Charitable Donation Tax Credit Calculator: First Time Donor’s Super Credit

 

For first-time donors, the budget proposes to introduce 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.

  

Q1. How is the existing non-refundable tax credit for charitable donations calculated?

A1. Currently, the non-refundable charitable donations tax credit (CDTC) is calculated as the total of:

  • the lowest income tax rate (15% for 2013) multiplied by the first $200 of charitable donations claimed by an individual; and
  • the highest income tax rate (29% for 2013) multiplied by the portion of the donations claimed by the individual that exceeds $200. 

 

Q2. What is the new First-Time Donor’s Super Credit (FDSC)?

A2. Starting in the 2013 taxation year, the budget proposes to introduce a temporary non-refundable 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.

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:

 

First $200 of charitable donations claimed: $200 x 15% = $30
Charitable donations claimed in excess of $200: $300 x 29% = $87
First-Time Donor’s Super Credit: $500 x 25% = $125
Total FDSC and CDTC: $242

 

Example 2: An eligible first-time donor claims $700 of charitable donations in 2013. Only $300 of the donations are donations of money. The first-time donor’s FDSC and CDTC would be calculated as follows:

 

First $200 of charitable donations claimed: $200 x 15% = $30
Charitable donations claimed in excess of $200: $500 x 29% = $145
First-Time Donor’s Super Credit: $300 x 25% = $75
Total FDSC and CDTC: $250

 

Q3. When can I claim the FDSC?

A3. As the FDSC is a temporary credit, you can only claim it once from the 2013 to 2017 taxation years.

 

 

Q4. Who is considered a first-time donor?

A4. 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.

 

Q5. Can both my spouse or common-law partner and I claim the FDSC?

A5. 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. 

 

Q6. Do all of my donations qualify for the FDSC?

A6. No. 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.

 

Q7. Where can I get more information about the FDSC?

A7. The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its Web site often. All new forms, policies, and guidelines will be posted as they become available.

In the meantime, please see the Department of Finance Canada’s Budget 2013 documents for details.

 


Source: Canada Revenue Agency 2013

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