5 Tax Advantages of Charitable Giving in Canada You Shouldn't Miss
- Suman Sindhu
- Jul 19
- 3 min read
Give with Purpose – And Get Tax Benefits Too
Giving to charity is a powerful way to support your community, but did you know it can also reduce your tax bill? At VJ Tax & Accounting, we want our clients to take full advantage of every opportunity recognized by the Canada Revenue Agency (CRA). This guide explains the tax advantages of charitable giving in Canada, so you can give back while keeping more of your money.
Why Understanding the Tax Advantages of Charitable Giving Matters.
Whether you're donating cash, stocks, or goods, Canadian tax laws reward generosity. The CRA allows individuals and businesses to claim tax credits, reduce capital gains, and even structure donations as part of long-term estate planning. Understanding how to optimize your charitable giving can make a meaningful difference in both your finances and the causes you care about.
Here are 5 tax advantages of charitable donations in Canada that you should know:
1. 💰 Claim Tax Credits for Monetary Donations in Canada
The most common tax benefit is the non-refundable tax credit for donations of money to registered charities in Canada.
You can claim up to 75% of your net income in donations.
The federal and provincial portions of the credit can add up to a significant refund.
Unused donation amounts can be carried forward for up to five years.
💡 Tip: The first $200 of donations gets a lower credit rate, but everything above that qualifies for a higher one. When you donate money to a registered Canadian charity, you receive an official donation receipt.
2. 🧥 Get Deductions for Non-Cash Gifts
Donating goods like clothing, electronics, or furniture? The CRA allows deductions for non-cash gifts at fair market value. Ensure the organization issues a receipt that reflects the value of the item. This is a great way to declutter and give back without reducing your cash flow. Tip: Keep proof of ownership and valuation documentation for your records.
3. 📈 Avoid Capital Gains Tax with Appreciated Asset Donations
Donating publicly traded securities (stocks, mutual funds, bonds) directly to a charity lets you avoid the capital gains tax and claim the full donation amount. Why it matters: This is one of the most tax-efficient ways to give, especially if your investments have grown in value.
4. 🔁 Roll Over RRSPs or RRIFs Through Your Estate
Canadians aged 65+ can plan their giving by naming a charity as a beneficiary in their RRSP or RRIF. This can offset final return taxes and reduce estate taxes.
Including charitable giving in your estate plan lets you leave a legacy and reduce the tax burden on your heirs.
5. 🧾 Use Donor-Advised Funds for Long-Term Giving
Donor-Advised Funds (DAFs) allow you to:
Contribute a lump sum now and get an immediate tax receipt.
Distribute the funds to charities over time.
Create a family legacy of structured giving.
DAFs are perfect for high-income years, allowing you to manage tax impact while still supporting your favourite causes over time.
