Good news for the good hearted CHARITABLE DONATION TAX CREDIT SET TO INCREASE LATER THIS YEAR
BY GEOFF KIRBYSON
Y ou could end up paying a little less tax after donating to charity this year, thanks for the most recent federal budget. The charitable donation tax credit for individuals has been increased from 50 per cent to 80 per cent when calculating the alternative minimum tax (AMT), which could reduce your AMT tax. The proposed changes to the AMT calculation — which were announced in April but have yet to become law —
were designed to address concerns from charities that the revised AMT would discourage Canadians from donating large amounts. The AMT is an alternative method to calculate a minimum amount of tax you owe in Canada. It often applies when you have claimed a preferential tax deduction such as the capital gains deduction or have preferential tax rates due to donation tax credits or dividend tax credits. The most tax-effective way to make a charitable contribution,
according to Yves Lagasse, a Winnipeg-based tax partner at Craig Ross LLP, is to donate stock in a publicly-traded company, because the capital gain is taxed at a zero per cent rate. “Stock is a very good thing to donate because of the tax rate plus you get a full donation tax credit on the other side. It’s a good way of not paying the gain at the two-thirds rate,” he says. The charitable limits remain the same — 75 per cent of net income
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Manitoba
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