The first $200 of eligible donations made to a qualifying charity receives a 15% non-refundable tax credit. Contributions above that are entitled to a 29% credit. If you are subject to the highest tax bracket you are entitled to a 33% credit for donations over $200.
How do I maximize tax savings by giving to charity?
There are a few things you should consider:
- If you and your partner make separate contributions to charity, you should claim your donations on a single return. This is because you will only have to deal with the 15% lower tier once and will therefore maximize the amount you get from the 29% tier.
- The timing of charitable donations is important. If you are considering making a $200 donation to a charity every year, consider making a $400 donation every second year, so that half of the donation is eligible for the credit at the higher rate.
- You don’t have to claim your charitable donations in the year you make them. Charitable donations can be claimed in the year they are made or in any of the five subsequent years. You may wish to bundle them to ensure you benefit from the higher credit rate or simply because you forgot to claim them previously.
What if I donate publicly listed securities to either a charity or a public or private foundation?
The capital gains resulting from these are not taxable.
Can I get tax savings if I donate to charities outside of Canada?
Maybe. CRA maintains a list of eligible foreign charities.
What if I donate to a U.S. charity?
There may be some tax relief, assuming the organization would qualify as a charity if it were set up in Canada. However, to reap the tax benefits, the amount you donate cannot be more than 75% of your income from U.S. sources.
Medical, Dental & Eye-care Expenses
How much can I claim?
For 2023, qualifying medical and dental expenses greater than $2,635 or 3% of net income (whichever is less) are eligible for a 15% non-refundable federal tax credit, which can be used to reduce what you owe in taxes.
What are some examples of medical, dental and eye-care expenses I can claim?
Some of the expenses that can be claimed include:
- medical costs
- dental fees
- prescription glasses
- prescription medication
- medical and dental plan premiums
It is important to check with your FWH advisor as to what is and isn’t covered.
Can I claim over-the-counter medications?
No, only medication prescribed by a doctor and recorded by a pharmacist can be claimed. This means that even vitamins and supplements, which are recommended by a doctor but purchased over the counter, cannot be claimed.
What about expenses for infertility treatment?
Some recent Canada Revenue Agency (CRA) rulings have found the costs related to in-vitro fertility programs, specifically sperm and egg freezing and storage, would qualify as medical expenses if they are paid by you to a medical practitioner or a public or licensed private hospital for treatment for you, your spouse, common-law partner or dependent. As well, laboratory, radiological or other diagnostic procedures related to the in-vitro fertility program would also qualify.
Whose expenses can I claim?
You may claim medical expenses for:
- your spouse or common-law partner
- children under the age of 18 (before the end of the tax year) who are yours, your spouse’s or common-law partner’s.
Who should claim my spouse or common-law partner’s medical expenses?
The person with the lower income may want to claim the medical expenses because it will usually maximize the expenses claimed. That being said, there are circumstances where the person with the higher income should make the claim. In any case, we can help determine what the best option for your situation is.
What if I need to travel to obtain medical services?
If medical services are not available where you live, you may be able to claim the transportation costs and travel expenses associated with seeking treatment.
Are you in residency?
If the answer is yes, the first year of residency can be the best time to incur any medical, dental and eye-care expenses you may have been avoiding in medical school. There are a few reasons for this:
- Some of these expenses can be partially or fully covered by your health insurance plan. If there is a portion not covered by the insurance plan, you may be able to claim it.
- Your income in the first year of residency will likely be the lowest of your career, so you won’t be restricted in latter, higher earning years by the 3% of net income restriction mentioned above.
One other thing to consider is whether you have significant tuition tax credits carrying forward from previous years. These credits must be used before you can claim any medical, dental and eye-care expenses.
What is the timeframe for claiming medical expenses?
CRA allows you to claim medical expenses for any 12-month period ending in the year of the tax return. This means you can choose the 12-month period that maximizes your medical expense tax credit. For example, on a 2023 tax return, this means the 12-month period could conceivably be August 7, 2022 to August 6, 2023 or March 26, 2022 to March 25, 2023. Be sure not to claim the same expenses twice.
First-Time Home Buyer’s Tax Credit
You may claim a tax credit of up to $1500 ($10,000 x 15%) the year you buy or build your first home.
How do I qualify of a first-time home buyer?
To qualify as a first-time home buyer, you must meet the following conditions:
- in the four preceding calendar years, you, your common-law spouse or partner may not have owned or lived in another home which was owned by either spouse
- you must live in the home as a primary residence within one year of the purchase date
- the home must qualify as a housing unit under the Home Buyers’ Plan, such as a single-family home, demi-detached home, townhouse, mobile home, or condo unit.
I am buying the home with my spouse. Does that change the amount we can claim?
The total amount claimed between the two of you cannot exceed $1500.