Giving feels good — and in Canada, it can also lower your tax bill. However, not all charitable donations qualify for a tax break. If you're planning to donate in 2025 and want to know which gifts are eligible for tax credits, here’s what you need to know.
Who Can Issue Official Donation Receipts?
While the terms non-profit and charity are used interchangeably, only a registered charity or other qualified donee can issue donation receipts that qualify for a non-refundable tax credit or deduction.
The Canada Revenue Agency (CRA) keeps a verified list of charities and certain other qualified donees and updates it daily. Use the list to confirm an organization’s status before donating – if its status is revoked, for example, it cannot issue charitable receipts, and your donation will not qualify for a credit or a deduction.
Finally, if you receive any benefit from the charity because of your donation, this will affect the value of your tax deduction.
What Kinds of Donations Qualify for a Tax Credit?
To get a tax break in Canada, your donation must go to a registered charity or another qualified donee recognized by the Canada Revenue Agency (CRA). That includes:
- Registered Canadian charities
- Registered Amateur Athletic associations
- Registered national arts service organizations
- Registered municipalities
- Canadian universities or colleges (even those outside Canada if you’re an alumnus)
- Some foreign charities (with special status under CRA)
You can confirm an organization’s status by searching the CRA’s Charities Listings.
What Types of Donations Can Be Made to Charities?
There are several ways to contribute to a registered charity or other qualified donee in Canada:
- Cash Donations: The most straightforward option, providing immediate tax benefits.
- Property Donations: Non-cash donations include real estate, vehicles, art, or jewelry. Appraisals are often needed to determine the property’s value.
- Securities Donations: Donating stocks, bonds, or mutual funds can offer potential tax advantages, though the recent Alternative Minimum Tax (AMT) changes will impact the benefits for high-income individuals.
- Donating Skills or Services: Donating time, skills, effort, and services directly is appreciated, but it usually only qualifies for tax receipts if specific conditions are met (see below).
What Donations Don't Qualify?
Not all generous acts come with a tax break:
- Donations to GoFundMe campaigns (unless the organizer is a registered charity)
- Contributions to political parties (they have a different credit system)
- Time or services (volunteering)
- Gifts with too much of a personal benefit (e.g., buying a dinner at a gala and writing off the full ticket)
You can only claim the eligible amount of your donation — that’s the amount minus any benefit you received.
Charitable Tax Benefits for Individuals vs Corporations
The tax rules and benefits are different for individuals and corporations.
Individuals Get a Tax Credit
As an individual, you receive a non-refundable tax credit when you donate to a charity, which directly reduces your tax bill. While rates vary depending on where you live, but in general:
- Federally: You receive a 15% credit for the first $200 donated and 29% for amounts exceeding that. It’s in your best interest to donate more than $200 so you can maximize the federal credit. (For those individuals who pay the highest rate of tax federally, 33%, they are eligible to receive donation credits at that higher rate).
- Provincially: Rates vary, but when the federal and provincial rates are combined, the credit can reach up to 49% for some provinces.
- Limitations: You can claim a maximum of 75% of your net income for the year (100% for cultural property or ecological land and 100% in the year proceeding or the year of death).
- Carry forward: You can carry forward credits for up to five years.
- Pool credits: You can pool credits with spouses or common-law partners.
Corporations Get a Tax Deduction
Corporations are subject to different tax rates in Canada. When you donate as a corporation, you receive a tax deduction that lowers your taxable income:
- Claim limit: You can typically claim a maximum of 75% of your annual net income.
- Carry forward credits: Unused credits can be carried forward for up to five years.
Depending on your income level and personal tax situation, donating as an individual versus a corporation has advantages.
Tax Implications for Charitable Donations in Canada
Before making any kind of donation, make sure you consider the tax implications of your donation:
Cash Donations
- Most common and straightforward form of donation.
- May offer immediate tax benefits.
Property Donations
- Includes real estate, vehicles, art, jewelry, and other valuables.
- Requires professional appraisal to determine value.
- Potential capital gains tax implications.
- Specific rules apply based on the property type.
Securities Donations
- Involves donating stocks, bonds, or mutual funds.
- Offers potential tax advantages, but changes to the Alternative Minimum Tax (AMT) and the capital gains inclusion rate need to be considered.
- Specific rules and conditions apply.
Donating Time, Skills, Effort
- They are typically not eligible for tax receipts.
Donating Services
- Again, they are not typically eligible for tax receipts.
- Exceptions exist, but they require specific arrangements and documentation (e.g., if a charity pays you for services, you donate the same amount back to the charity).
Sponsorships
- Not eligible for charitable tax receipts.
- Best approach when donating to a non-profit.
- Involves financial support in exchange for advertising or promotional benefits.
Remember: Keeping detailed records of your donations is essential for claiming tax deductions.
Donating as an Individual vs Corporation
Donating as an individual is usually more advantageous because you receive a tax credit directly applied to your tax bill. However, with changes to AMT and capital gains rules, it is essential to weigh your options carefully – especially if you own a corporation. In some instances, there may be a significant tax advantage in donating through your CCPC.
What Do You Need to Claim the Credit?
You must get an official donation receipt from the charity. It should include:
- Charity’s name and registration number
- Your name and donation amount
- Date of the gift
- CRA-compliant receipt number
Hold on to your receipts — you don’t have to send them in with your return, but you’ll need them if CRA reviews your file.
How Much Is the Tax Credit Worth?
Canada has a two-tier federal tax credit system, plus a provincial credit:
- 15% on the first $200 of donations
- 29% or 33% on donations over $200 (depending on your income)
- Provincial tax credits vary by province (e.g., Ontario offers 5.05–11.16%)
Example: A $1,000 donation could net you over $450 in tax credits, depending on your income and province.
How Long Can You Claim?
You can:
- Claim donations made in the current year
- Carry forward unused donations for up to 5 years
This means you can group several years of giving into one return to maximize your credit.
Final Tip: Donate Smarter, Not Just More
- Check the charity’s status before donating
- Consider gifting appreciated securities to save more on taxes
- Keep your receipts organized
- Talk to an expert accountant if you’re donating large assets or planning a giving strategy.
Create a Charitable Tax Strategy: Get Professional Help
If you plan to make a substantial donation to charity, it’s in your best interest to consult with a tax specialist. Recent tax changes have created far-reaching tax implications, and you want to ensure you choose the option that will create the greatest tax benefit for you while still positively contributing to a worthy cause.
Remember, whatever the size of the donations – large or small – always keep detailed records of your donations, including receipts and appraisals for valuable items.
Book a Consultation Today
Let Filing Taxes –Toronto Tax Professional help you prepare better for next the 2026 tax season with ease. Connect with Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step toward proper management of your finances.
Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.