By Travis Koivula, Island Savings Insurance Services –
It’s not very often that giving money away plays into your investment plan, but one important exception is charitable giving. There is a large need to support local charities, but it can be difficult to know how to leverage your hard-earned dollars to best help the charity while keeping your own financial plan in mind. Here are some strategies.
Sweat the Small Stuff. Keep your receipts no matter the size of the donation. $10 here, $20 there can really add up when tax-time rolls around. Many charities will have a minimum donation threshold in order to qualify for a charitable receipt, so try and donate that amount to reap the tax benefits.
Take Advantage of the Tax Benefits. Speaking of taxes, there are several tax benefits connected to charitable giving. For donations over $200, you get almost 44% back. For example, when you give $1,000 to charities it only ends up costing you $560 – it’s a win-win for everyone. If you haven’t made a donation since 2007, there is a special one-time bonus credit of 25% extra that the government offers to entice Canadians to get in the spirit of giving. To receive a tax receipt for your donation, you must donate to a charity registered through the Canadian Revenue Agency (CRA). The CRA has an online tool to easily search for every charity registered in Canada in case you’re unsure.
Think Beyond Cash. Don’t limit yourself to cash donations. If you have an investment that has increased significantly in value, rather than selling the investment and paying the taxes on the gain, try donating directly to the charity. This will save you paying the capital gains tax while still getting the full credit of the tax donation.
Has your old jalopy been taking up space in the driveway for too long? What about that piece of artwork collecting dust in the basement? You can donate these directly to a charity and get a tax receipt. Another way to donate is through your credit card reward points, just keep in mind that you won’t be getting a tax receipt for the donations of points.
Give the Gift of Time. Every charity needs money, but donating your time and talents can be equally as valuable. Doing this will give you a better sense of where your funds are going, and it will also make you feel good to see your money in action.
Travis Koivula is a Senior Wealth Advisor with Island Savings Insurance Services, a division of First West Insurance Services Ltd.