Learn how to give back and get back

(NC) While you’ve likely heard the phrase “it’s better to give than receive,” did you know that it’s possible to do both? You can, for example, give to charity and get a big break on your taxes. In fact, Canada has some of the best tax incentives for charitable giving in the world. Here’s how you can take advantage of them.

Donations earn tax deductions
You probably know that if you make a donation to a registered charity, you’ll get a receipt for a tax credit in the calendar year you made it. In fact, for donations of more than $200, you will get back almost half of that in lowered taxes. As a result, your donation only costs you $100.

Get double tax savings
If you own any stocks, bonds or other securities that have increased in value since you purchased them, they will be subject to capital gains tax when you sell them. But if you transfer your stock to a registered charity instead, you eliminate the capital gains tax and receive a donation tax credit that helps pay down any income taxes you owe.

Pledge now, save later
Even if you don’t have the disposable income to spare for a donation this year, there are other ways you can make a meaningful contribution to the charity or charities you support. Each with their own tax benefits:

1. Include a charity in your will. Designating a small percentage of your estate to charity could turn into a sizeable donation. Plus, your donation will help lower the taxes your estate will be responsible for.

2. Use your RRSPs. Did you know you can name charities as beneficiaries of your RRSP? Doing this could just about offset the taxes that your estate would have to pay on this asset.

   Your financial institution will have a simple RRSP beneficiary form for you to fill out where you list all the people and/or registered charities you’d like to receive your leftover funds. Note that in Quebec, you can only name a charity as a beneficiary of your RRSPs through your will.

3. Donate your life insurance. You can also choose to donate all or a portion of a life insurance policy to a registered charity. This option lets you multiply your contribution and make a big donation to a cause you support, all while reducing the tax burden your loved ones will face.

Learn more about making donations through your estate at willpower.ca.