Amended legislation for the charitable donation tax credit

Section 118.1 of the Income Tax Act provides a tax credit to individuals for donations made to registered charities and other qualified donees. The amount of the credit was previously calculated as 15% on the first $200 and 29% on donations above that amount. Subsection 118.1(3) was amended in 2016 following the introduction of a new top individual income tax rate of 33% on income over $200,000.

A tax credit rate of 33% now applies to donations made after 2015 that are above the first $200, when an individual's taxable income exceeds the top personal tax bracket of $200,000 for 2016 and $202,800 for 2017.

As a result of this amendment, the credit is calculated as the total of the following:

  • 15% on the first $200 of total donations

  • 33% on whichever of the following amounts is less:

    • the amount of the donations for the year above the first $200

    • the amount of the taxable income that is over $200,000 (2016) or $202,800 (2017)

  • 29% on the total donations for the year above the first $200, which are not eligible for the 33% rate above

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