As the holiday season approaches, the year-round appeals for charitable donations which every Canadian receives will inevitably increase – and there’s no shortage of need, or of worthy causes which merit support, both domestically and internationally. Generally, those appeals are met, as Canadians have a well-deserved reputation for supporting charitable causes, through donations of both money and goods. Our tax system supports that generosity by providing both federal and provincial tax credits for qualifying donations made, and in all cases, in order to claim a credit for a donation in a particular tax year, that donation must be made by the end of that calendar year.
There is an additional reason, when planning charitable donations, to ensure that such donations are made by December 31. The credit provided by the federal government is a two-level credit, in which the percentage credit claimable increases with the amount of donation made. For federal tax purposes, the first $200 in donations is eligible for a non-refundable tax credit equal to 14.5% of the donation. (The 14.5% credit percentage is effective for 2025, and will decrease to 14.0% for 2026, as the result of a change in federal tax rates.) The credit for donations made during the year which exceed the $200 threshold is, however, calculated as 29% of the excess. Finally, where the taxpayer making the donation has taxable income (for 2025) over $253,414, charitable donations above the $200 threshold can receive a federal tax credit of 33%.
As a result of the two-level credit structure, the best tax result is obtained when donations made before the end of the calendar year are maximized. For example, a qualifying charitable donation of $600 made in December 2025 will receive a federal credit of $145.00 ($200 times 14.5% plus $400 times 29%). If the same amount is donated, but the donation is split equally between December 2025 and January 2026, meaning that a $300 donation is made in each year, the total credit claimable in 2025 will be $58.00 and the total credit claimable in 2026 will be $57.00, for a total federal credit of $115.00. As well, the credit for the donation made in 2026 cannot be claimed until the 2026 tax return is filed in the spring of 2027. And, of course, the larger the donation made in any one calendar year, the greater the proportion of that donation which will receive credit at the 29% level rather than the 14.5% level.
It’s also possible to carry forward, for up to five years, donations which were made in a particular tax year, but not claimed on the tax return for that year. So, if donations made in 2025 don’t reach the $200 level, it’s usually worth holding off on claiming the donation and carrying it forward to the next year in which total donations, including carryforwards, are over that threshold. Of course, this also means that donations made but not claimed in any of the 2020, 2021, 2022, 2023, or 2024 tax years can be carried forward and added to the total donations made in 2025, and the total then claimed on the 2025 tax return. There is a ceiling on the amount of donations which can be claimed in any one calendar year, but that ceiling is a very generous one – a taxpayer can claim any qualifying current or carryforward donations up to a limit of three quarters of the taxpayer’s net income for the year.
When claiming charitable donations, it’s possible to combine donations made by oneself and one’s spouse and claim them on one spouse’s return. Generally it makes sense to do so, in order to maximize the total amount of donations claimed by a single individual, and therefore the amount of donations which can qualify for the higher tax credit rate(s). There is one caveat, however: the charitable donation tax credit is a non-refundable credit, meaning that it can reduce taxes payable, but cannot create or increase a refund. In deciding who should claim the charitable donation tax credit for total family donations, it's necessary to make sure that that person has tax payable of at least the amount of the charitable donations tax credit to be claimed.
Regardless of when a charitable donation is made or who claims it for tax purposes, would-be donors are well advised to carefully consider the charities to which they donate. It’s an unfortunate reality that while most organizations seeking charitable donations are legitimate, the charitable sector attracts perhaps more than its share of scammers and fraudsters who exploit the willingness of Canadians to help, but whose only aim is to personally profit from the generosity of others. Such charitable donation frauds arise most often whenever there are Canadian or world events like wars or natural disasters and people are particularly motivated to help. After every such event a flurry of “instant” charities spring to life, seeking donations which may or may not actually be used as represented. And, while some of the individuals or organizations who seek to raise funds in response to particular events may actually be both legitimate and well intentioned, the reality is that they are unlikely to have either the infrastructure or the experience needed to actually carry out their stated or intended aims. And others, of course, are simply scammers seeking to capitalize on the desire of Canadians to help in response to disaster or other need.
There are two ways to ensure that one’s charitable dollar is actually utilized as intended. The first is to donate only to large international charities which have been in existence for some time and who have both expertise and experience in utilizing charitable donations in an efficient and effective way. However, where a donor is deciding whether to make a donation to a newer or less well-known charity, it’s relatively easy to find information about that charity on the website of the Canada Revenue Agency.
Only donations made to registered charities can be claimed for purposes of the charitable donations tax credit. The Canada Revenue Agency maintains on its website a listing of all such registered charities, and that listing (which is searchable) can be found at https://apps.cra-arc.gc.ca/ebci/hacc/srch/pub/dsplyBscSrch?request_locale=en.
That webpage will also provide information on the charity’s activities, including the date on which it became a registered charity. Through that site (which is updated each business day by the Canada Revenue Agency), it’s also possible to obtain information on the countries in which the charity operates, the nature of its charitable activities, and details of its revenues and expenditures, all of which can help a would-be donor to determine whether or not to make a donation.
Detailed information on calculating and claiming the charitable donation tax credit is available on the same website at Giving to charity: Information for donors - Canada.ca.