I agree to Idea Improve the Charitable Contribution Tax Credit on the 1st $200
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I disagree to Idea Improve the Charitable Contribution Tax Credit on the 1st $200

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Improve the Charitable Contribution Tax Credit on the 1st $200

The first $200 of annual charitable contributions attract a provincial tax credit of only 5.05%. Contributions above the threshold attract a credit of 11.16%. The credit should be revised so that all donations receive the 11.16% credit. This will particularly benefit lower income small donors and will encourage help for many charities trying to help the most vulnerable in our society.

Submitted by Gord Drimmie 11 months ago

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(latest 20 votes)

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  1. The idea was posted
    11 months ago

Comments (21)

  1. I agree as we fall far behind the US in % of income spent on charities and the better the incentive the less the burden that governments will bear. It is logical to have citizens and not governments build hospitals, schools and support charities from the homeless to many many many other social service causes as my grandparents in Toronto 1896 did and still do

    11 months ago
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  2. As someone who's income means I'd never be able to afford to give $200 to charity in a year, this is something I fully support.

    11 months ago
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  3. Jon

    We don't need more tax credits, we need less. The tax system is already overly complicated. If you want to donate to a charity, do so. But do so benevolently. Not so you can reduce your taxable income.

    11 months ago
    1 Agreed
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    1. Gord Drimmie Idea Submitter

      Jon....I want to point out that I am not suggesting an additional tax credit. The issue is that lower income people that generally donate only small amounts get a tax credit of 5.05%.....whereas higher income people that generally give higher amounts get a tax credit of 11.16% after their first $200. Why wouldn't you want to see those smaller donors get a comparable 11.16% tax credit?? This simplifies the tax system......by removing a 2-stage tax credit on charitable contributions.

      11 months ago
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  4. What evidence is there that charities are more efficient than government? There is much greater scrutiny of government than charities, especially religious ones, based on my observations.

    11 months ago
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    1. I would prefer low official taxation rates and no tax exemptions or expenditures (deductions, credits, etc.)

      11 months ago
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    2. Gord Drimmie Idea Submitter

      What has that got to do with it? Charities are a fact of life. I'm not trying to re-invent the wheel here....we'll save that for another day. All I'm suggesting is the correction of an inequity that sees lower-income folk receive lower tax credits on their donations than do upper income people. That's all...

      11 months ago
      1 Agreed
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  5. Moderator

    To give a sense of the cost of what Gord has proposed: the cost of the existing charitable donation tax credit, for personal income tax in Ontario, is estimated at approximately $600 million (see: http://www.fin.gov.on.ca/en/budget/fallstatement/2012/transparency.html). If we assume the median annual donation is approximately $150 (as it was in 2010 for Ontario, see http://www.statcan.gc.ca/pub/89-649-x/2011001/tbl/tbl17-eng.htm), and a distribution of donations where 30% of the total value of donations comes from donations less than $200, then the cost of the existing credit on the first $200 would be approximately $180 million. Doubling it to 11.16% would probably increase the cost of this tax expenditure by $180 million, bringing the total to $780 million.

    11 months ago
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    1. Gord Drimmie Idea Submitter

      Jesse: I thought I should mention that I proposed the same adjustment to the Feds whose Finance Sub-Committee studying Charitable Contributions was looking for ways to increase donations and support charities which are having a tougher time making ends meet. In the Federal situation, I wanted to see the credit on the first $200 go to 29% from 15%. I proposed a few other things as well.........all were tossed into the trashbin.

      But one change that I feel strongly about that I did NOT propose here (it gets a little complicated sometimes) is to enhance the credit for charities that spend 95%+ of their money IN Canada (because when they spend in Canada, it creates economic activity, jobs, wages, taxes, HST, and so on); and reduce the credit for charities that spend less than 95% of their money in Canada (i.e overseas initiatives for the most part). Overall, I wanted to set up a combined 50% non-refundable tax credit for donations to charities spending 95%+ in Canada; and an overall 30% non-refundable tax credit for donations to charities spending less than 95% in Canada. In my view, there would have been a small overall cost increase to Government....well worth it considering the economic activity generated by charities in Canada.

      I felt the 30% credit was still generous for "out-of-Canada" charities; and that if one considered the income (taxes, HST, etc) that "in-Canada" charities generated, the cost to Government treasuries would be something close to equal.

      Just wanted you to know that.........because the last thing i want to do is add Government spending unless there is a similar return.

      11 months ago
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  6. Gord Drimmie Idea Submitter

    I thought it would be somewhat less than that because the tax credit is a non-refundable credit. In other words, the $600 million you mention was not, as I understand it, all paid out. Based on your projection the non-refundable tax credit would go from $600 to $780.....but I'm not sure what the actual cost would be.

    11 months ago
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  7. Granting charitable status for "advancement of religion" is a wealth transfer from the non-religious to the religious and is among the worst violations of church-state separation in Canada today. Any increase in reimbursement rates would magnify this problem.

    11 months ago
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    1. Based on my understanding, the organizations which qualify for the "advancement of religion" charitable tax category also undergo far less scrutiny than the other three charitable tax categories.

      11 months ago
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    2. dhandelman1 - This is true. A much higher burden of proof is placed on educational charities for example.

      Though it should be noted that with only ~40 auditors at the CRA Charities Directorate for over 80,000 charities, the resources simply don't exist to properly monitor the conduct of charities all around.

      11 months ago
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  8. Are lower income individuals/families really going to be donating their money to charities? It's more logical for them to save up.

    11 months ago
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    1. Gord Drimmie Idea Submitter

      Many lower income families make small donations. And that is what I see as unfair because they often struggle hard to come up with the donation and yet the tax credit they receive is smaller than the tax credit more well off people receive on their donations over $200. I just think everyone tries to give what they can; the charities badly need help; and the tax credits ought to be uniform for all donations regardless of income.

      11 months ago
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  9. Can you define "badly need help"? Who requires more help: those of lower economic status or charities?

    11 months ago
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    1. Gord Drimmie Idea Submitter

      I'm sure they both need help. It is, in fact, charities that often throw the life line to some of those lower income people. Food banks are regularly frequented by working people who just can't handle all the expenses. Charities, in general, suffer from lower donation levels and higher demand on their offerings in times of economic difficulty. As a matter of fact (see comments above), the Feds had a Finance Committee working on ways to increase donating activity....they solicited input from numerous Charity umbrella organizations; and I sent in several suggestions; but other than a one-time "Super Credit" to 1st time donors, the Finance Committee was a waste of time. Nothing happened.

      Charities really need help; and donors need to be encouraged.

      11 months ago
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  10. If governments are increasing poverty, through taxing productive activity (sales, income, buildings) rather than unproductive activity (pollution, financial speculation, land speculation, resources), and making it more profitable for builders to build outward rather than upward (through zoning, development charges and land transfer taxes), why should the government effectively become more involved with charities, which tend to have less scrutiny? Charities are already subsidized through tax deductions, exemption from corporate income tax, and paying 30% less in property taxes (and religious organizations paying 0%), which encourages inefficient land use.

    11 months ago
    0 Agreed
    1 Disagreed
  11. The credit should simply be eliminated. It is grossly unethical that the government takes my taxes by force (try and not pay - eventually you end up in jail) and gives part of it away to someone who has given money to charity. I may very well hate the charity that my tax dollars are subsidizing.

    If you want to support a charity go ahead but don't expect others to pay taxes to subsidize your choice.

    11 months ago
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  12. The small charity donors do not usually donate to get income tax credits.

    10 months ago
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  13. Fun tax fact: you can save your tax credits up to 5 years and claim them all at once to maximise the amount of money that clears the $200 threshold.

    10 months ago
    0 Agreed
    0 Disagreed