Category Archives: Money Tips

Can I Claim a Charitable Tax Deduction Credit for a Donation Made Outside of Canada?

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We help a lot of Canadian charities because we were both raised to believe that if you have you should share. One thing we quickly learned is that we can donate more to Canadian charities at the same total cost to us if we claim the donation on our income taxes. We also donate to some international charities. (And yes, despite what Pearson airport and Canada Post believe, the USA is actually *international!*) In the past, we haven’t bothered too much with the receipts for those foreign donations because we believed that they were not necessary for filing our Canadian income taxes. When I read the tax forms more carefully this year, though, I was left wondering if we could claim donations made outside of Canada to get a tax deduction.

What the CRA Says on Schedule 9 Donations and Gifts

This was the wording on Schedule 9 that caught my eye

“Donations made to the United Nations, its agencies, and certain charitable organizations outside Canada” (line 334)

The amount you enter on this new line 334 is added directly into your “Total eligible amount of charitable donations and government gifts” just like your gifts to registered Canadian charities.

So can you donate to international charities and claim it on your Canadian taxes? Which charitable organizations outside Canada are included in “certain?”

Which are the “Certain Charitable Organizations Outside Canada” and Which Aren’t?

I went hunting on the CRA website to find out if the health and children’s charities we donate to internationally are “claimable.” Here’s what I found:

Did the Queen Give it the Royal Nod on Behalf of Canada?

I found at http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/gftsfrmhrmjsty-lst-eng.html
that

“A listed charitable organization outside Canada that has received a gift from Her Majesty in right of Canada is a qualified donee until 24 months from the date of the gift.”

A list of which gifts Queen Elizabeth II has made within the required time period is provided. For the 2012 taxation year, these include

  • Education Africa, in South Africa
  • The Rhodes Trust, in the United Kingdom
  • the Aga Khan Foundation, in Switzerland
  • and several others

The list is certainly not long!

Did One of Our Politicians Go to Uni There

At http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/prscrbdnvrsts-lst-eng.html there is a list of international universities to which you can donate and claim the expense on your Schedule 9.

(Donations to most Canadian universities are also eligible. You can check by looking up the name of the university on the CRA website at http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html.)

So if you want to contribute to the University of Tartu, rest assured you can get back a portion of your contribution. (or donate more at no additional total cost to yourself) Or to the Maharishi University of Management, which I’m sure you know is in Iowa.

Gifts to the United Nations and Its Agencies Qualify Too

I could not find a specific list of United Nations agencies on the CRA website, so you might have to contact the CRA to determine if an agency is approved.

What Other International Gifts Can be Claimed on Schedule 9?

At this time, the UN and its agencies, foreign universities, and the organizations favoured by Queen Elizabeth II on Canada’s behalf are the only ones qualified. So our donations to help children in other countries and with world health issues are not eligible.

Still, if you did donate to one of those select few organizations, you should be sure to report your claim on Schedule 9. Assuming you have taxes to pay, you will be able to reduce them using the associated credit. Then you can use the money you didn’t have to pay in taxes to contribute more to the same or another charitable effort, at no additional total cost to yourself!

Do You Work Primarily in the USA or Internationally?

This information is intended for average Canadians who work in Canada, generally donate in Canada and pay taxes only in Canada. It appears that there may some other eligible donations that apply only in very specific circumstances, particularly for Canadians who work in the US (or other countries) and are paid in US dollars (or other currencies). If that describes you, you may want to talk to an accountant about which contributions to US (or international) charities you may be able to claim.

If you read the comments, below, you will find a very useful and detailed description of one case in which a taxpayer could claim donations made to US charities based on income earned in US dollars.

I don’t feel qualified to judge which international (including American) charities would qualify for this tax break in Canada. I’d recommend you look for a tax accountant who specializes in Canadians working abroad if you have a substantial donation that you wish to claim. (It’s possible that in that case you should be getting advance authorization from the CRA before submitting the claim.)

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Early Retirement. Be Very Afraid: It Could Happen to You!

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Once again this week, I have been forcefully reminded that early “retirement” is not a choice for many Canadians. It’s something that happens to them, not something they select. Basically, your boss walks into your office one morning and says, “Sorry but we don’t want you any more. You can take this ‘bridging’ package and retire early. Or you can be fired. Your choice.”

That’s more or less what’s happening to up to 45 employees of RBC.

For those who have been busy trying to cling on to the storm-swept rock that is their own job, here’s what’s happened.

The Royal Bank of Canada has chosen to outsource and offshore some jobs. That’s not particularly surprising although it’s always unpleasant. The brouhaha has developed because of how they handled the transition.

RBC hired a company, iGATE Corp., to do the work in future in India. However, that company has brought the new workers to Canada to be trained by the current Canadian RBC staff. In fact, they may be here being “trained” for as long as two years, according to some news stories, although it appears 3 months is more likely, according to other reports.

The RBC staff have been told they are welcome to apply for any internal vacancies, but unless they find a job by the end of April, they will be out of work. (That was according to an early CBC news report.) Most of the affected staff, according to the CBC report, are in their fifties or older and are very gloomy about their prospects of finding a job if they are pushed out the door.

Forced Early Retirement Can be a Financial Disaster

Many workers in their early fifties are just paying off their mortgage. In fact, a study released this week by CIBC says most Canadians expect to be 57 before they pay off the mortgage. These workers are often counting on paying off their home and then using the extra cash flow to boost their pension and possibly help their children with education expenses. Usually the last 10-15 years of your working life are when you finally start to be able to accumulate cash, money that will be very welcome if not essential during retirement.

Being forced out at, say 55, can be devastating. It’s very unlikely an older worker will walk out one door and straight in another. Months or even years of lost salary loom. And anecdotally most older workers I’ve seen end up working in a different lower-paying field for the rest of their career. Many end up starting small businesses which, while they can be emotionally rewarding, are rarely as financially beneficial as employment income at the top of a salary grid with dental and health benefits.

Don’t Be Complacent: Save Early and Save Lots

If a company decides to layoff and restructure, or outsource or offshore, there’s little an older worker can do to stop them. The best I can suggest is that people try to keep their skills current and flexible. If you’ve been working 20 years in one company, do you even have a résumé? It may be worth taking a bit of time to draft one. If you see weaknesses (Does your company still use Win95? What professional organizations do you belong to? Did you somehow shift around within the company without ever getting hands-on managerial experience?) try to address them within your current job or through a continuing education course or two.

For those just starting your careers, don’t think you’ll have lots of time to save for retirement later. Build an emergency fund first, then start socking away money against the unforeseen. Or at the very least, continually invest in yourself by upgrading your skills and adding to your education either through formal courses or informal mentoring. Perhaps plan on how a hobby could become a career if needs must.

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