Political Contributions: Top Ten Canadian Tax Tips

March, 2024  (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. (Also check with the appropriate agency in your province for provincial contributions.)

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 and/or with the appropriate agency in your province.)

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 $1,700 per year (in 2023). (This increases by $25 in each subsequent 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 federal political tax 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 40900 of the Income Tax Return, enter the total amount of your contributions. A tax preparation program will then calculate your credit. If calculating manually, using Line 41000 of the Worksheet for the Return, calculate your tax credit, and then enter on Line 41000 of the Income Tax Return. 

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 the credit), claim the donation on the higher income spouse.

7.  Time Your Donations

You can get a bigger "bang for your buck" by contributing later in the year. Make a $400 contribution in December, and you will receive $300 of your contribution back just a few months later at income tax time.

Spread out larger donations over the years. A $600 contribution will reap a larger credit spread out over two years (or two spouses in one year, if applicable). Also, keep in mind that the maximum contribution you can claim a federal credit for is $1,275 in any one year.

8.  Don't Forget To Vote

Participating during elections is important. Federal political campaigns can receive significant government reimbursement of their election expenses, so the impact of your contribution during an election can be augmented.

(The former program of providing a per-vote subsidy has been phased out at the federal level, but something similar may apply in your province.)

9.  Check Your Province

Provinces have different rules for tax credits for contributions to provincial political parties. Check your applicable province in CRA's General Tax and Benefit Guide.

10.  Consider the Larger Picture - See Also:

Effective Altruism Poised to Make Major Impact

Charitable Donations: Top Ten Canadian Tax Tips

Donating is a Great Way to Feel Connected to Your Community 

Tax Time Offers Folks a Chance to Reflect

Donation Laws Give Citizens More Clout

Ways to Leave a Legacy