Other Qualified Donees
A “qualified donee,” for the purposes of the Income Tax Act, is a organization to which a gift may be made by a donor, and in respect of which an official donation tax receipt may be issued for the purposes of allowing the donor to claim a deduction or a tax credit. While all registered Canadian charities are “qualified donees,” so too are, among others, registered Canadian amateur athletic associations, municipalities, certain prescribed universities outside of Canada and a list of charitable organizations outside of Canada that have received a gift from the federal Crown.
By consolidating this information on its website, the Charities Directorate has made it easier for prospective donors to determine whether they stand to receive a charitable tax receipt prior to making a donation to an organization. It should be noted that the list of prescribed colleges and universities outside of Canada is lengthy and includes a large number of institutions located across the United States and the United Kingdom. A more limited list of prescribed colleges and universities is provided for other countries. Similarly, there is a limited list of charities to which the federal Crown has made a donation. These include, amongst others, the Aga Khan Foundation in Switzerland, the Foundation for Canadian Studies in the United Kingdom, the William J. Clinton Foundation in the United States and the British Rhodes Trust Public Purposes Fund.
It is highly recommended that, before deciding to give to a foreign academic institution or other qualified donee, donors carefully consult the list of “other qualified donees” to determine whether they will be able to claim a deduction or charitable tax credit in respect of the donation that they have made.
Donation Credit Calculator
Individuals who make donations to qualified donees are entitled to charitable tax credits in respect of the eligible amount of their donations. The new “donation credit calculator” permits donors to determine the amount of credit that they stand to receive, depending on the total value of the gift that they intend to or have made to a qualified donee and their province of residence. Donors will receive an overall tax credit that is the sum of the federal and provincial tax credits applicable to each donation that they make to a qualified donee. For example, an Ontario resident who made a gift of $1,000.00 to a registered Canadian charity during the 2011 taxation year will receive a federal tax credit of $262.00 and an Ontario tax credit of $99.38, for a combined total tax credit of $361.38, assuming that the donor retains no benefit or advantage whatsoever in respect of the gift.
Given its usefulness to prospective donors, charities may want to consider including a link to the new “donation credit calculator” on their websites.