# POLITICAL or CHARITABLE



## AMABILE (Apr 3, 2009)

For an Ontario resident, which one is the most effective in reducing taxes
a political or charitable donation?


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## Jimmy (May 19, 2017)

First they are non refundable tax credits which means you have to have tax payable to claim them. (ie if you owe no tax you will get nothing)

The political donation is better. 75% on the first $400, 50% on $400 to $750 etc federal tax . Contribution limits is $1625









TaxTips.ca - Political Contributions Tax Credit - Federal and Provincial


TaxTips.ca - Political contribution tax credits; Small political contributions are encouraged by the high tax credit rate on the first part of the contribution.




www.taxtips.ca





The charitable donation tax credit is 15% on first $200, 29% on rest ( federal credit) but you can donate up to 75% of your net income.

So use the politcal tax credit first. Then if you have $ left over, the charitable credit.









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## AMABILE (Apr 3, 2009)

Jimmy said:


> First they are non refundable tax credits which means you have to have tax payable to claim them. (ie if you owe no tax you will get nothing)
> 
> The political donation is better. 75% on the first $400, 50% on $400 to $750 etc federal tax . Contribution limits is $1275
> 
> ...


--


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## AMABILE (Apr 3, 2009)

Thanks Jimmy - are there any restrictions ?
can I donate to any municipal , provincial , or federal government at any time ?


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## Eclectic12 (Oct 20, 2010)

I believe one is donating to political parties .... not the government.

There used to be a spot on the tax return to give money to the gov't but I don't think there's any tax credit, refundable or otherwise.


Cheers


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## Joe Black (Aug 3, 2015)

Just to be clear, charitable donations are not a way to end up with more money in your pocket. E.g. if you give $100 donation which gives you tax credit of $30, you are still $70 poorer than if you gave nothing at all.


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## Jimmy (May 19, 2017)

Sorry. I put (federal) to indicate that was just the federal tax credit ( as you also get an additional provincial tax credit) just for simplicity.

But as Eclectic said , and you are likely refering to, the donations can be to federal or provincial political parties or leaders,


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## MrMatt (Dec 21, 2011)

Doesn't matter, you're still out of pocket. 
Donate where you think your money is going to do the most good.


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## bgc_fan (Apr 5, 2009)

Joe Black said:


> Just to be clear, charitable donations are not a way to end up with more money in your pocket. E.g. if you give $100 donation which gives you tax credit of $30, you are still $70 poorer than if you gave nothing at all.


A slight tangent. That always bothered me about people in the US justifying carrying a mortgage, as a tax-planning strategy. Yes, the interest is tax deductible, but you are still paying more in interest than you would save in taxes. Although, that's an assumption as I've never gone through the process of filing US taxes.


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## AMABILE (Apr 3, 2009)

There are separate tax credits for federal and provincial or territorial political contributions. There is a federal tax credit for federal political contributions, and there is a provincial/territorial tax credit for provincial/territorial political contributions. All of the tax credits are non-refundable tax credits, except for Ontario, which provides a refundable tax credit for provincial/territorial political contributions.

To get the credit, you need to:

be an Ontario resident on December 31 of the tax year, and
have made a contribution during that year to a candidate in an Ontario provincial election, or to a registered Ontario political party, registered constituency association or registered leadership contestant. You cannot claim this credit for contributions to municipal or federal elections.


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## AMABILE (Apr 3, 2009)

So it's best to contribute to an Ontario political entity
for a refundable tax credit


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## sags (May 15, 2010)

Political contributions as of Jan 1, 2020.

You can donate $1625 at the Federal level plus $1625 at the riding level for a total of $3250.

The maximum tax credit for Federal political contributions is $650.









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secure.liberal.ca


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## Joe Black (Aug 3, 2015)

AMABILE said:


> So it's best to contribute to an Ontario political entity
> for a refundable tax credit


I'm really not understanding what your goal is - why do you want to know the charitable contribution that gives the best refundable tax credit? If this is purely a tax reduction strategy, $0 charitable is always the best. The only reason to make a charitable donation is if you want to support the particular cause. It seems like you are choosing a "cause" simply for it's relative tax advantage? If so, what are you getting out of it?


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## AMABILE (Apr 3, 2009)

^^^^^^^^^ Yes, exactly- I'm looking for any tax advantage to reduce
my huge capital gains ( no capital losses to claim ) this year.


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## Jimmy (May 19, 2017)

If you have investments in your cash account that have lost $, you could sell them for a capital loss and apply it against your capital gain too.


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## bgc_fan (Apr 5, 2009)

AMABILE said:


> ^^^^^^^^^ Yes, exactly- I'm looking for any tax advantage to reduce
> my huge capital gains ( no capital losses to claim ) this year.


You realize that the total cost of the donation is more than the tax payable right?


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## Retired Peasant (Apr 22, 2013)

You could have donated a portion of the shares in-kind to charity and sold a portion of shares. No capital gains on the donated shares, and the donation credit could offset the cap gains on the rest of the shares. You could even calculate what % to donate vs sell to result in no tax. There's a calculator here


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## Eclectic12 (Oct 20, 2010)

The other think to keep in mind is that the capital gain isn't final until three years have passed. Capital losses, if they can't be used in the current tax year can be carried back three years.








TaxTips.ca - Capital losses, losses carried forward & back, superficial losses


TaxTips.ca - Treatment of capital losses for tax purposes, inclusion rates for capital gains and losses, carrying losses forward and back, superficial losses.




www.taxtips.ca





Cheers


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