A few holiday charity gift-giving
a goat Oxfam Canada allows you to buy a goat
for a needy family for $58 (chickens are a bargain
at $15 or you could splash out for a $120 donkey)
a girl to fish Donors to the Canadian Harambee
Education Society provide high school tuition
to bright but disadvantaged girls in Kenya and
Tanzania. Tuition fees are $450 per year
sponsors are encouraged to commit to the girl's
full four-year high school education. www.canadianharambee.ca
leg up Microfinance is the buzzword in charity
circles right now. The idea is you lend an entrepreneur
in a developing country capital to get their business
going. For instance, $100 to a Peruvian woman
to buy a sewing machine to make clothes. The Mennonite
Economic Development Associates of Canada (MEDA)
is one organization that facilitates loans for
Canadian micro-investors. www.medatrust.org
More and more doctors and their
families are rediscovering the true meaning of the holidays
and forfeiting gift exchanges in favour of charitable
donations. If you're thinking of getting in on the act,
look no further for inspiration than fellow MD and charity
tour de force Dr Asha Seth.
Dr Seth is a trained ob/gyn who
runs a family practice in Toronto. But the 35 years
she's practised medicine in Toronto hardly begin to
explain her compassion towards others.
She's personally donated around
$250,000 to a list of charities that includes Hospital
for Sick Children and Doctors Without Borders. Her fundraising
efforts ring in much higher.
Dr Seth is very humble about it
all. "That's my passion," she says. "It gives me personal
satisfaction in helping to contribute to the bright
future of others."
FUZZY, TAX DEDUCTIBLE
But don't forget: charity isn't just about the giving.
Luckily your accountant's two favourite words
tax deductible allow you to get something back
besides that warm and fuzzy feeling.
The most straightforward approach
is to simply make straight donations to charities and
receive a tax receipt at the end of the year. But there
are ways to maximize the benefit you get from your largesse.
If your charitable pledges fall
into a smaller range, then $200 becomes an important
checkpoint. Total donations under $200 are worth about
24% when provincial tax is factored in and 46% after
that amount. So if you don't quite reach $200, you may
want to consider combining donations from other years
to get over that threshold. According to a KPMG example,
a $100 donation above the $200 level for the year costs
you only about $54 instead of about $77 below that level.
You can carry forward donations
and claim the credit in any of the following five years.
The maximum credit you can use in a year is 75% of your
Another way to avoid missing the
$200 mark is to lump the separate donations you and
your spouse make together and claim them on one return.
A more creative way to maximize your charitable donations
is to funnel stocks into your favourite charities. Let's
assume that you have an investment portfolio and you're
in the highest tax bracket, which, depending on your
province, would be around 46%. A change in the 2006
federal budget means if you donate securities directly
to charity, you don't have to pay capital gains tax.
Why does that matter?
"If you have securities (a) you
don't have to come up with the cash to make the donation
and (b) you're better off donating the security, not
selling the security and then donating the cash," explains
Aleem Janmohamed, an investment advisor at BMO Nesbitt
Let's say you bought a stock at
$10,000 and it's worth $60,000 now. If you sell it,
there's a capital gain of $50,000. The taxable portion
of that is 50%, or $25,000. In the 46% tax bracket,
you'll have to cough up $11,500.
That means if you wanted to use
the $50,000 capital gain towards charity, it's really
only worth $38,500 after tax. If you're sticking to
your donation target, you're going to have to dip into
another source to come up with the balance.
But instead, let's say you donate
the stock itself to the charity. Your tax credit is
still going to be $23,000 (46% of $50,000). With the
new rules, you avoid paying a capital gains tax. That
means it costs you only $27,000 to make the donation.
Charities aren't in the dark about
this. They're actively seeking stock donors. "Not only
are they aware of it, they are promoting and marketing
it as a way to raise the funds," Mr Janmohamed says.
As for Dr Seth, she demurred when
it came to talking about her tax situation. But it's
a good bet her accountant is doing wonders with her