Giving Costs Less Than You Think

It may surprise you how little it costs to be generous. In Canada, every tax credit for charitable donations over $200 reduces the overall cost of your gift by almost half. This varies slightly from province to province but there are clear government incentives in place to encourage individuals to support their charities of choice. The combination of incentives on a federal and provincial level often cause those benefits to be underestimated as they are often calculated separately on your individual tax return. 

Click here to see how little it actually costs to give: Charitable Donation Tax Credit Calculator

If you earn a salary: Every paycheque automatically deducts federal and provincial income tax, and at the year-end the amount of income tax deducted should be equal to what you would owe. Tax Credits are what is needed to get some of that money back. Charitable donations are one means to make that happen. For example, if you had a total of $10 000 in Income Tax deducted from your paycheque throughout the year, but you had $4 600 in Tax Credits then you could claim that on your tax form and receive that amount back from the government.

If you have income from other sources (Interest, Tips, Business Revenue etc.): All of these categories of earnings are also expected to incur income tax at the end of the year. Tax Credits help to reduce that amount. For example if you owe $10 000 in taxes, based on these categories, but have $5 000 in Tax Credit you can apply that towards the amount owed. You would only need to pay $5 000.

How is a charitable donation tax credit calculated?

For BC residents, charitable donation tax credits are calculated as follows:

  1. ⦁ For the first $200 of donations claimed, the combined tax credit totals 20.06% (15% federal plus 5.06% provincial) which = $40.12 (For simplicity, all of the the following examples assume the first $200 has been given.)
  2. ⦁ All donations after the first $200 get a combined tax credit totalling 43.7% in BC or 50% in AB (29% federal plus 14.7% BC provincial or 21.0% AB provincial) of the amount donated. (There are different rates depending on which Province you live in. See all the charitable donation tax credit rates here.)
  3. NOTE: The total charitable donations claimed for the calendar year cannot exceed 75% of your net income. If donations exceed this 75% limit, you can put the remaining donations towards tax returns during any of the next five years.

How much do you actually want to give?

Consider the tax impact of a $10,000 charitable donation in BC.

In the above scenario, your gift of $10,000 costs only $5,630 because of the money you get back as a cash refund or save on taxes owed.

So how would you make a donation where it costs you $10,000? 

Using the formula for calculating the combined Tax Credit, you can make a “net cost gift” of $10,000 by making a donation of $17,762.

This approach provides you a Tax Credit of $7,762 to include on tax forms to get back after you file your tax return. If you wish to calculate the the total amount according to your desired net cost gift simply multiply your personal gift amount by 1.7762 in BC. In AB you can make a net cost gift of $10,000 by making a donation of $19,900. If you want to calculate the total gift you can actually make to hit a net cost to you in AB, simply multiply your ‘out-of-pocket’ gift amount by 1.9900.

Credit: Based off content from Village 2021 Campaign

Donate a One-Time Amount or Partner with us over the Next Year with Automatic Monthly Giving.

- Scroll to the bottom and pick one-time or monthly. Under “more scheduling options” you can pick the specific day for the donation to made each month, and the number of months to support (12).
- Under “Apply Your Donation…” click “City Collective - Langley, BC”
- Click continue and it will take you through the final steps. Please choose to provide your name and email (address is optional) so we can provide quarterly updates.

Cheques can be made out to ““ECCC” or “Evangelical Covenant Church of Canada” along with City Collective in the memo line. 

Send To:
City Collective Church
4781 199A St
Langley, BC
V3A 6J5