Federal government introduces first-time donor super credit

The federal government is encouraging new donors to make a charitable gift, by offering a temporary tax incentive. First-time donors will be eligible to receive an additional 25% tax credit, for any charitable gifts made before 2018.

Currently, the Tax Act allows any donor to claim a non-refundable tax credit of 15% for the first $200 of charitable donations made per year, and 29% for all donations made over that threshold.

The new tax incentive, named the “First-time Donors Super Credit” (“FDSC”), will combine these incentives, and allow the following for first-time charitable donors 40% on donations $200 or less, and 54% on donations over $200 and up to $1,000.

Although the incentive is intended to motivate young Canadians to become charitable donors, the FDSC is available to Canadians of all ages, who have not claimed a charitable tax credit since 2007.

The temporary incentive will be applied to gifts made on or after March 21, 2013 up to December 31, 2017. Only cash donations will qualify for the tax incentive, not gifts in kind. It is also only available to individuals, or gifts made by their spouse or common-law partner. Corporations are not eligible to receive the FDSC.

The federal government announced the FDSC in this week’s budget, and hopes that the new incentive will help enhance the charitable sector by increasing the current donor base.

For more information, visit the Government of Canada website.

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