is generally most beneficial to claim donations made by both spouses together on one tax return. This is because the first $200 of donations is only eligible for a 16-percent tax credit while any additional donations attract a 29-percent tax credit. That's quite a difference! Combining your donations will ensure you are only subject to the 16-percent limit on the first $200 once — not twice.
For the year a person dies and the year before that, this limit is 100 percent of the person's net income.
You do not have to claim on your 2001 return the donations you made in 2001. It may be more beneficial for you not to claim them for 2001, but to carry them forward to claim them on your return for one of the next five years.
This may be to your benefit, for example, if you already have sufficient non-refundable tax credits to completely eliminate your taxes payable. You should attach your official receipts to your paper return, showing either your name or your spouse's name. The Canada Customs and Revenue Agency (CCRA) will not accept as proof of payment cancelled cheques, credit card slips, pledge forms, or stubs. You do not have to attach receipts for amounts shown in box 46 of your T4 or T4A slips, in box 36 of your T3 slips, in box 34 of your T5013 slips, or on financial statements showing an amount a partnership allocated to you.
You can claim only amounts you gave to Canadian registered charities and other qualified donees. A registered charity will show its charity registration number on the receipt.
Cultural and ecological gifts
Unlike other donations, your claim for these types of gifts is not limited to a percentage of net income. You can choose the portion you want to claim in 2001, and carryforward any unused portion for up to five years.
Donations of cultural property enjoy an exemption from capital gains tax plus an eligibility for the charitable donations tax credit for individuals. That's an added tax advantage! Normally when a capital asset is directly donated to charity, a disposition occurs for tax purposes and the difference between the market value and cost base of the asset is taxed as a capital gain. Elimination of the capital gains tax greatly enhances the desirability of donating cultural property!
Donations of publicly traded securities
Capital gains on shares of publicly traded companies that were donated to charities any time after February 19, 1997, will be included in income at 50 percent of the normal one-half inclusion rule for capital gains — that is, 25 percent for donations made in 2001. Rather than selling the security and donating the cash, you should instead consider donating the security. This way, you'll pay less tax and still get the same donation credit.
This special treatment was originally going to be around only until the end of 2001. Fortunately, however, for those charitably minded persons wishing to gift property rather than cash, Finance Minister Paul Martin announced late in 2001 that this tax relief will be made permanent.
Donations to U.S. charities
Generally, donations to foreign charities are not eligible for a credit on your Canadian tax return. However, you can claim donations to U.S. charities, subject to a limitation of 75 percent of your U.S. source income, as long as the charitable organization is recognized as such by U.S. law and would have qualified in Canada if it had been a Canadian organization.
If you make a donation to a qualifying foreign university, the donation can be treated as if it were a Canadian donation; that is, you do not have to have U.S. source income in order to benefit from the donation. A qualified university is one where the student body normally includes students from Canada. A listing of these universities can be found in Schedule VIII of the Income Tax Regulations. Most large U.S. universities are found on the list.
Donations of RRSPs, RRIFs, and life insurance
Changes in the tax legislation in 2001 now make it possible to name a registered charity as the beneficiary of an RRSP, RRIF, or insurance policy and to obtain a donation tax credit for the donation in the year of death. When gifts of life insurance are made, it may also be possible in some circumstances to claim the insurance premiums as donation credits.
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