Volunteer work can make you feel really good. You have contributed your part to make the world a better place even by a little bit. In Canada, doing good can also get you great tax deductions. The Canadian government rewards citizens who are generous and kind enough to help out those who are less fortunate than them. If you are a Canadian who makes charitable donation or volunteers, the tax law makes you eligible for deductions and credit – https://www.lifeoncredit.ca/
Volunteering in Canada
Canada recognises volunteering as a “fundamental building block of civil society”. Canadians are big donors of time and money. The country has the biggest volunteer sector in the world, second only to the Netherlands. In 2015, a Caring Canadians, Involved Canadians survey found that close to half of Canadians over the age of 15 volunteered for a cause on some level.
Canada also has a large full-time volunteer sector (meaning full-time employees working at nonprofits, charities, and the like). The National Survey on Nonprofit and Voluntary Organizations 2003 showed that Canadian nonprofits clock in over 2 billion volunteer hours and create close to a million full-time jobs. The volunteering sector in the country generates over $110 billion in revenue, which amounts to an amazing 7 percent of the national GDP.
This level of kind-heartedness is driven largely by Canadian values of helping others, and also tax incentives offered by the government.
Tax Deductions and Charitable Donations
Do you want to volunteer with the United Way on Random Acts of Kindness Day? You can then write off the amount you donated or time you dedicated from your tax filings. Canada is actually one of the few governments in the world to reward citizens for being do gooders. The Canada Revenue Agency has a number of clauses that offer tax incentives for volunteering: Donations and gifts as stated in Line 349, Line 362 volunteer firefighters’ amount, the search and rescue volunteer tax credit established by the 2014 budget, and incentives offered for gifting publicly traded shares and stock options.
The most common way for Canadians to get tax credit is by donating to charities. When you volunteer with a cause you believe in, your provincial government and the federal government will give you non-refundable tax credit – https://www.lifeoncredit.ca/cashback-vs-rewards-credit-cards/. When you donate money to a registered charity like the aforementioned United Way, you become eligible for a tax deduction. You can claim this deduction under Schedule 9 donations and gifts clause.
When you volunteer, you are not donating money but time. Like donations, volunteerism is also eligible for tax credit. There are different ways that Canadians can volunteer. For starters, you can volunteer as a firefighter in poor or rural communities without proper fire stations. If you do so, you could claim as much as $3,000 in tax credit. However, you would have to volunteer for a minimum of 200 hours per year with a single fire department.
In 2014, the Canadian Parliament made it possible to obtain tax credit for volunteering in search and rescue operations. You can claim up to $3,000 in tax credit for volunteering with water or ground rescue missions. Three thousand dollars in tax credit translates close to $450 saved in taxes. You need to have a taxable income to qualify for this non-refundable tax credit.
Credit Cards and Tax Credit
There are several ways you can put the tax credit you receive for volunteerism to good use. You can donate it to charity, save the money for retirement, or use it towards paying off credit card debt. Tax credit is an excellent way to pay down credit card bills. Some credit cards, like BMO Canadian Volunteer Fire Services Association MasterCard, even support non-profit volunteerism. You can pay your taxes with your credit card and arrange the tax credit to be directly deposited to your cardholder’s account.
Obviously, the aim of volunteerism is helping out others. If you are an avid do gooder, don’t forget to claim your tax credit for your efforts.