Charity tax credit.

yung44

How does that work? I don't quite get this part.

can someone demonstrate an example.

(say, I am donating $300 this year, I am earning $50000 a year, how does that gonna benefit me in terms of tax credit when I have to do my taxes in a few months? what happens if I donate more/less?)

Thanks.

p51dray

For the first 200 you get a tax credit equal to the lowest marginal tax rate and for the rest you get the highest marginal tax rate. eg. you pay 200 * 15.25% + 100 * 29% less tax if you donated 300 to a CRA registered charity. Basically it means the income that you donate doesn't get taxed.

http://www.cra-arc.gc.ca/tax/charities/donors/savings/2-e.html

You should get a break from BC provincial taxes as well.

Steven

Here is a rule of thumb. Tax credit gets subtracted from your net income (Income - Deductible Expenses). Tax deduction gets subtracted from your income. If you donate more, then you get taxed less.. in the case of high income earners, you would want to lower your net income so you fall into a lower marginal tax rate.