Tax Considerations and Estate Planning
Your tax planning strategies should always align with your estate plan. Preparing a will ensures that your estate will be distributed to your family members, favourite charity(s) and other beneficiaries according to your wishes.
Your tax planning objectives may include:
“God loves a cheerful giver.”
2 Corinthians 9:7b
Tax Incentives for Charitable Gifts
When you, as an individual, make a donation to a registered Canadian charity, (like your
congregation or any of the ministries of The Presbyterian Church in Canada), you are
entitled to receive a tax credit that can be applied when calculating your federal and
provincial income tax. For Canadians, a charitable donation is eligible for a federal tax credit
of 15% on the first $200 donated and 29% on the excess over $200. Provincial income tax
savings vary. For higher income donors who give above $200, the effective rate of tax
savings comes out to between 40% and 50%.
During your lifetime, claims for charitable donations are limited to 75% of net income for
each year. However, tax credits not used in one year can be carried over for up to five years
and used when needed to enable possible greater tax savings. This formula changes when a
donation is given under a will. A gift given by the estate it is treated as having taken place
“immediately before death” and qualifies for a tax credit that applies to 100% of the net
income for the immediate tax year and one year prior (if needed).
What is the Actual Cost of a Charitable Donation?
For simplicity’s sake, let’s look at 3 examples of a gift of cash given by a person with a
taxable income under $200,000. You can calculate the savings in your province at:
https://www.canada.ca/en/revenue-agency/services/charities-giving/giving-charity-information-donors/claiming-charitable-tax-credits/calculate-charitable-tax-credits/calculator.html.
These figures are based on rates set in 2016. Note that tax credits may be even greater
when savings on federal surtaxes and provincial taxes are factored in.
| For a gift of … | $1,000 | $5,000 | $100,000 |
|---|---|---|---|
| Federal credit ($200 at 15%) | $30.00 | $30.00 | $30.00 |
| Balance at 29% | $232.00 | $1,392.00 | $28,942.00 |
| Ontario credit ($200 at 5.05%) | $10.10 | $10.10 | $10.10 |
| Balance at 11.16% | $89.28 | $535.68 | $11,137.68 |
| Total tax savings | $361.38 | $1,967.78 | $40,119.78 |
| Tax savings as a % of the gift | 36.1% | 39.36% | 40.12% |
| Cost of the gift | $638.62 | $3,032.22 | $59,880.22 |
*There are additional federal tax savings when an individual’s taxable income exceeds the
top personal tax bracket of 33%: $200,000 for 2016 and $202,800 for 2017.
The individual can receive a tax credit rate of 33% for donations above the first $200 and
equivalent to the amount which their income exceeds $200,000.
For example, if an individual had an income of $215,000 and gave $20,000, they would
receive a 33% tax credit for $15,000, 29% for the $4,800 and $30 on the first $200.
There’s More than One Way to Give
We invite you to review any or all of the giving strategies listed below to assess the advantages of each and to
determine if any would apply to your circumstances, should you decide to make a legacy gift of lasting impact to
your congregation and/or a ministry of The Presbyterian Church in Canada.
For More Information
The Stewardship and Planned Giving staff are available to help you turn your philanthropic wishes into reality.
To learn how a gift of cash or other planned gift can leave a lasting legacy, please contact us
Charitable Registration No. 10785 6619 RR0001
The information on this page does not constitute legal or professional advice and should not be substituted for appropriate professional advice. The Presbyterian Church in Canada strongly recommends that you seek professional legal and financial advice to ensure your financial situation and those of your dependents are considered; that your tax situation is reviewed; and that your legacy gift is tailored to your circumstances.