Rewards for the generous: A review of recent tax changes for charitable donations

The rules for charitable donations in the Income Tax Act have undergone a number of changes in the past few years. Where a taxpayer makes a large gift, there is less chance that a portion of the gift will be unclaimed after the 5-year carryforward period because of the higher net income limitation rate. For taxpayers gifting capital property, further improvements to the net income limitation rate have been proposed where capital gains and recapture arise from the gift. In addition, alternative minimum tax will not be payable on the untaxed portion of a capital gain arising from a charitable gift. Although these enhancements apply equally for inter vivos gifts and bequests, the greatest benefit may arise in respect of gifts made on the death of an individual. For individuals who are contemplating gifts of non-qualifying securities, great care is required to ensure that the claim for a charitable donation will not be denied.