4 tips for making smart donations

CRA regulates more than 86,000 registered charities in Canada. The tax agency is offering a few tips this holiday season to ensure those giving to charity can feel secure about their donation.

Read: Charitable giving falls

1) Confirm that the organization is a Canadian registered charity. Registered charities have to devote their resources to charitable activities and are monitored by the CRA. Only charities that are registered with the CRA can issue official donation receipts for tax purposes. Check the CRA Charities Listings at or call the CRA at 1-800-267-2384.

2) Get to know the charity. Start by visiting the charity’s website to learn about its activities and how it’s managed. You can also review its financial information and activities by looking at its information returns using the CRA’s Charity Quick View. One of the best ways to learn about a charity is to volunteer. Moneysense also publishes an annual guide to Canada’s charities.

3) Beware of gifting tax shelter schemes that promise you returns greater than your donation. There are many risks associated with these donation schemes and, in many cases, less than 1% of the funds donated are used for charitable works. The CRA strongly advises that you not participate in gifting tax shelter schemes. As of the 2013 tax year, if the amounts you have donated to a gifting tax shelter are in dispute, you are now required by law to pay 50% of the taxes you may owe.

4) Learn to recognize the signs of fraud. Signs of fraud could include inappropriate pressure to give immediately, individuals who demand cash only or ask that you write a cheque payable to them rather than the charity. In addition, fraudulent organizations sometimes use names that are similar to well-known and respected registered charities.

Also read:

Tax tips for giving to charity

Tax break today, legacy tomorrow

Teach kids not to be greedy during holidays

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.