Political
Contributions:
Top Ten Canadian Tax Tips
August 19, 2008 - David McConkey
1.
New Rules
Recent changes to the Canada Elections Act and the Income Tax
Act provide limits and tax credits for contributions
to political parties. See Elections
Canada and Canada
Revenue
Agency for detailed information.
2.
Where You Can Donate
You can donate to registered political parties, nomination contests,
leadership contestants, and independent candidates. Obtain official
receipts. (Questions? Check with Elections Canada.)
If paper filing your income tax return, you need to include your
receipts. If electronically filing, save your receipts in case CRA asks
for them later.
Donations made by one spouse / common-law partner can be claimed by
either one.
3. Watch
Your Limits
To encourage participation by many ordinary people, businesses and
unions can no longer make political donations to federal political
parties. Only individuals can make these donations, and only to a
maximum of $1,100 each year.
4. Generous Tax Credit
When you file your income tax return, you can take advantage of
a tax credit. The credit is much more generous than the tax
credit for charitable
donations. The credit is:
- 75% of your contribution up to $400,
- 50% of the next $350, and
- 33-1/3% of the last $350.
The maximum credit is $591.67. The amount will be indexed to inflation,
up to a maximum credit of $650.
5.
How To Calculate and Claim
On Line 409 of
Schedule
1, enter the total amount of your contribution. Using the
Federal
Worksheet, calculate your tax credit, and then enter on Line
410 of Schedule 1.
6.
Work Together As Spouses
Donations made by one spouse / common-law partner can be claimed by
either one. So, spouses can work together to increase their credit. For
example, if a couple has donated a total of $800, split the amount into
two $400 donations to take advantage of the higher credit for donations
up to $400. Also, if one spouse has a lower income and is not paying
taxes (and so would not be able to claim th credit), claim the donation
on the higher income spouse.
As well, split up donations so as not to exceed the $1,100 annual
maximum amount.
7.
Time Your Donations
You can get a bigger "bang for your buck" by contributing later in
the year. Make a $400 donation in December, and you will receive $300
of it back just a few months later at income tax time.
Spread out larger donations over the years. A $600 donation will reap a
larger credit spread out over two years (or two spouses in one year, if
applicable).
8.
Don't Forget To Vote
Every registered political party that gets at least 2% of the votes
nationally receives $1.75 per vote per year from the federal
government. It may not sound like much, but it adds up to millions. So,
every vote supports your political choice financially into the future.
An additional reason to vote!
9. Check
Your Province
Provinces have different rules for contributions to provincial
political
parties. Check your applicable province in CRA's
General
Tax and Benefit Guide.
10.
Special Situations
If you have partnership income and receive a T5003, T5013, or T5013A
slip, then see
Charitable
Donations, Gifts, and Political Contributions - Schedule 2
Also check out Charitable Donations: Top
Ten Tax Tips
