As we all adjust to life in the midst of the COVID-19 pandemic,
many have been donating time and/or money to help those in need.
Last week, Jack Dorsey, the CEO of Twitter and Square, announced
that he is putting $1 billion of his Square equity into a fund that
will directly provide coronavirus relief. What an unbelievable
gesture.
The tax lawyer in me, though, hopes (but is sure) he got proper
tax advice to structure this gift in the most tax-efficient manner.
And hopefully everyone else, no matter the size of the donation, is
also getting proper tax advice when applicable.
Generally, donations to registered charities in Canada can be
claimed as a tax credit against income. Where an individual is
earning income at the top marginal tax bracket, the value of that
tax credit is more than 50 cents for every dollar donated. A $1,000
donation would, thus, ultimately cost the taxpayer less than $500
while the recipient gets the whole $1,000.
