Why read this?
- donated to a political campaign, or
- attended a political fundraiser, or
- volunteered for a campaign.
1 Claim federal political contributions
› Any donations your client and her spouse or common-law partner has made to a candidate or registered federal political party are eligible for a non-refundable credit. (See “Federal political contribution tax credit,” this page.)
i. Volunteering time isn’t eligible for the credit.
ii. If your client went to a fundraiser, Elections Canada says the ticket price, minus the fair market value of the event, is a donation (see “Fundraising dinners,” below).
› Decide whether to pool your client’s credits with her spouse’s or to claim them separately. (See “Maximizing the federal credit,” below.)
› Contributions must be claimed the year they’re made, says Jason Valente, tax manager at Logan Katz in Ottawa. They can’t be carried forward or back.
› List total contributions on Line 409 of Schedule 1, Federal Tax.
b. If the total contribution is $1,275 or more, enter $650 on Line 410 of Schedule 1.
Line 349 (Donations and Gifts) of the return.
Political contributions have different tax rules compared to other donations.
FEDERAL POLITICAL CONTRIBUTION TAX CREDIT
Source: KPMG’s Tax Planning for You and Your Family 2015
Example: Your client attends a $250-per-person fundraising dinner organized by her favourite federal candidate. The dinner and entertainment has a fair market value of $100. The campaign issues your client a donation receipt for $150—the portion eligible for the tax credit.
2 Claim provincial political contributions
› In Ontario, your client can receive a credit of up to $1,330. She must:
ii. have made a contribution to a registered Ontario party, constituency association or candidate.
› To calculate the Ontario credit, use Line 6 of CRA’s Provincial Worksheet for Ontario and complete Line 5 of Form ON479. For details of your province’s political donation credit, see CRA’s guide.
3 Prepare your client for voting
› If your client is a Canadian citizen, and wants to be registered, answer “Yes” to questions A and B on page one of her return.
4 File your client’s return
a. If filing electronically, don’t submit donation receipts. Keep them for six years, in case CRA requests them, says Valente.
b. If filing by paper, attach receipts.
Maximizing the federal credit
Should your married or common-law clients pool their donation receipts with their partners’ or claim them separately?
- The credit is non-refundable, so if someone doesn’t have any tax outstanding, he doesn’t benefit, says Jason Valente, tax manager at Logan Katz in Ottawa. So, assign the credit to the partner with the higher tax bill to ensure it’s used entirely.
- If each client has a similar tax bill, claim donations separately for maximum savings.
Sources: Jason Valente, CA, CPA, tax manager at Logan Katz in Ottawa; CRA; Elections Canada.