What Is the Tax Credit for Political Donations in Canada

A federal contribution can be claimed by one of the spouses (or life partner), but a contribution receipt cannot be shared between the spouses. If you have a spouse and want to contribute more than $400 per year, it would be beneficial to make two separate contributions to maximize the tax credit in a more flexible way. The credit helps reduce or eliminate the amount of tax you owe. If you have an excess balance, it can be paid as a refund after you assess your tax return, even if you do not pay income tax. In this case, you should receive your money within 6 to 8 weeks of your return being assessed by the Canada Revenue Agency. Only Canadian citizens or permanent residents are allowed to make political contributions equal to the following amounts: Abolishing the PCTC – as an alternative policy instrument – is difficult, as high-income people will benefit disproportionately while voting and continuing to donate. The PCTC seeks to compensate for an obstacle to the participation of individuals in political donations, which remains a form of political participation in its own right. Individual political gifts are likely to remain because political expression “is at the heart of the guarantee of freedom of expression and underpins the foundation of our democracy.” [34] Without tax incentives, the interests of high-income earners are likely to be more exposed. A refundable PCTC offers a modest step forward as it better meets the criteria for tax expenditures and encourages other donors in the income bracket. Tax expenditures are often less effective than other policy solutions. [31] For example, the Pro-Vote Grant Program (PVS) offered quarterly payments to political parties based on their previous election results from 2004-2015. [32] Under the PVS, a person finances his or her preferred political party by voting for them.

This policy tool is more effective because more people are voting than currently claim the PCTC. [33] The following legislation applies to the tax credit for political contributions. If you file your tax return electronically, you must keep all your receipts and documents for six years. When you submit a paper return, attach all official receipts for your political contributions to your paper return. The highest percentage tax credit is obtained at the first level of the contribution, with a lower percentage credit for each subsequent level, to a maximum allowable tax credit that varies by province or territory. [5] See “Report on Federal Tax Expenditures: Concepts, Estimates and Evaluations” (2020), online at 223 (pdf): Department of Finance [“Dept. Finance”]. If you have contributed to a registered political party in your province or territory, or to a candidate for election to the Legislative Assembly of your province or territory, you will receive a tax credit that will be deducted from your provincial or territorial tax payable.

– Not more than $1,650 per calendar year for each registered political party; – Not more than $1,650 in total in a calendar year for the combined units of each registered political party (electoral district associations, nomination contestants and candidate campaigns); and – Not more than $1,650 in total among all registered leadership candidates in the leadership race of a registered party. The PCTC is unlikely to achieve a fair outcome, as its non-refundable status often rewards high-income beneficiaries more than low-income beneficiaries. Professor Neil Brooks describes that, in general, all tax credits should be refunded because “a person who is entitled to a tax credit and whose tax liability is not sufficient to fully offset the credit should be reimbursed the excess credit as a transfer payment. If loans are not repaid, many low-income individuals are excluded from recipients of the spending program. [21] For example, many eligible claimants cannot access the disability tax credit because they “have no taxable income to qualify for the [disability tax] credit compared to other eligible claimants.”[22] .