Newcomers to the practice of making annual charitable donations are being rewarded by the federal government. Taxpayers making charitable donations after March 21, 2013 may be eligible for a First-Time Donor’s Super Credit (FDSC). The FDSC can be used by a taxpayer if they or their spouse have not claimed a donation credit at any time during the previous five years and gives the donations an elevated tax credit value.
Currently, total donations up to $200 will earn you a federal credit of 15% (20.06% with the provincial credit). Total donations in a year of more than $200 earn a federal credit of 29% (43.7% total). These rates mirror the lowest tax rate for the credit below $200, and the highest tax rate for the credit above $200. The new super credit will increase the value of the federal percentage to 40% (45.06% total) for donations up to $200, and 54% (68.7%) for donations between $200 and $1,000. This credit will be available until 2018.Note that donations are non-refundable credits, so you will only receive the benefit of the credit up to the point where it reduces your federal tax to zero. You can carry forward any unused donations for five years if you are unable to claim them in the current year.
Provincial credits on donations will not change. Furthermore, when the temporary increase in the highest tax bracket
starts in 2014, there will not be a corresponding increase in the highest donation credit in British Columbia.
The highest provincial donation credit will continue to sit at 14.7%.