Canadians less generous than Americans, survey suggests

‘Tis the season of tax deadlines and good cheer. Charitable contributions need to be made before the end of the year if clients want to apply the credit to the income they earned in 2004.

Although charitable giving tax strategies are now more commonplace than ever before — boomers are wealthier, aging and thinking about their legacies — Canadians still lag Americans by a significant margin in the average amount we donate to charities.

Many charities are most visible at this time of the year when the holiday spirit moves many people to give to charitable causes that help the less fortunate. “The charitable sector depends on the generosity of Canadians to finance the provision of goods and services that might not otherwise be available to some of society’s neediest citizens,” says Sylvia LeRoy, policy analyst at the Frasier Institute.

The right wing think tank’s “Generosity Index” released earlier this week shows a dramatic difference in charitable giving that exists between Canada and the United States. In the U.S., 2003 numbers show Americans donated 1.57% of their aggregate income to charity compared to 0.7% of aggregate income donated by Canadians. The extent of charitable giving is also lower in Canada with 24.9% of all tax filers claiming donations compare to 29.4% of Americans.

Average annual American donations came in at $3,731, more than three times the Canadian average of $1,165, even before accounting for differences in the value of currencies.

In Canada, Manitoba ranks first for having the highest percentage of tax filers donating to charity, followed by Ontario and Saskatchewan. The three provinces also top the list of provinces with the highest percentage of aggregate income donated to charity.

Although the institute does not use the number in calculating the index, Albertans continue to give the most with an average annual donation of $1,468, followed closely by Ontario with tax filers claiming an average donation of $1,437. Quebec registered the lowest average charitable donation of only $532.

The Frasier Institute says charitable giving has in fact been declining in all provinces since 1997. The decline is most notable in Prince Edward Island, where the number of charitable claims fell 7.2% between 1997 and 2003. Newfoundland experienced the smallest decline with only 1.2% fewer tax filers claiming a charitable deduction.

The largest increases in the amount of aggregate income donated to charity occurred in Ontario and Manitoba.

The basic rules under the income tax act allow taxpayers to deduct a credit worth 17% of gifts under $200 and 29% of any amount over $200, made during the tax year.

For more advanced tax planning tips and more information on how to present charitable giving opportunities to your clients, click here to visit access Advisor.ca’s charitable giving toolkit for advisors.

Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com