As we move toward the end of the year, we approach the season of giving. Many Canadians increase their charitable giving during this period. However, not everyone is maximizing their giving in the most tax-efficient way. Whether it’s a continuation of donations made throughout the year, or an initial donation, there are several strategies to consider when donating prior to the end of the year.

Maximize the value of donation tax credits

The first $200 of donations you claim on your tax return receive a lower donation tax credit rate than donations claimed above $200 (except in Alberta). To limit donations subject to the lower $200 credit rate outside Alberta, consider bringing forward donations planned early in the new year and make them prior to December 31st in order to combine them onto this year’s tax return. You can also maximize the amount above $200 by combining onto a single tax return donations made by you and your spouse or common-law partner, and carry forward unclaimed donations made in any of the prior five years. For Alberta residents, spouses and common-law partners should split donations in order to maximize the amount each claim under $200.

The federal donation tax credit is enhanced if your income is in the top tax bracket. Rules vary by province, but there may also be an increase to the provincial donation tax credit based on your income. If this is a high-income year, consider donating prior to the end of the year to take advantage of the potentially higher donation tax credit available to you.

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