Should I Make Charitable Donations Personally Or Through My Company?

Incorporated business owners will often ask their tax advisor whether they should make charitable donations with personal or corporate funds to achieve the best tax result.

Quite often, business owners will compare their corporate income tax rate of say, 13% on income eligible for the small business deduction or 27% on all other active business income, to the donation tax credit they get on their personal tax return, which can be 44% or more. A quick comparison of these rates and the conclusion business owners often come up with is that it would be more advantageous to donate personally and get a 44% tax benefit than to donate through their company and get only a 13% or 27% tax benefit, similar to their other business expenses.