The First-Time Donor’s Super Credit is a limited opportunity to receive a higher tax credit for donations up to $1,000.
Ron Sciannella, CPA, CA, CMA, LPA, CBV & Partner at Millards Chartered Professional Accountants explains that the First-Time Donor’s Super Credit expires this year and that Canadian taxpayers shouldn’t miss out it if they qualify.
“The FDSC is especially beneficial as the credit is added to the federal and provincial donations tax credits. Unfortunately, this is the last year that you can claim the federal First-Time Donor’s Super Credit so now is the time to review your charitable donations.”
Cash donations up to $200 in a year combined with the 25 percent FDSC is worth 40 percent of the donation amount.
“For total cash donations between $200 and $1,000 this year, the 29 percent federal donation credit in addition to the 25 percent First-Time Donor’s Super Credit results in a federal credit of 54 percent of the donation amount.”
The Canadian government introduced the credit as a temporary supplement in 2013 to encourage additional non-refundable tax credits for first-time donors.
While the maximum contribution that qualifies for the FDSC is $1,000, the potential tax credit is substantial.
“If you add your provincial donation credits, your total tax credits could be as much as 70 percent. Your actual cost to donate $1,000 could be as low as $300 if you take advantage of the FDSC.”
How Do You Know If You Qualify?
“To qualify as a first-time donor, you or your partner must not have claimed the charitable donations tax credit during the last five years. Donations must have been made after March 20, 2013 and only donations of cash qualify for the FDSC credit.”
The First-Time Donor’s Super Credit can be split between couples but only if the total does not exceed the $1,000 limit.
Sciannella recommends holding onto to smaller donations that don’t reach the $200 threshold.
“There are reasons to consider holding on to charitable donations without claiming them in the current year. Combining multiple years donations in a single year will get you a larger credit and could put you over the $200 threshold. Keep in mind that unclaimed donations can only go back five years so don’t miss your window.”
The First-Time Donor’s Super Credit is a non-refundable credit. It only reduces tax amounts owed.
“Obviously you do not want to claim this super credit if you don’t owe any tax”
Do you have a question about the First-Time Donor’s Super Credit? Millards has 7 locations across Southern Ontario to serve it’s growing list of clients. Contact us today and let us guide you confidently through the complexities of finance.
Ron Sciannella’s practice areas include business valuation services, litigation support, accounting, auditing and tax services for small and medium-sized businesses.
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