Guide to Understanding Donation Tax Credits in Canada

Almost every year, as the year-end approaches, I realize I haven't supported the charities I care about as much as I intended. I also know there's a tax side to charitable giving in Canada, but the rules can feel more complex than they need to be. 

This guide is meant to simplify all of that. It explains how donation tax credits work, how federal and provincial rules fit together, what qualifies as an eligible donation, the timing considerations to keep in mind in December, and a few practical ways to ensure your giving is both intentional and tax efficient.

1. What counts and who qualifies

A donation only qualifies for a tax credit if it is made to a “qualified donee.”

The Canada Revenue Agency (CRA) defines qualified donees as organizations such as registered charities, registered amateur athletic associations, public bodies that carry out government functions, registered low-cost housing corporations, and some foreign universities or charities. These groups are recognized by the government and can give you a receipt for tax purposes.

If you donate to an organization that is not a qualified donee, you cannot claim the tax credit.  

Always check the CRA’s publicly available list of registered charities before relying on the receipt for tax.  

2. How the federal tax credit works

The federal credit follows a simple structure:

• The first $200 of eligible donations receives a 15% credit.
• Any amount above $200 receives a 29% credit.
• If your income places you in the top federal bracket (33% in 2025, for income above $253,415), the portion above $200 receives a 33% credit instead of 29%.
• The “eligible amount” is the donation’s value after subtracting anything you received in return, such as event tickets or goods. Only the actual gift portion qualifies for the credit.

3. Provincial/territorial credits and stacking

Each province and territory adds its own donation tax credit. Combined, these credits can meaningfully reduce the after-tax cost of giving. The table below shows the combined credit rate (federal plus provincial/territorial) and the after-tax cost of a $1,000 donation. These figures apply to donations above the $200 threshold and reflect 2025 data.

Combined Federal + Provincial/Territorial Tax Credit Rates for Donations over $200 (2025)

Notes:
* After-tax cost means $1,000 donation minus tax credit. The lower the number, the more value you are getting from the credit, and the less it costs for the $1,000 donation

** In British Columbia the tax credit rate is 49.8% for income between $253,415 and $259,830. For income over $259,830, the rate is 53.5%.

*** In Quebec teh tax credit rate is 48.2% for income up to $129,591, and 50% for income over that amount.

4. Limits and carry-forward options

A few rules shape how much you can claim:

• You can claim donations up to 75% of your net income in a given year.
• If you don’t claim the full amount, you can carry forward unused donations for up to five years.
• In the year of death, or the year before death, 100% of net income can be claimed as donations.

5. Year-end timing and receipt-date issues

Donation timing matters.

• For most years, a donation must be made by December 31 to count for that tax year. For the 2024 tax year only, the deadline was extended to February 28, 2025.
• Save your official donation receipts. The CRA advises keeping them for at least six years.  
• For donations involving property or publicly traded securities (such as stocks), the important date is when the asset is officially transferred to the charity, not when it is sold. This affects which tax year your donation counts for.
• If you are considering delaying donations or combining several years' donations to reach the $200 threshold, plan ahead (see tips below).

6. Donations of property, securities, and special cases

Not all donations need to be cash.

• Donating publicly listed securities (or certain mutual funds) directly can eliminate capital gains tax while still generating the donation credit.
• If you get a benefit (like tickets or goods) in return, the eligible donation is the fair-market value minus what you received. 

7. Practical household tips

A few ways to make giving more intentional and tax-efficient:

• Collect receipts now: Gather all official receipts or pending donations before year-end.
• Pool with your partner: If you have a spouse or common-law partner, consider combining your donations and claiming them on the return that yields the better tax result.
• Watch the $200 threshold: If your giving tends to be modest, combining two years of donations may allow more of the total to qualify for the higher credit rate.
• Check your province/territory’s credit rate: Combined credit rates vary across the country. Use the table above as a reference.
• Consider non-cash forms of giving: If you hold appreciated investments, donating them directly may provide a better outcome than selling and donating the cash.
• Time your gift: For late-December donations, make sure the transfer and receipt occur in the year you intend.
• Document properly: Keep receipts, bank or brokerage statements, and valuation records (for non-cash donations). The CRA can request records for up to six years.
• Avoid high-risk schemes: If a donation arrangement promises unusually large credits or seems overly complicated, verify the charity’s status and seek advice.
• Use carry-forward strategically: A large donation made in a lower-income year may be more valuable if carried forward to a year with a higher marginal tax rate.

8. Household-level example (Ontario)

Here's how a $1,000 donation works for an Ontario household:

Federal:

• 15% of the first $200 = $30
• 29% of the remaining $800 = $232
• Total federal credit = $262

Ontario:

• 5.05% of the first $200 = $10.10
• 11.16% of the remaining $800 = $89.28
• Total provincial credit = $99.38

Combined total tax credit: $361.38.
After-tax cost of the $1,000 donation: $638.62.

If, instead, you donated $2,000 in a single year, the portion above $200 would benefit from a higher credit rate, lowering the after-tax cost even further.

The takeaway: Your giving is purpose-driven, but aligning it with tax rules ensures your donation has a greater impact.

9. Final checklist before year-end

✅ Confirm the organization is a registered charity and will issue a proper receipt.

✅ Make the donation (or transfer the property) in the year you intend to claim.

✅ Save and organise your receipts and documentation.

✅ Verify your provincial/territorial tax credit rate for the current year.

✅ Decide whether to:

• claim now or carry forward
• claim the donation yourself or with your partner
• donate appreciated securities rather than cash

✅ Be aware of the potential for the alternative minimum tax (AMT) to affect high-income individuals with large donations of assets. 

✅ File your claim using the appropriate schedule (e.g., Schedule 9) and retain supporting documents for at least six years.