Claiming Charitable Donations: Maximizing Your Donation Tax Credits – A Complete Guide by a Montreal CPA Firm Near You

Claiming charitable donations in Canada is one of the most effective ways to reduce

your tax bill while supporting important causes. The donation tax credit offers generous

federal and provincial tax savings, especially when donations are combined between

spouses or carried forward to a year with higher income. However, many taxpayers lose

out on these benefits because they misunderstand the rules, file without proper receipts,

or donate to organizations that are not CRA-registered charities. CRA applies strict

documentation standards, and incorrect claims can result in reassessments, denied

credits, and penalties. Understanding the rules for claiming charitable donations in

Canada ensures taxpayers maximize their tax credits and remain fully compliant.

Legal and Regulatory Framework

Charitable donation tax credits are governed by section 118.1 of the Income Tax Act. To

qualify, donations must be made to registered Canadian charities, qualified donees,

or specific foreign charitable organizations approved by CRA. Taxpayers receive non-

refundable tax credits calculated using a two-tier federal rate: 15% on the first portion

of eligible donations and 29%–33% on amounts above that threshold, depending on

taxable income. Provincial donation tax credits apply in addition to federal credits. CRA

requires official donation receipts that include the charity’s name, registration number,

date, serial number, and donation amount. Taxpayers may claim donations up to 75% of

net income, and unused donations may be carried forward for up to five years. These

rules form the framework for claiming charitable donations in Canada.

Key Court Decisions

Canadian courts have reinforced strict compliance with charitable donation rules. In

Kossow v. Canada, CRA denied donation credits claimed through a tax shelter scheme,

and the court upheld the denial, emphasizing that only legitimate donations qualify. In

Maréchaux v. The Queen, the Federal Court confirmed that inflated charitable receipts

are invalid and that taxpayers must verify the legitimacy of charitable programs. In

Nassif v. Canada, the court denied credits where receipts lacked required information,

emphasizing that CRA receipt rules must be followed precisely. These rulings highlight

that taxpayers must exercise due diligence when claiming charitable donations in

Canada and ensure that receipts meet CRA standards.

Why CRA Targets This Issue

CRA closely audits charitable donation claims because this area is prone to abuse,

including inflated receipts, unregistered charities issuing fraudulent receipts, and

donation tax shelter schemes. CRA also performs electronic matching between tax

returns and charity filings, identifying receipts that do not correspond to registered

charities. CRA reviews large donation amounts, first-time donors with high claims, and

inconsistencies in multi-year donations. When CRA suspects improper donations, it may

request supporting documentation, verify receipts with the charity, or deny the credit

entirely. Because the donation tax credit significantly reduces taxes payable, CRA

enforces strict verification. Understanding the rules for claiming charitable donations in

Canada helps taxpayers avoid reassessments.

Mackisen Strategy

At Mackisen CPA Montreal, we help clients maximize donation credits while ensuring

complete compliance. Our process begins with reviewing all donation receipts for

accuracy and eligibility. We verify that charities are registered under CRA’s database

and ensure receipts meet legislative requirements. We analyze the taxpayer’s income

level to determine the best year to claim donations—either immediately or by carrying

them forward for up to five years. For couples, we combine donations strategically

under one spouse to increase the credit rate and reduce the household’s overall tax

burden. When clients have large donations or donations of securities, we calculate the

optimal tax savings and prepare required filings. If CRA questions donation claims, we

respond with complete documentation and advocate on the taxpayer’s behalf. This

structured approach ensures taxpayers maximize the benefits of claiming charitable

donations in Canada.

Real Client Experience

A client performed multiple donations but filed receipts incorrectly due to missing

registration numbers. CRA denied the claim. We contacted the charities, obtained

correct receipts, and successfully reinstated the credits. Another client donated

appreciated securities, unaware that capital gains on donations of publicly traded

securities are eliminated. We calculated the tax advantage, secured significant savings,

and prepared future donation strategies. In a third case, a couple donated large

amounts annually but claimed them separately, reducing the value of their credits. We

consolidated the donations under the higher-income spouse, increasing their tax

savings dramatically. These examples show how proper planning maximizes charitable

donation credits.

Common Questions

Taxpayers often ask whether GoFundMe or crowdfunding donations qualify. They do not

unless the campaign is run by a registered charity. Others ask whether volunteer time

can be claimed. It cannot. Many ask whether they can claim donations made on behalf

of another person. Only the individual whose name is on the receipt may claim the

credit. Taxpayers also ask whether receipts must be physical. Electronic receipts are

accepted if they meet CRA requirements. These questions highlight why understanding

the rules for claiming charitable donations in Canada is essential for maximizing tax

savings.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps

Canadians stay compliant while maximizing tax credits from charitable giving. Whether

you donate cash, securities, or recurring gifts, our expert team ensures precision,

transparency, and protection from audit risk.