Evelyn Jacks: Charitable giving counts

I like to donate to my favorite causes in December. It makes me feel great because it benefits others. The fact it lessens my tax liability is but an added benefit.

Charitable giving is a tax-efficient way to contribute to causes I believe in. And, as an investor, I can multiply the returns on my winnings, publicly traded securities in my non-registered investment accounts by transferring those shares directly to my favorite charity. That way it’s possible to avoid taxes on the accrued gains in those securities — and get a charitable donation receipt, too.

According to data from Statistics Canada’s Canada Survey of Giving, Volunteering and Participating, Canadians gave $10.6 billion to charities in 2010. Based on responses from more than 15,000 people, each donor gave an average amount of $446. Those who attended religious services or meetings at least once a week gave more: $1,004 on average.

Demographically, older people gave more. Those aged 75 and older made average donations of $725, compared to $431 for those aged 35 to 44. Geographically, people from British Columbia, Alberta and Saskatchewan donated the highest amounts, while those in Quebec and Newfoundland and Labrador gave the lowest average amounts.

According to the study, tax planning to get the charitable donation tax credit was most important to donors in Saskatchewan, Manitoba and Prince Edward Island.

So, now is a good time to do your tax planning and, in particular, to coordinate with your spouse regarding donations made at work and at the door. The charitable donation credit is two-tiered: when you calculate your charitable donation credit on your tax return, the maximum credit occurs when donations are more than $200 in the tax year. To get a better family tax break, make sure at least one of you exceeds the $200 threshold.

Calculating your tax credit can be somewhat complex, however. Try calculating the real dollar value of your donations using a free trial of the Knowledge Bureau's Donations Savings Calculator. Then, file tax returns to the best benefit of the family as a whole. If your gifting exceeds $200, you’ll get a better tax break.

It’s Your Money.  Your Life.  Give before yearend to make a difference to your community and on your 2012 tax return. You will also be able to reduce your quarterly tax instalment remittances in 2013, and possibly your withholding taxes at source. If you are gifting securities, do so in time for your transaction to clear before the Christmas holidays. Check with your investment advisor now.

Next time:  Understanding the real dollar value of your charitable donation.

Evelyn Jacks is the president of Knowledge Bureau and the best-selling author of Essential Tax Facts and Jacks on Tax. This is a great time to enroll in a certificate tax course; call 1-866-953-4769. Tuition fees qualify for a tax credit on your 2012 tax return.