Political Contributions: Top Ten Canadian Tax Tips

October 18, 2011 (Updated) - 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 $1,275 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 $525 (but see maximum).

The maximum credit is $650.

5. How To Calculate and Claim

On Line 409 of Schedule 1 , enter the total amount of your contribution. Using line 410 of 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 $1,275 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! (This program is being changed now by the federal government, but something similar may apply in your province.)

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

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