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2007 saw $10 billion donated in Canada. Increase of 12% over 2004Over 2.1 billion hours volunteeredAverage donation was $437 ? up 9% from 2004Over 23 million Canadians donated25% of the 23 million gave 82% of the $10 billion.Religion = 46% of $10 billion donated. 35% of 23 million. High Octan
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5. High Octane Charitable Giving Known as Public Charities:
All resources devoted to charitable activities; and
More than 50% of trustees, directors must be at arms length. However, charities are not re-designated solely on contribution; and/or
Not more than 50% (75% for Foundations) of capital contributed or paid in came from related persons (except other charities, municipalities, governments, etc); and
Can carry on other businesses (e.g. annuities, car washes, gift shops)
Public Foundations can not incur some debt (e.g. annuities).
6. High Octane Charitable Giving
All aspects of Charitable Organization and Public Foundation except:
More than 50% of trustees or directors are not at arms length; and/or
Can not do some investments (non-qualifying investment)
Can not do any other business
More than 50% of capital came from related persons or companies; and
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14. Combined federal and provincial rate = highest MTR (exception is Alberta)
Tax deduction versus tax credit
Gifting non-cash property reduces tax savings
Property tax, GST, PST, and so on
Advantage/eligible amount
Timing of gift (current/deferred)
Tax Treatment for Gifts
15. Contribution limits (Indv/Corp)
Contribution carryforwards
Direct versus indirect tax savings
ITA 110(2), 110(1)(d.01), (2.1), 110.1(1)-(7) Corp
ITA 118.1(1)-(20) Indv
149.1(1)-(24) Reg 3500, 3702 Charities
38(a.1),40(1.01) 237.1(1) 248(30)-(41), 143.2(6.1), Reg 3200 ALL of the above
Tax Treatment for Gifts, cont.
17. Cash
Listed securities
Insurance (intangible)
Personal-use property (such as boats)
Real property (such as vacant lots)
Capital (such as buildings)
Interests (such as trusts)
Other/combinations
Types of Property Gifted
18. No longer king!
No income inclusion
Easy to use
Universally accepted
Different currencies acceptable
Valuation simple Cash
19. Non-private shares
Maximize tax savings
Easy to use
Valuation easy to obtain
Timing issues (when to issue tax receipt)
Accounting required Listed Securities
20. Generally deferred benefit
Cash when received
Windfalls/surprises
Valuation
Accounting issues
Heavily endorsed Insurance (Intangible and deferred)
21. Someone elses garbage
Use can be more difficult
External valuation if MV > $1,000
Convert to cash then donate
CRA scrutiny (such as artworks)
Operating Expenses (such as gas, tax, licenses)
Obligated to accept Personal-use Property
22. Use can be difficult
External valuation required
Often convert to cash then donate
Operating expenses (such as utilities, taxes)
Obligated to accept
Net tax savings reduced
Property taxes, maintenance, tennants, etc
Real Property
23. Use can be difficult
External valuation required
Convert to cash then donate
Operating expenses (such as utilities, taxes)
Management/tenant issues
Obligated to accept
Net tax savings reduced
Capital Property
24. Deferred benefit
Often cash
Easy to use once received
HUGE Valuation issues
Legal/accounting costs
Ongoing reporting required
No clear Finance roadmap
Interests (Trusts)
25. Trepidation
Large $$$
Deferred
Known/surprise
Cross Border issues
Tax issues for donor
Gifting arrangements
Promoted versus natural
Other/Combinations
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29. High Octane Charitable Giving Charity A with fiscal year-end of Feb 28, 2010 issued tax receipts for $1 million. Assuming no other assets, what amount must the charity expend on charitable activities by fiscal year-end 2011?
$800,000
Charity B with fiscal year-end of Mar 31, 2010 issued tax receipts for $1 million. Assuming no other assets, what amount must the charity expend on charitable activities by fiscal year-end 2011?
$35,000
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36. High Octane Charitable Giving Gifts by Way of Bequest or Inheritance
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79. CGA Personal Tax Planning handbook
Charities section on PD Net(under Taxation)
http://www.cra-arc.gc.ca/tx/chrts
http://www.irs.ustreas.gov/
http://www.charitylaw.ca/index.html
http://www.cagp-acpdp.org
http://www.givingandvolunteering.ca/
dosborn@lawtonpartners.ca
1-888-944-1144, ext 256 Resources for CGAs
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