Get a lot from charitable giving

(Fotolia)

(Fotolia)

Joanne Richard, Special to QMI Agency

, Last Updated: 1:15 PM ET

So you meant to give in order to receive but, good intentions aside, you failed to meet the deadline for the charitable giving credit for the 2012 tax year.

But it's still better late than never, so start giving now and reap the rewards next year.

David Ablett, director of tax and estate planning at Investors Group, recommends planning your charitable giving well ahead of the tax deadline. Don't wait until December as it's not only a hectic time, but the financial pressures of the holiday season often distract you and tie up your cash.

"A well-constructed plan is a very effective way of managing your charitable giving and delivering on your best intentions," says Ablett.

Start by including charitable gifts as part of the household budget process at the outset of the year, says Ablett.

"The individual or family unit should decide ahead of time what the annual level of giving should be and ensure that the gifts are made prior to December 31 ... to ensure that the tax credits can be claimed for that year."

For those who make charitable donations, there is significant tax assistance provided. "For example, there is a federal and provincial donation tax credit available to individuals that can significantly reduce the out-of-pocket expense of the donation."

According to Ablett, a person can claim donations made by his or her spouse in order to take advantage of the higher tax-credit rate applicable to annual donations in excess of $200.

You may also want to consider a different type of gift. A non-cash donation, for example, can be a gift of publicly-traded securities or a life insurance policy.

Ablett also suggests determining at the outset of the year if you wish to make one or two large gifts each year instead of a number of smaller gifts.

"Another option for charitable giving is (to) provide support to charities over a number of years by making a donation to a 'donor-advised fund' or to a community foundation," he says.

Keep in mind you can also help a charity after your death by naming it as the beneficiary of an RRSP, RRIF or TFSA. This is deemed a charitable gift, so there will be donation tax credits available to be claimed on your final tax return.

Beware charity fraud

Canada has more than 85,000 registered charities representing an array of vitally important causes, covering everything from the environment and international development to health care and social services.

"Charities deliver meals to people who are hungry and preserve important ecosystems. They deliver health care and other immediate needs during a crisis. And they rely on the support of Canadians to fulfill their missions," says Amy Huynh, of CanadaHelps, a registered charity that facilitates charitable giving.

This requires Canadians think about charitable giving as an important investment in their communities, says Huynh. "Just as you would with your RSPs, Canadians should be investigating where their money is going."

Experts suggest researching the organizations you want to support to make sure the money you're donating actually goes to the cause you want.

Statistics Canada reports that, in 2011, 5.7 million Canadians provided $8.5 billion to charities. But, according to a 2011 survey, 53% of Canadians say they are less likely to give because concerns about charity fraud.

"Most charitable giving scams promise the person a donation tax receipt which is significantly higher than the person's actual cash donation -- it is recommended to stay away from these types of programs as Canada Revenue Agency has denied tax credits where individuals have participated in these arrangements," says David Ablett, director of tax and estate planning at Investors Group.

PayPal Canada reports that online scams, including fake websites and phishing e-mails, net as much as 41 cents of every dollar donated.

"The worst thing that could happen from charity fraud stories is that Canadians stop trusting the charitable sector and stop donating to legitimate charities," says Huynh.

 

CanadaHelps offer the following charity fraud prevention tips:

* Make sure the charity is registered with the Canada Revenue Agency (CRA) and provides you with its charitable registration number. CanadaHelps.org only lists charities registered with the CRA.

* Ask to see a charity's financial statements.

* Understand the impact the charity has and what difference it makes in the community. Charities should be able to give you clear outcomes of the programs or services they provide.

* Research the causes you want to support and how much you want to donate. Advance planning results in feeling less pressured when solicited.

* Never succumb to high-pressure donation pitches. Avoid any charity that isn't open to sharing more information about itself.

 


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