The Canada Revenue Agency has confirmed that Canadians will have the option of claiming certain charitable donations made before March, 2025, against their 2024 income even if the changes to extend that tax deadline aren’t law yet.
The agency’s announcement on Thursday came after the Department of Finance published draft legislation providing greater detail on the one-time deadline extension. The federal government had said on Dec. 30 it intended to push back the cut-off date for claiming the tax break on donations as a way to mitigate any negative impacts on charities from the four-week Canada Post strike that ended Dec. 17. Normally, taxpayers have until Dec. 31 to make charitable donations they can claim in the same tax year or carry forward to following years.
The prorogation of Parliament until March 24 has cast uncertainty on whether the CRA would uphold the extension, along with a number of proposed tax changes, including the increase in the capital gains inclusion rate, that had not been enshrined into law yet. But the agency reasserted on Jan. 23 it will administer the delayed deadline, in line with its long-standing practice of following proposed legislation.
The draft legislation indicates any donations by individuals must be in the form of cash, cheque, credit card, money order or electronic payment to be eligible for the postponed deadline. Gifts made through a payroll deduction, as well as those made through the will of a person who died after 2024, do not qualify for the extension.
Canadians who make an eligible donation by Feb. 28 will be able to choose whether to claim the associated tax credit in their 2024 tax return or, as they normally would be able to, in either 2025 or any of the following five taxation years.
Corporations will also be able to take advantage of the extension for qualifying donations made in the first two months of 2025 if they have a taxation year that ended after Nov. 14, 2024, and before Jan. 1, 2025. The same applies to graduated rate estates (GREs), a type of trust that generally arises after an individual’s death.
Individuals can claim a federal tax credit of 15 per cent on the first $200-worth of donations and 29 per cent on amounts above (the rate rises to 33 per cent for those subject to the top federal marginal tax rate, which applies to taxable income of more than $246,752 in 2024).
Corporations can claim qualifying donations as a tax deduction, which reduces their taxable income. A GRE can claim a donation tax credit.
The government said it will introduce legislation implementing the changes once Parliament returns in the new year.
