Making a charitable donation can leave more money in your pocket as a result of the 2013 Budget. For first-time donors, the 2013 Budget introduced a temporary supplement to the existing non-refundable tax credit for charitable donations by individuals. The new credit can be claimed once from the 2013 to 2017 taxation years.
Currently, the non-refundable charitable donations tax credit (CDTC) is calculated as the total of:
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the lowest income tax rate (15% for 2013) multiplied by the first $200 of charitable donations claimed by an individual; and
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the highest income tax rate (29% for 2013) multiplied by the portion of the donations claimed by the individual that exceeds $200.
Starting in the 2013 taxation year, the 2013 Budget introduced a temporary non-refundable First-Time Donor’s Super Credit (FDSC) that will supplement the CDTC for individuals. This new credit effectively adds 25% to the rates used in the calculation of the CDTC for up to $1,000 of monetary donations. As a result, a first-time donor will be allowed a 40% federal credit for donations of $200 or less, and a 54% federal credit for the portion of donations over $200 but not exceeding $1,000.
First-time donor FDSC and CDTC
Example 1: An eligible first-time donor claims $500 of charitable donations in 2013. All of the donations are donations of money. The first-time donor’s FDSC and CDTC would be calculated as follows:
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First $200 of charitable donations claimed: $200 x 15% = $30
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Charitable donations claimed in excess of $200: $300 x 29% = $87
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First-Time Donor’s Super Credit: $500 x 25% = $125
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Total FDSC and CDTC: $242
As the FDSC is a temporary credit, you can only claim it once from the 2013 to 2017 taxation years.
For the 2013 taxation year, an individual will be considered a first-time donor if neither the individual nor the individual’s spouse or common-law partner has claimed the CDTC in any of the five preceding tax years.
As a first-time donor, the FDSC, along with the corresponding CDTC, may be shared by you and your spouse or common-law partner in a particular taxation year. However, the total amount of donations that may be claimed for the FDSC by both individuals cannot exceed $1,000. When it cannot be agreed on the amount of the credit that each of you will claim, the CRA may apportion the credit.
Only donations of money that are made after March 20, 2013 will qualify for the FDSC. For taxation years from 2013 to 2017, a new line will be added to Schedule 9, Donations and Gifts to identify the eligible portion of the charitable donations that you have claimed that are donations of money.
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