BMO Economics Suggests Single Tax Credit of 29 Per Cent to Encourage More Charitable Giving in Canada
OTTAWA, ONTARIO--(Marketwire - Feb. 9, 2012) - A report from the BMO Economics Department released today states that charitable donations in Canada could be encouraged by extending the 29 per cent tax credit to all donations, not just those over $200. Currently, donations below $200 receive a 15 per cent credit.
The report was presented to the House of Commons Standing Committee on Finance during an appearance by John Waters, Vice President and Head of Technical Expertise, Wealth Group, BMO Nesbitt Burns at the committee's hearing today on tax incentives for charitable donations.
"While this would have little or no impact on large donors, we believe it will help encourage giving for more modest donors, as the marginal return would nearly double for gifts of up to $200," said Doug Porter, Deputy Chief Economist, BMO Capital Markets. "Further, the median claimed charitable donation in 2010 was $260 - versus an average of $1,437 - suggesting that many donors could benefit from such a step."
The report noted that the overall cost of this step would be less than $200 million, even if more than 1.5 million Canadians began giving more generously to charities. "Given the projected fiscal cost, we would recommend considering implementing this change only when the revenue situation is stronger and the fiscal position is closer to balance," said Mr. Porter.
"We applaud this recommendation from BMO, which we believe will help organizations like United Way broaden their base of donors," said Michèle Thibodeau-DeGuire, President and Executive Director, Centraide of Greater Montreal. "It would make it much easier for donors to understand what the amount of their tax credit will be."
The full report can be downloaded at: http://www.bmonesbittburns.com/economics/reports/20120209b/SR120209.pdf.
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