Section 2 – Individuals and Families
Other Credits and Assistance Measures
Individuals may claim non-refundable tax credits for charitable donations to a qualified doneeat the rates indicated in your province’s Schedule – Individuals Taxation.
For federal purposes, there is an overall annual limit in donations of 75% of the taxpayer’s net income.22 Any unused creditscan be carried forward for a maximum five-year period. For federal purposes, an individual with income taxed at the highest marginal rate of 33% can benefit from a tax credit for charitable donations calculated at this same rate. This credit rate applies to the lesser of the following amounts:
- The amount by which the total gifts for the year exceeds $200, and
- The amount by which the taxable income exceeds $200,000.
In Quebec, a similar measure applies to allow individuals with income taxable at the highest marginal rate of 25.75% to benefit from a credit for donations at this rate.
Donations made by an individual may be claimed by his/her spouse. Combine donations in one tax return, if this allows you to benefit from a higher credit.
Since donations may be carried forward five years, it may be advantageous to carry them forward so as to benefit from a tax credit at a higher rate.
Donation in Year of Death
The federal annual limit is increased from 75% to 100% of net income for donations made in the year of death or in the preceding year (see Section XI).
Donation for Consideration
A donation is a voluntary transfer of property, without any monetary consideration or other benefit. Consequently, the charitable receipt may not be accepted for tax purposes if a charitable organization “compensates” donors for their contributions. According to the guidelines published by the CRA, the amount of the donation is equal to the excess of its value over the amount of the benefit to the donor. In addition, no charitable receipt can be issued if the value of the benefit exceeds 80% of the value of the property transferred. Any property that is given to participants at an event must only be included in the calculation of the benefit if its value exceeds the lesser of $75 or 10% of the value of the donated property.
Donation of Capital Property
The amount of non-cash donations equals the FMV of the property. Donations of capital property are dispositions of capital property that may trigger a capital gain or a capital loss, recaptured capital cost allowance or a terminal loss. The aforementioned federal annual limit of 75% of net income is grossed-up by 25% of the taxable capital gain and 25% of any recapture of capital cost allowance arising from such donations. The end result of these provisions is that a taxpayer may be entitled, in certain cases, to a credit on 100% of the taxable capital gain and recaptured capital cost allowance arising from the donation of a capital property.
Donation of Cultural and Ecologically Sensitive Property
The 75% limit is increased to 100% with respect to certain donations of cultural properties and ecologically sensitive lands. Thus, the gain arising from such a donation generally results in no additional tax. In Quebec, such a measure also applies to the donation of musical instruments to an institution offering a musical training and additional incentives are available until December 31, 2022 for certain large cultural donations.
The deferral period is increased from five to ten years for donations of ecologically sensitive property.
Donation of Securities
The capital gain to be included in income from the donation of certain securities registered on a Canadian stock exchange (shares, debts, mutual fund or segregated fund trust, etc.) and on certain foreign stock exchanges is not taxable. However, despite the fact that the tax cost of a flow-through share is deemed to be nil (see Section VII), only the taxable gain portion attributable to the actual value increase (that is, the excess of the FMV over the actual cost of the share) realized on the donation of such a share is not taxable.
In addition, an employee who deals at arm’s length with his/her employer and who exercises options of a public company to make a charitable donation in the year and within the following 30 days may not have to pay any income tax on the taxable benefit, except in Quebec where the benefit generally continues to be partially taxable (see Section V).
If you are planning to make significant donations to a charity, consider giving shares of public corporations so that you may benefit from the special rules regarding these donations.
Personal-use property is property acquired by a taxpayer for his/her own personal use and not to earn business or property income, such as jewellery, furniture, works of art and stamp collections. The adjusted cost base and the minimum proceeds of disposition of a personal-use property are set at $1,000, unless an arrangement for donations of such property is concluded.
Donation of Agricultural Products
Ontario farmers donating certain agricultural products to food banks are entitled to an non-refundable tax credit equal to 25% of the value of the products donated.
In Quebec, the amount of a donation of eligible agricultural products made by an agricultural producer to a Moisson member, an Associate member or the Food Banks of Quebec can be increased by 50% for the purposes of the calculation of the non-refundable tax credit for charitable donations.
The amount of non-cash donations is equal to the lesser of the cost or the FMV of the property if it was acquired either with a view to making a donation or less than three years before making the donation (except in the event of the death of the donor). However, the measures generally do not apply when the donation consists of ecologically sensitive property, property held in inventory, real property located in Canada, listed securities or certified cultural property.
There are specific rules for donations by a taxpayer of non-eligible securities, including a debt owed by the individual, or a share of the capital stock of a corporation with whom the individual does not deal at arm’s length (except for securities listed on a stock exchange in Canada).
Quebec also provides for similar rules for donations of works of art (except donations to a museum, art gallery or other similar body).
22 No limit for Quebec purposes.
Every individual, at least 19 years of age or who is married or a parent of a child, is entitled to a federal GST/HST credit.
|Maximum annual credit||Supplement for a single person and single parent|
|July 2017 to June 2018||$280||$147||$147|
|July 2018 to June 2019||$284||$149||$149|
The maximum credit is reduced by 5% starting at a family net income threshold in excess of $36,976 whereas the supplement for a single person is reduced by 2% of the net income in excess of $9,209.
The CRA automatically determines eligibility for the credit. The quarterly payment takes account of any significant changes in the family before the end of the previous quarter. Parents who share custody of a child more or less equally may elect to each receive one-half of the credit paid in respect of the child.
Individuals with an income of less than $35,000 benefit from the maximum HST credit of $300 per person, $300 for a spouse and $100 for a child under 19 years of age, except for the first child from a single-parent family, for which $300 may also be granted. The credit is reduced by two cents for every dollar of income over $35,000.
Ontario Trillium Benefit
The Ontario Trillium Benefit lumps together in one amount the sales tax credit, the energy and property tax credit, and the Northern Ontario energy credit. The amount of the benefit is determined according to these three components and family net income in the preceding year. This contribution is paid on a monthly basis unless the claimant elects to receive a lump-sum payment.
The solidarity tax credit amount is based on three separate components, i.e. the QST, housing, and accommodation in the northern village, and is reduced if family net income exceeds $34,21523 . To benefit from this credit, taxpayers have to apply for it with their income tax return and be registered for direct deposit.24 The tax credit is determinedbased on the taxpayer’s situation as at December 31st each year and is paid on a monthly, quarterly or annual basis, depending on the amount granted. The ARQ must be notified during the year if the individual dies, is imprisoned or leaves Quebec. The individual must be able to prove that he or she is, alone or jointly, the owner, tenant or subtenant of an eligible dwelling.25
23 Threshold for the period from July 2017 to June 2018. Indexed annually.
24 Since 2018, the QST component of the solidarity tax credit is paid to eligible taxpayers who have filed a tax return, even if they do not apply for it.
25 Owners of a rental property must provide their tenants with an RL-31 slip for this purpose (see Section VII).
For federal purposes, contributions to federal political parties are eligible for a tax credit. In Ontario and New Brunswick, such credit is available for provincial political contributions. These credits are subject to the following rates and maximums:
|75% of||first $400||first $399||first $200|
|50% of||next $350||next $930||next $350|
|33⅓% of||next $525||next $1,697||next $525|
|Maximum credit||$650 non-refundable||$1,330 refundable||$500 non-refundable|
If you are planning to make significant political contributions, consider spreading them over two years to benefit from the higher rates allowed on the first dollars.
In Quebec, a taxpayer is entitled to a non-refundable tax credit of 85% of the first $50 portion and 75% of the additional $150 portion paid as contributions to finance municipal political activities for a total maximum credit of $155.
An individual who lives in a remote area for at least six consecutive months, beginning or ending in the year, can claim a deduction for the higher cost of living in these areas. The deduction is limited to 20% of the individual’s net income and includes two components. First, a deduction for housing of $11 per day26 is granted to an individual living in a prescribed northern zone. Second, employees in a remote area who receive taxable benefits from their employer related to travel can deduct certain expenses related to these travel. The deduction for a resident of a remote area is reduced by half for residents of a prescribed intermediate zone.
26 This deduction amount can be doubled if only one member of the household requests the housing deduction.
A refundable tax credit is available to compensate athletes for expenses related to training and to the purchase, rental and maintenance of equipment required for their sport. The credit, which is available to athletes recognized by the Secrétariat au loisir et au sport as belonging to the “Excellence”, “Élite” or “Relève” performance level. The credit varies depending on the type of sport (individual or team sports) and is calculated pro rata based on the number of days the recognition applies on amounts between $1,000 and $4,000 depending on the circumstances.
A household subject to a reduced child care expense or work premium tax credit resulting from an increase in family income from work can benefit from a refundable tax credit, the tax, shield, that aims to offset part of this loss. The amount of the tax credit is determined by comparing the amount the couple would be entitled to for these two credits based on actual income to the amount the couple would have been entitled to based on “modified income”. This credit is calculated according to a maximum increase in work income of $4,00027 per spouse. The tax shield may be claimed by one of the two spouses or separated equally between them.
27 In 2018; $3,000 before that date.
This document has been updated on August 31st, 2018 and reflects the state of the Law, including draft amendments, at that date.