“It’s better to give than to receive” is probably a saying you’ve heard, but did you know that you can do both? For instance, donating to a charity can result in a significant tax reduction. The tax incentives offered by Canada for charitable contributions are actually among the best in the world. Here’s a way to benefit from them.
Donations earn tax deductions
If you donate to a registered charity, you will likely receive a receipt for a tax credit in the year that you made the donation. If you donate more than $200, you will really receive nearly half of that back in reduced taxes. You simply have to pay $100 for your donation as a result.
Get double tax savings
When you sell stocks, bonds, or other instruments that have appreciated in value since you bought them, you will be liable for capital gains tax. However, you can avoid the capital gains tax and get a donation tax credit that will help you pay off whatever income taxes you owe if you donate your shares to a registered charity instead.
Pledge now, save later
There are other ways to meaningfully support the organization or charities you love, even if you don’t have the extra cash to provide this year. Each has unique tax advantages.
- Include a charity in your will. Giving a little portion of your estate to a worthy cause could grow into a substantial gift. Additionally, your gift will assist reduce the taxes that your estate must pay.
- Use your RRSPs. Did you know that you can choose charitable organizations as RRSP beneficiaries? The taxes your estate would have to pay on this asset could be nearly offset by doing this.
A straightforward RRSP beneficiary form will be provided by your financial institution, which you can complete to designate all the individuals and/or registered organizations you would like to receive any remaining funds. Keep in mind that in Quebec, your will is the only way to designate a charity as an RRSP beneficiary. - Donate your life insurance. Donating all or a portion of a life insurance policy to a registered charity is another option. By choosing this option, you can lessen the tax burden your loved ones will bear while increasing your contribution and making a significant gift to a cause you support.
Learn more about big tax savings at: https://newscanada.com/en/Learn-how-to-give-back-and-get-back-140010
Reference: https://newscanada.com/
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