Use it Before It Disappears in 2018: The First-Time Donor’s Super Credit

An important tax break is disappearing after 2017: The First-Time Donor’s Super Credit. This opportunity is of particular interest to advisors who work with higher-net-worth families and their adult children. In fact, discussing it as part of mid-year tax plan may make good sense for these taxpayers, especially if they wish to be strategic about their giving.

The Super Credit was first introduced in 2013, and can be claimed in cases where neither the taxpayer nor their spouse claimed a donation after 2007. This amount can also be shared between spouses. It has allowed for an additional 25% federal tax credit to first-time donors who make cash donations up to $1,000. Unfortunately, unclaimed donations from years before 2013 will not qualify.

The value of the donation credit increases with donations over $200. There is also additional value for high-income earners who make more than $202,800 in 2017. Therefore, some additional dollars can be saved by combining donations made on one return, in the case of spouses. Also, be aware that only one claim can be made for the Super Credit per couple. It will be important to look back at prior filed tax returns to see if there is any carry forward of smaller donations of the previous years as part of your charitable giving review session. Recall that donations to foreign disaster-relief organizations are considered to be “qualified donees” for the credit (since 2013).

Financial advisors working with their clients on mid-year or year-end donation planning can also check with a DFA-Tax Services Specialist to do “what if” scenarios that calculate the maximum tax advantages with this important last-time opportunity. Or try Knowledge Bureau’s Income Tax Estimator or the Donations Savings Calculator to determine the impact of philanthropy on your clients’ bigger tax picture in 2017.

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading educator in the tax and financial services, and author of 52 books on family tax preparation and planning.

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