Strategic donations maximize both gifts and tax breaks. explains how to get the most bang for your charitable bucks
made to a registered charity by Dec. 31, 2020 or any unclaimed donations from the previous five years. Remember, this is a non-refundable tax credit, so you can only use it to reduce the tax you owe. (Hint: Using the CRA’s charity tax calculator will help determine whether it makes sense to claim your spouse or common-law partner’s donations.)
ital gains tax. “One client originally bought stocks for $10,000 and over the years its value appreciated to $50,000. Had he sold the stock at market value, he would have triggered capital gains tax on the $40,000 appreciation. However, by giving the stock ‘in kind’ to a charity, he avoided capital gains and received a tax receipt for the full $50,000. This saved him about $35,000 in taxes.”
This is a strategy well suited to highincome donors, where they name a charity as the beneficiary of an RRSP or RRIF in order to eliminate tax owing on the registered money due upon their death.
Halpern, an expert in the use of life insurance for philanthropy, explains how this strategy worked for a client: “A retired accountant in his mid-60s had a $500,000 life insurance policy he wished to donate to his alma mater. An independent actuary valued the policy at $290,000, which he donated to the university. In exchange, he received a charitable donation receipt for the entire $290,000 and saved himself $145,000 in taxes.”