Did you miss the normal Dec. 31 deadline to make a charitable donation for the 2024 tax year? Well, you may be in luck, courtesy of the postal strike.
On Dec. 30, the federal government announced that it intends to amend the Income Tax Act to extend the deadline until Feb. 28, 2025, for making donations eligible for tax support in the 2024 tax year. The government explained that the extension is meant to “mitigate the impacts of the four-week Canada Post mail stoppage,” since many charities rely on mass mailing campaigns each December, and donor response to those solicitations may have been significantly impacted due to the postal strike.
“Many Canadians donate in the last eight weeks of the year with an estimated 40 per cent of all donations coming in during the holiday season,” said Bruce MacDonald, president and chief executive of Imagine Canada in a December 2024 press release. “A large proportion of donors still donate by mail, and these donations are not being delivered during the labour dispute. The postal strike also means that many organizations were not able to send donation appeals via direct mail this year. There’s no doubt that the strike has a significant impact on donations, with organizations already reporting significant losses.”
To mitigate delays caused by the postal disruption Imagine Canada, along with non-profit coalition Cooperation Canada and the Health Charities Coalition of Canada Inc., called on the government to extend the deadline for eligible charitable donations into the new year, so that donors can receive tax receipts for the 2024 fiscal year even if donations are received and processed in early 2025. This was followed by a Dec. 24 letter from Ontario Premier Doug Ford, in his capacity as chair of the Council of the Federation on behalf of Canada’s premiers, to Prime Minister Justin Trudeau asking the federal government to extend the deadline for claiming charitable donations on tax returns through to the end of February.
As a reminder, when you make a charitable donation, you get a donation receipt that allows you to claim both federal and provincial non-refundable tax credits when you file your return. On the federal side, you get a credit of 15 per cent for the first $200 of annual charitable donations. The credit rate jumps to 29 per cent for cumulative donations above $200 (or 33 per cent if you have income subject to the top 33-per-cent federal rate, which was income of more than $246,752 in 2024). Parallel provincial credits work similarly, providing most Canadians with a minimum combined federal/provincial tax credit worth at least 40 per cent for donations above $200 annually.
Allowing donors until Feb. 28 to make a donation and claim it on the 2024 return will also permit some late tax planning opportunities for those who are charitably inclined.
Let’s say you’re eager to get a head start on your 2024 tax return preparation, and start preparing a draft of your 2024 return in January or February 2025 (some 2024 tax preparation software packages have already been released.) You realize that you owe a few hundred dollars of tax due to some investment income you earned and capital gains you triggered during 2024. You go online, make a 2025 donation to your favourite charity, generating an instant electronic tax receipt that you could immediately enter into your tax preparation software package. And presto, bingo: You have eliminated any tax owing.
This is a rare form of retroactive tax planning, similar to making an RRSP contribution for the prior year in the first sixty days of the current one.
The idea of extending the donation deadline by up to 60 days is not a new one. In fact, in October 2012 Peter Braid, who served as the Conservative Member of Parliament (MP) for Kitchener-Waterloo from 2008-2015, tabled a Private Member’s Bill (PMB), Bill C-458, that proposed to extend the deadline for charitable donations to the end of February to coincide with the deadline for RRSP contributions.
He got the idea from a submission made to the standing committee on finance in February 2012 by Ottawa charity lawyers Arthur Drache, a former tax columnist for the Financial Post, and Adam Aptowitzer, who is currently a partner and the national leader of charitable and not-for-profit law at KPMG Law LLP.
Braid said at the time that our current tax deadline of Dec. 31 “falls during the busy holiday season, when Canadians are not usually focused on strategic financial planning. In addition, many families have financial constraints at this time, and are unable to maximize their donations in order to provide a greater charitable tax credit.”
While the 2012 private member’s bill never became law, Braid is pleased with the current extension, and hopes that it will become part of the Tax Act for future years as well. “Moving forward, I would encourage this government, or a future government, to thoroughly study the impacts of making this change permanent … creating two seasons of giving — one that leverages the benevolence of donors during the holiday season, and (a) second (one) that combines the goodwill of donor motivation with strategic tax deductions when Canadians are more focused on maximizing their income tax refunds,” said Braid in an email this week.
Aptowitzer agrees: “Extending the deadline … is a good idea, independent of the reasons for it in this case, and given the general decline in charitable giving, one would hope it will become a permanent feature of our system.”
In its press release, the government said that it will introduce legislation effecting these changes once Parliament returns in the new year. But given the precarious government situation, should we be worried about this becoming law in time for tax filing?
This question was raised by Stephen Hsia, a charities lawyer with Miller Thomson LLP in Vancouver, in an e-blast to clients advising them about the donation deadline extension. He suggested that, given the uncertainty, it would be safest to make donations by Dec. 31, which is too late for anyone reading this column.
But, even if there is a non-confidence vote that brings down the government before enabling legislation is passed, I can’t envision a scenario in which any new government that is formed doesn’t fully support this charitable provision, retroactively.