Budget will reward your generosity as new giver

If you’ve never made a charitable donation — or you’ve been lax in your generosity in the past five years — Ottawa will give you a super tax break on your donation.

The new federal budget introduced the First-Time Donor’s Super Credit, which is available until 2017. It gives new donors an extra one-time 25% tax credit for cash donations up to a maximum of $1,000.

“It’s to kick-start a lifetime of charitable giving,” said Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth Management. “This is to get particularly young people who aren’t giving as much to charity to think about charitable giving for the very first time and to inspire them with very generous credits.”

The standard tax credit for a donation is 15% of the first $200 and 29% for amounts above that. The new credit gives newbies a 40% credit for the first $200 and 54% for amounts between $200 and $1,000.

A first-time donor (someone who has not made any donations since 2007) who gives $500 to charity will now receive a $285 tax credit, versus a $160 tax credit, according to Ativa Interactive Corporation’s online financial calculator.

“I would wait to accumulate $1,000,” Mr. Golombek added. “It’s a one-shot deal.”

You are allowed to carry forward your donations for up to five years. “Someone who doesn’t necessarily have the cash flow to make the donation might want to wait to claim the credit and carry forward her donations,” said Allison Marshall, vice-president, high net worth planning services, RBC Wealth Management.

“I think this applies equally to young and old Canadians who may not be currently making donations to charities.”

In 2010, 84% of Canadians over the age of 15 made a financial donation, for a total of $10.6-billion, according to Statistics Canada. The average annual donation is $446; those between the ages of 15 and 24 gave an average of $143.

While first-time donor couples can share the super credit in a particular year, the total amount claimed can’t exceed the maximum allowable credit. The super credit is available for donations made on or after March 21, 2013.

“The base of charitable giving in this country needs to be expanded. When we look at the trends, fewer people are using the tax credit than they did previously to support the charity of their choice,” said Michelle Gauthier, vicepresident of public policy and community engagement at the charity watchdog Imagine Canada.

“Getting first-time donors on board is often the most costly and challenging piece of the equation. If we engage young donors, we can create a culture of giving.”