CRA publishes additional information on “First-Time Donor’s Super Credit”

April 03, 2013 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law

In the 2013 Federal Budget there was a small tax incentive for first time charitable donors called the “First-Time Donor’s Super Credit”.  CRA has provided additional information on the administration of this small tax incentive for giving.

Here is a page from CRA with Questions and Answers:


http://www.cra-arc.gc.ca/gncy/bdgt/2013/qa01-eng.html

“First-Time Donor’s Super Credit  

Q1. How is the existing non-refundable tax credit for charitable donations calculated?
Q2. What is the new First-Time Donor’s Super Credit (FDSC)?
Q3. When can I claim the FDSC?
Q4. Who is considered a first-time donor?
Q5. Can both my spouse or common-law partner and I claim the FDSC?
Q6. Do all of my donations qualify for the FDSC?
Q7. Where can I get more information about the FDSC?

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For first-time donors, the budget proposes to introduce a temporary supplement to the existing non-refundable tax credit for charitable donations by individuals. The new credit can be claimed once from the 2013 to 2017 taxation years.

Q1. How is the existing non-refundable tax credit for charitable donations calculated?

A1. Currently, the non-refundable charitable donations tax credit (CDTC) is calculated as the total of:
•the lowest income tax rate (15% for 2013) multiplied by the first $200 of charitable donations claimed by an individual; and
•the highest income tax rate (29% for 2013) multiplied by the portion of the donations claimed by the individual that exceeds $200.

Q2. What is the new First-Time Donor’s Super Credit (FDSC)?

A.2. Starting in the 2013 taxation year, the budget proposes to introduce a temporary non-refundable FDSC that will supplement the CDTC for individuals. This new credit effectively adds 25% to the rates used in the calculation of the CDTC for up to $1,000 of monetary donations. As a result, a first-time donor will be allowed a 40% federal credit for donations of $200 or less, and a 54% federal credit for the portion of donations over $200 but not exceeding $1,000.

Example 1: An eligible first-time donor claims $500 of charitable donations in 2013. All of the donations are donations of money. The first-time donor’s FDSC and CDTC would be calculated as follows:


First $200 of charitable donations claimed: $200 x 15% = $30
Charitable donations claimed in excess of $200: $300 x 29% = $87
First-Time Donor’s Super Credit: $500 x 25% = $125
Total FDSC and CDTC: $242

Example 2: An eligible first-time donor claims $700 of charitable donations in 2013. Only $300 of the donations are donations of money. The first-time donor’s FDSC and CDTC would be calculated as follows:


First $200 of charitable donations claimed: $200 x 15% = $30
Charitable donations claimed in excess of $200: $500 x 29% = $145
First-Time Donor’s Super Credit: $300 x 25% = $75
Total FDSC and CDTC: $250

Q3. When can I claim the FDSC?

A.3. As the FDSC is a temporary credit, you can only claim it once from the 2013 to 2017 taxation years.

Q4. Who is considered a first-time donor?

A.4. For the 2013 taxation year, an individual will be considered a first-time donor if neither the individual nor the individual’s spouse or common-law partner has claimed the CDTC in any of the five preceding tax years.

Q5. Can both my spouse or common-law partner and I claim the FDSC?

A.5. As a first-time donor, the FDSC, along with the corresponding CDTC, may be shared by you and your spouse or common-law partner in a particular taxation year. However, the total amount of donations that may be claimed for the FDSC by both individuals cannot exceed $1,000. When it cannot be agreed on the amount of the credit that each of you will claim, the CRA may apportion the credit.

Q6. Do all of my donations qualify for the FDSC?

A.6. No. Only donations of money that are made after March 20, 2013 will qualify for the FDSC. For taxation years from 2013 to 2017, a new line will be added to Schedule 9, Donations and Gifts to identify the eligible portion of the charitable donations that you have claimed that are donations of money.

Q7. Where can I get more information about the FDSC?

A.7. The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its Web site often. All new forms, policies, and guidelines will be posted as they become available.

In the meantime, please see the Department of Finance Canada’s Budget 2013 documents for details.”

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

mark@blumbergs.ca
416.361.1982
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