General rules
The charitable donations tax credit applies to your gifts made to a “qualified donee”, which includes registered charities, universities and colleges, and federal, provincial and municipal governments (as well as certain other donees, including registered journalism organizations as of this year). The federal credit equals the total of:
- 15% of the first $200 of donations made in the year;
- 33% of additional donations, to the extent you are in the top tax bracket by having taxable income exceeding $214,368, and
- 29% on donations over $200 that don't qualify for the 33% rate above.
Example
In 2020, you make $20,000 of charitable donations. Your taxable income for the year is $224,368.
Your federal credit is:
- 15% x $200; plus
- 33% x $10,000 (the excess of your taxable income over $214,368); plus
- 29% x the remaining $9,800 of donations.
In addition, you will receive a provincial tax credit. The amount of the provincial credit will vary, depending on your province of residence.
The donation can be claimed in 2020 or carried forward and claimed for any of the next five years.
Rules upon death: Donations by deceased
When a person dies, donations made in the year of death qualify for the credit for the year of death or the immediately preceding year. The deceased person can also claim the credit for the year of death for donations made by the person’s spouse or common-law partner in the person’s year of death, or for donations made in the previous five years by the person or the spouse or common-law
partner to the extent they have not been otherwise claimed.
However, a donation made by the person’s spouse or common-law partner in the year of death cannot be claimed for the taxation year immediately preceding death.
Rules upon death: Donations by will or estate of deceased
A donation made by a deceased person’s will or estate, or by a designation under the person’s life insurance policy, RRSP, RRIF or TFSA, is deemed to be a donation made by the person’s estate at the time the donated property is transferred to the qualified donee.
However, the donation can generally qualify for the donations tax credit for either the deceased person or their estate (which files a separate return as a trust for years after death, until the estate is wound up).
If the donation is made while the estate is a graduated rate estate (“GRE”), the deceased person can claim the credit for the year of death or the immediately preceding year. In most cases, the deceased’s estate can qualify as a GRE for up to 36 months after the person’s death.
Furthermore, donations made by the estate within 60 months after the death qualify for the deceased’s credit for the year of death or the immediately preceding year, if the estate would qualify as a GRE but for the fact that more than 36 months have passed since the individual’s death (certain conditions apply). If the donation is made after the 60-month period, the deceased cannot claim the credit.
Alternatively, the GRE can claim the credit for the year that the donation is made or a preceding year of the estate. Additionally, the estate, whether it is a GRE or not, can claim the credit for the year of the donation or any of the five following years.
The credit can be shared or allocated between the deceased person and the GRE for these purposes, but the credit cannot be doubled up. The person’s surviving spouse or common-law partner cannot claim the credit for a gift made through the deceased's will or otherwise by the GRE.
Example
John dies in 2020. John's estate qualifies as a GRE. In 2022, the GRE makes a $50,000 donation to a charity.
Options:
The credit for $50,000 of donations can be claimed for John's year of death (i.e. on his terminal return) or the immediately preceding year, or can be split between the two years.
Or the credit can be claimed by the John's estate on its estate (trust) tax return for 2020, 2021, or 2022, or in any of the following five years.
Alternatively, the credit can be split amongst the various options, but the total donations claimed cannot exceed $50,000.
