Donation deadlines may soon mimic RRSP deadlines, but much depends on education

publication date: Nov 6, 2012
 | 
author/source: Adam Aptowitzer
Most Canadians are aware of the effect that RRSP contributions have on their taxes, and are also aware of the deadline for making contributions each year. This is mostly due to the educational efforts of the banks and other RRSP providers each year as the March 1st or February 29th deadline approaches. The yearly run for RRSPs illustrates that when Canadians understand the incentive system, they are quite prepared to alter their behaviour to take advantage of it.Adam Aptowitzer photo

Run like RRSP season to boost understanding

In February, we made submissions to the House of Commons Finance Committee which was studying the incentives to giving. In our submissions we made the point that whatever incentives are currently in place, or that Parliament might put in place at a later date, they would be of limited usefulness if Canadians did not understand the nature of the system. We also pointed out that the RRSP season, taking place in February, allows people to make contributions with full knowledge of their income from the previous year. 

And so to answer both of these concerns we [Arthur Drache and Adam Aptowitzer] suggested that the tax credits generated from donations in the first 60 days of a year be available to offset taxes owing from the previous year. In this way the charitable giving deadlines would mimic those for RRSPs. (Download our written submissions or a transcript of the oral submissions.) 

Proposal moves forward as Private Member's Bill

Our suggestion has been taken up in the form of a Private Member's Bill from MP Peter Braid. (The text of the bill is available here). Most in the sector will remember Mr. Braid as having originally proposed that the Finance Committee conduct an investigation into incentives for charitable giving in the first place. The Bill proposes that the tax credits from all gifts to charity made in the first 60 days of the year be available for use in the previous taxation year. To reinforce the educational component Bill C-458 also declares the last seven days of February to be National Charities Week. No other changes are made to the Income Tax Act or any other acts as a result. 

Another season for giving

In proposing this change we hoped that this would create two charitable giving "seasons," the the usual December holiday season and a tax-motivated season at the end of February. The proposal gives charities, along with partners such as the banks, an opportunity to educate Canadians about the tax benefits of charitable giving. 

Tell your MP now

As the matter is a Private Member's bill the Parliamentary vote is likely to be a free vote of the Members. And while we hope that the Members will vote for the bill without any convincing, those that support the idea behind the bill would do well to let their Member of Parliament know. 

Adam Aptowitzer of Drache Aptowitzer LLP is a charity law lawyer with a national practice based in Ottawa. He has been published in Canadian Taxpayer, Canadian Fundraising & Philanthropy and the Not-for-Profit News. He has also published a widely distributed study on the regulation of Canadian charities with the C.D. Howe Institute. 

As a speaker, he has presented to the National Symposium of Charity Law, the C.D. Howe Institute, the Association of Fundraising Professionals, the Canadian Association of Gift Planners, the Ottawa Estate Planning Council and various large and small Canadian charities. He has also given expert advice on Parliament Hill. Adam is an executive member of the Canadian Bar Association's Charity and Not-for-Profit Law section. 

For speaking engagements and consultations, contact him at 613-237-3300 or visit http://www.drache.ca.


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