Filing taxes for political junkies

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Why read this?

Your client:

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.)

TIP

Look for your client in Elections Canada’s donor database to ensure you don’t miss a donation.

› 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.

a. If the total contribution is less than $1,275, calculate the credit on the Federal

i. Enter the total on Line 410 of Schedule 1.

b. If the total contribution is $1,275 or more, enter $650 on Line 410 of Schedule 1.

Don’t claim political donations on 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

Fundraising dinners

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

TIP

If you are completing a terminal return, CRA will tell Elections Canada to remove your client from the register.

› Provinces offer credits for provincial election donations. In Quebec, for instance, provincial donors can receive a credit of up to $310, and donors to municipal elections can receive up to $155.

› In Ontario, your client can receive a credit of up to $1,330. She must:

i. be a provincial resident on Dec. 31 of the tax year, and

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

› Ask your client if she’d like to be on the National Register of Electors. Elections Canada uses the register to communicate with eligible voters during elections, making it easier for your client to cast a ballot.

TIP

Campaigns must issue receipts for all donations more than $20.

› 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.