November 3, 2016

Tax deductions on political donations

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I thought with the US election nearing, I would do some investigation about the difference between donating to a Canadian political party versus an American political party. Here is some information I found:

Canada’s federal election finance laws put limits on contributions to political parties and candidates. Only individuals — not corporations or trade unions — may donate. Contributions are limited to up to $1,500 a year to each political party and up to $1,500 to all the registered electoral district associations, contestants seeking the party’s nomination and candidates for each party. In addition, donors may give up to $1,500 to leadership contestants for a party as well as up to $1,500 to independent candidates. These limits were set in 2015, and the amounts increase by $25 each year. Political actors must disclose the names of anyone who donates more than $200. Source: The Canadian Encyclopedia article party-financing

For 2015, the tax credit for Canadian Political donations are calculated as follows: 75% of the first $400, 50% on the next $350 and 33 1/3% of any contribution over $750, up to $1,275. This results in a maximum credit of $650. Some provinces provide similar credits against provincial income taxes for contributions made to provincial political parties. Source: Wikipedia – Federal political financing in Canada

For federal purposes, the credit can only reduce taxes paid or payable. If you are not liable for any taxes in 2015, the credit is lost. It cannot be carried forward to 2016. Note that contributions to local mayoral campaigns do not qualify for the political donation tax credit. For provincial purposes, tax credits for political donations are also non-refundable, except for Ontario and Nunavut, which provide a refundable tax credit for political contributions. Source: Tax planning guide – section-2-individuals/political-donations

US Federal law restricts how much individuals and organizations may contribute to political campaigns, political parties, and other FEC-regulated organizations. Corporations and unions are barred from donating money directly to candidates or national party committees.

DONORS RECIPIENTS
Candidate Committee PAC
(SSF and Nonconnected)
State/District/Local Party Committee National Party Committee Additional National Party Committee Accounts
Individual $2,700
per election
$5,000
per year
$10,000
per year
(combined)
$33,400
per year
$100,200
per account, per year
Candidate Committee $2,000
per election
$5,000
per year
Unlimited Transfers
PAC – Multicandidate $5,000
per election
$5,000
per year
$5,000
per year (combined)
$15,000
per year
$45,000
per account, per year
PAC – Nonmulticandidate $2,700]
per election
$5,000
per year
$10,000
per year
(combined)
$33,400
per year
$100,200
per account, per year
State, District & Local Party Committee $5,000
per election
$5,000
per year
Unlimited Transfers
National Party Committee $5,000
per election]
$5,000
per year

However, unlike in Canada the IRS (Internal Revenue Service) in the United States publication 529 does not allow you to deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are all not deductible. Source: Wikipedia – Campaign finance in the United States 

I hope you enjoy my postings and find this information useful. Please follow the link at: http://raveresults.ca/blog/ as I welcome your comments on my Blog.

If you would like to learn more about how my experience and skills may be able to help benefit your nonprofit, or a nonprofit you may be associated with, please do not hesitate to get in touch with me as I would be pleased to meet and discuss the opportunity of working together.

Sincerely,

 

 

Mitchell Ravvin, BComm, PFPC, CFRE
Professional Fundraiser
Rave Results Inc.
7436 21A Street SE
Calgary, AB T2C 0V9
403-607-3242
www.raveresults.ca

Rave Results Inc. is a professional fundraising service specializing in assisting mid-size nonprofit organizations. Areas of expertise include: Donor Development, Major Gift Fundraising, Sponsorship, Planned Giving, and both Annual and Capital Campaigns.

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