KB Poll: Donations Credit Could Use a Tax Boost

According to last month’s Knowledge Bureau Poll, the existing charitable donations tax credit could be more generous to taxpayers. So said 75% of the respondents, who also gave suggestions for improvement of the credit.  But the tax tail didn’t always wag the donation dog! Many respondents gave to charity for other reasons.

Here are some of the comments from September’s poll, in answer to the question: In your opinion, would Canadians be encouraged to share more with their communities if the charitable donations tax credit was further enhanced?

Brian agrees with the concept and makes a case for prize deductions: “I’m pretty sure that a larger credit for charitable donations would likely encourage more people to contribute. Also, some thought should be given to allowing some credit for a charity lottery ticket if the purchaser has not won a prize.”

From Ken, a simple change is preferred: “Why doesn’t CRA just allow a straight deduction from income? After all is said and done, you (the donor) have acted as a flow-through.”

Sandra agrees with more simplicity: “The challenge, often, with encouraging taxpayers to contribute is the fact that donations fall under NRTCs (Non-refundable Tax Credits) . . . one of the most misunderstood tax credits of all time.”

Gaetan gets specific: “You know what would be great? Have all of your charitable donations deducted from your income before calculating your net income . . . treat it just like an RRSP . . . then you’ll see a significant increase in charitable donations.”

Mitzi-Lynne likes the idea, but. . . “I do think that it would be better in many cases if the donation were treated as a deduction . . . [but] I don’t believe that the people who don’t give now will give if the tax break is improved.”

From Joan, a plea for tax recognition for low earners and foreign donations: While I agree with the other comments, I wanted to add that my clients who donate to charities would most likely do so with or without the tax deduction, but it would still be better if the deduction were improved and all-inclusive, even for people with all types and sizes of income. It is almost painful for this tax-writer to have to return/shred so many valid donation slips because the donor’s income was too low to deduct them. These generous people would ALL love to see that credit put to good use on another family member/associate. Further, CRA really needs to expand its list of qualified charities to include our neighbours to the south for sure, and also so many URGENT charities in the other countries, [perhaps] some kind of universal tax breaks regardless of their ‘residence’ particulars.” (Editor’s note: the 2015 federal budget announced that foreign charitable foundations could register as qualifying donees if they received a gift from the government of Canada for activities related to disaster relief or urgent humanitarian aid, or were carrying on activities in the national interest of Canada.)

Richard wants more of a tax break, especially for seniors: “What I would like to see is an improvement to how many seniors are carrying high amounts of donations which they cannot use because they lack sufficient taxable income to apply them against. I think they should be able to transfer that credit to a family member to get some benefit.”

Martin reflects on the different tax treatment between charitable and political giving: “People do use charitable donations as a way to reduce taxes. I agree with the commenters that the government should allow the value of furniture or significant donations of clothes or other items . . . not just cash donations. It’s sad to think that a gift to a political party is worth about three times more than a gift to a charity that helps people in need. A higher deduction may redirect some donations to those who really need it.”

Janet agrees: “Canadians are very generous people and give generously to their charities. I have often wondered why charitable donations don’t receive the same tax-preferred treatment that political donations do. It would be nice to see a level playing ground in this area.”

Diane feels the First Time Donor Super Tax Credit is misdirected: “I believe that an increased tax credit for charitable donations would increase the likelihood that some individuals would donate more to charities. The first time super credit does not encourage individuals to give to a charity; many of the people who would be eligible for this credit are not in that mind set in the first place . . . I believe the individuals who would be more likely to give more to charities if the tax credit was increased would be the ‘middle of the road givers’ who like to give some to charities but at the moment do not give a lot since there is not a high incentive to do so.”

Nilo like the idea of tax recognition in general: “I definitely am expecting many taxpayers like me will be encouraged to help out in our community because we know that donations made are going directly to communities we know are in NEED.”
Victor adds this, philosophically: “First, contrary to most sayings, ‘Charity does not start at home,’ rather, it starts in the ‘Heart.’ Its very nature is such. Second, those of us in tax practice sometimes see these slips, brought in by clients, who donated at their doors so that a child could be taken to baseball, hockey or other events. It clearly states that this ‘donation’ is not tax deductible unless you operate a business and to check with your tax advisor. This also is ‘true’ charity. The subject at hand, however, is government-funded charity. It, too, is valuable and beneficial to our communities. The ‘business of charity’ is, however, anathema to the reason it exists!”

Lyle sums it up nicely: “While all of the preceding comments have valid ideas and concepts, I can’t help but observe that true charity does not depend on a tax receipt.”

Sincere thanks to all who responded. Please give your opinion on this month’s poll: “In your opinion, is the new Canada Child Benefit better than the combo of UCCB, Child Tax Benefit and Family Tax Cut?”

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