Its what I think: PART ONE

Do you really need a Donation Receipt?

People currently are obsessed with obtaining a tax credit. What does the tax credit really accomplish? Is receiving a tax credit the sole purpose of giving a charitable contribution to a non-profit organization. I should hope not. There are other reasons to give. Some give as a sense of duty or obligation. They give to religious orders, medical foundations, and relief funds. One of the main reasons for giving is to feel better about themselves. Some often swell up with pride that $10 J has made a significant difference to the state of the world. Therefore, a tax credit should not be the fundamental reason for making a charitable contribution. Section 118 of the Income Tax Act permits a formula that calculated the federal tax credit for charitable donations. For the purposes of an example, let us make some assumptions. The total taxable income is 20,000. The individual donated 3,500 to qualified Canadian charities. Let us calculate the ‘significant’ tax credit. The formula for 2005 included 16% of the first $200; + the highest federal marginal tax rate say 29% times total charitable donations less $200. The tax credit is = 32+ 957 = $989 (So the true cost of the gift was only $2,511). Does this tax credit make a difference? 989 * federal marginal tax credit. This amount saves $286.81 (estimated) in taxes, which might otherwise be paid out. However, wait; the tax credit for charitable contributions is usually used after all the other tax credits have been used. On a taxable income around 20,000 the minimum threshold to were federal taxes would be owing hasn’t been reached. So for the poor farmers and working families in Canada, the purpose of a charitable contribution is not for tax savings or to make themselves feel good, but to give to make a difference in their community. United we stand, and united we can make a difference in our charitable contributions. Just think how many small donations are gathered up for heart and stroke foundations, in our local community. Not one farmer or labourer could ever give millions of dollars, but united again we stand in making a fundamental difference in society. At least that’s what I think.