The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. All articles. July — 15 min read. Key takeaways. For most people in the wealth accumulation stage of their financial journey, charitable giving will involve annual donation amounts ranging from hundreds to thousands of dollars, spread out over multiple charities or focused on a single cause.
When you donate to a registered charity you become eligible for tax credits, making charitable giving a win-win for both you and your charity of choice. This example represents a fairly straightforward case, but our tax rules include a number of other provisions that can enhance your credit amount and add significant flexibility to how you claim your credits.
These include:. Charitable giving is one of the best ways to meaningfully support causes that engage and inspire our natural impulse to help those less fortunate than we are and join with those dedicated to making our world a better place.
Working with your Investment Advisor and accountant can make this immensely satisfying activity financially beneficial for you as well. Meet early retirees Clara and Charlie, both 63 years old. Based on their age and the eligibility requirements, Charlie can give up to half of his pension income to Clara for tax purposes.
In short, because Charlie is in a higher tax bracket, he can split his income with Clara and drop into a lower tax bracket without bumping her into a higher one. Once you understand the age and eligible income rules, taking advantage of pension splitting is as simple as completing a tax form each year. No money has to change hands. What is pension splitting?
To qualify, you and your spouse or partner must both be Canadian residents, be living together at the end of the tax year, and remain together for a period of 90 days or more at the beginning of the next tax year.
For those under age 65, the most common form of eligible income is from a registered company pension plan, whether defined benefit or defined contribution. Individuals who are age 55 or older are eligible to split pension income with their spouses. In general, if one of the pension earners is in a higher marginal tax bracket than their spouse, then pension splitting is worth considering.
Other potential tax-management strategies related to pension income splitting include the pension tax credit for qualifying individuals. Taking time to care for young children can include leaving the workforce or reducing your hours. Fortunately, there is a special CPP provision called the Child Rearing Benefit that allows you to exclude years of low or no income from your benefits calculation. This accounts for periods when you were the primary caregiver raising your children under the age of seven, and can put more money in your pocket to fund your later years.
Even better news: The benefit is fully retroactive and could also help you meet the eligibility requirements for a CPP disability benefit, should you need it, as well as contributory requirements to pass along benefits to your estate and survivors in the event of your death. You must have not worked or had low earnings while being the primary caregiver of a child under the age of seven born after December either parent can claim this benefit.
You must have been eligible to receive the family allowance or child tax benefit. Whether reported by the Estate or an individual, it is advisable that some amount of the benefit be reserved to cover the tax payment once the income tax return is filed. Information including how to get started, eligibility and acceptable documents for proof of death to send with your application, along with a fillable copy of the application form, are available here.
Payment from Service Canada takes approximately 6 to 12 weeks from the date the application is received. If you have any other questions regarding the CPP death benefit, please call Service Canada at The payment received will be considered non-taxable to the beneficiary but deductible to the corporation. The amount of the payment should be reported in box of a T4A slip and the slip issued to the individual or estate receiving the payment.
The slip must be filed by the normal deadline for filing T slips, February 28 th. To be eligible, the child must be:. A child may be eligible if the parent or guardian:. CPP Allowance for the Survivor. The Allowance for the Survivor is a benefit available to people who have a low income, who are living in Canada, and whose spouse or common-law partner is deceased. Strict eligibility standards must be met. More information and application can be found here.
What is a social security agreement? A social security agreement is an international agreement between Canada and another country that is designed to coordinate the pension programs of the two countries for people who have lived or worked in both countries. Canada has signed social security agreements with a number of other countries that offer comparable pension programs.
The requirements under the social security agreements vary from agreement to agreement. It is important to check the details of the agreement that relates to you.
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