With Parliament prorogued until March 24, advisors and clients are largely in the dark regarding details about the extended deadline for charitable donations.Patrick Doyle/Reuters
The federal government’s proposal to extend the charitable donation deadline to Feb. 28 gives Canadians an extra opportunity to lower their tax bill for 2024. But, as with many tax proposals, Prime Minister Justin Trudeau’s decision on Monday to prorogue Parliament has left taxpayers wondering whether they can rely on the measure.
Charitable sector tax experts believe that even if the Liberal government doesn’t pass the proposal into law before a federal election is held sometime later this year, the next government is likely to move forward with the initiative.
“If the Canada Revenue Agency is accepting returns based on the announcement – as I assume the government will require – then I don’t see how a new government will be able to walk it back,” says Adam Aptowitzer, partner and national leader, charitable and not-for-profit law, with KPMG Law LLP in Ottawa.
Malcolm Burrows, head of philanthropic advisory services with Scotiatrust, Scotia Wealth Management in Toronto, also believes any new government would pass the extension into law: “It’s a goodwill thing, it’s not a politicized [issue].”
Nevertheless, a taxpayer who makes a charitable donation in the first two months of 2025 with the intention of claiming an associated donation tax credit in 2024 will have to do so without certainty that the change will become law.
In addition, Ottawa provided few details to accompany the extension. That leaves advisors and clients largely in the dark in terms of planning until the government releases guidance or draft legislation.
“The larger the amount [of the donation], the more significant the plan, the more nervousness and caution would apply,” Mr. Burrows says.
On Dec. 30, the Department of Finance said it would extend the donation deadline to help charities that may have been affected negatively by the four-week Canada Post strike that ended Dec. 17.
Finance also said it would introduce legislation to make the change “once Parliament returns in the new year.” However, on Monday, the governor-general prorogued Parliament until March 24 at Mr. Trudeau’s request.
The Department of Finance didn’t provide more information about when it expects to release draft legislation to implement the change. However, in an e-mail to the Globe, a spokesperson confirmed that individuals making donations in January and February this year would be able to claim those donations on either their 2024 or 2025 tax returns (or in any of the following five taxation years).
The Canada Revenue Agency did not say if or when it was expecting to provide guidance to taxpayers on the proposed extension.
Under current rules, an individual must make a charitable donation by Dec. 31 to obtain a tax receipt and claim the donation tax credit for that year. Unused donation tax credits can be carried forward and claimed in any of the next five taxation years.
Individuals can claim a donation tax credit for donations to registered charities of up to 75 per cent of a taxpayer’s income in a year (100 per cent in the year of death and the year before death).
The federal donation tax credit is 15 per cent on the first $200 of donations and 29 per cent (33 per cent to the extent income exceeds $246,752 in 2024) on amounts above. The provinces and territories also offer donation tax credits at different rates below and above the $200 threshold.
The federal government’s extension of the deadline will give clients and their advisors more time to determine how much income clients earned in 2024 and what level of donation would help them mitigate or eliminate tax for the year.
“If you have somebody who has philanthropic intent anyway, who also wants to minimize their tax [liability], here’s the opportunity to measure that with some level of exactness that is otherwise just a guess [at Dec. 31],” Mr. Aptowitzer says.
And even if the government doesn’t go ahead with the proposed extension, a taxpayer would still be able to claim a tax credit for a donation they made in January and February this year on their 2025 return or carry it forward, Mr. Aptowitzer says: “There is a safety net there. It’s not like we’ll lose the benefit [of the donation tax credit].”
Stephen Hsia, a partner with Miller Thomson LLP in Vancouver, says the lack of guidance accompanying the announcement leaves unanswered questions, including whether the extension applies to corporate donations as well as those by individuals, or how the draft legislation would address the donation of appreciated assets.
Mr. Hsia stated in an e-mail that taxpayers who donate in the first two months of 2025 to take advantage of the extension should consider documenting their intention to do so with both the charity and their tax advisor so that “internal record-keeping and external reporting with respect to that gift are consistent.”
“If that is the case, then I would also expect the CRA will have fewer questions about, or grounds to challenge, the gift or when donation tax credits were claimed,” he says.
Emily Mantle, a chartered professional accountant with Compass CPA in Sudbury, Ont., says some charities may run into administrative difficulties managing the extension.
“Some of the smaller charitable organizations that haven’t yet moved to a digitized system need to be aware of [the Feb. 28 deadline] so that they’re issuing the donation receipts earlier,” Ms. Mantle says.
Mark Blumberg, a lawyer with charity and non-profits law firm Blumbergs Professional Corp. in Toronto, says he believes the extension will cause confusion and uncertainty for charities and donors, both of whom are accustomed to a calendar-year deadline.
For example, a donor might mistakenly claim a January, 2025 donation receipt in 2024 and then again in 2025, he says.