Have you ever struggled with finding the perfect gift for that person in your life who seems to have everything? This week, fellow financial planner Jordan Arndt joins me to propose a unique and meaningful solution: charitable gifts. Our conversation takes us through the concept of Giving Tuesday, showcasing the importance of giving back during the holiday season and the key role it plays in our communities.
But the benefits of charitable giving extend into the financial world as well. We break down how making donations to registered charities can have a significant impact on your tax bill. We talk about everything from non-refundable and refundable credits, different brackets for tax credits based on donation amounts, and the exciting concept of matching campaigns. We underscore the importance of researching before donating and highlight the various tax credits available, including the ability to transfer them to a spouse or carrying them forward for five years. So tune in and let's explore the power of generosity and its potential perks this holiday season!
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Have you ever struggled with finding the perfect gift for that person in your life who seems to have everything? This week, fellow financial planner Jordan Arndt joins me to propose a unique and meaningful solution: charitable gifts. Our conversation takes us through the concept of Giving Tuesday, showcasing the importance of giving back during the holiday season and the key role it plays in our communities.
But the benefits of charitable giving extend into the financial world as well. We break down how making donations to registered charities can have a significant impact on your tax bill. We talk about everything from non-refundable and refundable credits, different brackets for tax credits based on donation amounts, and the exciting concept of matching campaigns. We underscore the importance of researching before donating and highlight the various tax credits available, including the ability to transfer them to a spouse or carrying them forward for five years. So tune in and let's explore the power of generosity and its potential perks this holiday season!
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Sign up for Jordan's newsletter
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TAX CHANGES: Budget 2024
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Add some STRESS to your retirement plan
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Hello and welcome back to the Canadian Money Roadmap Podcast. I'm your host, evan Newfell. Today I'm joined by Jordan Arton. We're going to be talking about a few things that you could consider for the gift for people that happen to have everything, and maybe get a little bit of a tax credit for yourself along the way, jordan it's been far too long.
Speaker 2:Welcome back, thanks for having me. Yes, excited to be back here with you.
Speaker 1:You're off suspension now, and so I'm glad to welcome you back since the incident, absolutely. Glad that dust is blown over. No, jordan, for those of you who didn't listen to the podcast last year, jordan is a colleague of mine here at Ensign Baxter Wealth Management and we as financial planners, we often have great conversations with people about very different aspects of their financial life. And this time of year, thanksgiving has just passed, black Friday is just coming up, cyber Monday is after that, and what comes next in the holiday calendar after that? Jordan?
Speaker 2:Well Giving Tuesday, which we'll talk about in a short minute.
Speaker 1:Yes, Giving Tuesday.
Speaker 2:We've got Christmas around the corner. It's an exciting time of year, I find. From American Thanksgiving to Christmas it goes fast here, and lots of excitement, lots of work parties, things like that to look forward to.
Speaker 1:Yeah, and there's lots of obligation to give gifts. Maybe I'll do an episode about some actual gifts that you can give, some book recommendations or something like that, but that's not the topic for today. We alluded to that earlier about Giving Tuesday, and this time of year is often kind of consumed by well, I probably misspoke there but consumerism, consumed by consumerism, but it's just a lot of stuff buying, a lot of stuff for people, and so this is where the idea of Giving Tuesday kind of came from, as a bit of a break for people to kind of separate. You know the purpose of this time of year with, you know, constantly buying things and being obsessed with more, and Giving Tuesday kind of flips it on its head by thinking of others and what you can do with your money to benefit someone else.
Speaker 2:Yeah, it's intentionally, or I believe it to be intentionally. After American Thanksgiving, there it's usually the Tuesday after that, which also coincides with, like you said, black Friday, cyber Monday. You know where Black Friday seems to start like two weeks early now. I don't totally understand that one, but it's like boxing week. Yeah, boxing year, you know it's. So, yeah, it's just, you know it's an intentional reset. Giving Tuesday is actually an organization and I was looking online. Their mission is to have generosity as part of someone's everyday life. So Giving Tuesday this year is Tuesday, november 28th. That's a very specific day, but their mission is much, much broader than that. You know, sometimes, just when things are specific like that, it can be more, more pointed or just a more focused reset. So I understand kind of where it's coming from.
Speaker 1:Yeah, and so if you're looking around your city or your community, there are a lot of people that could use a lot of help. These days, you know they're. For most of us and most of you that are listening to the podcast, inflation is more of like an annoyance than it is like a meaningful problem, but you know, the statistics on people using food banks and things like that are it's getting pretty outrageous, actually it's. There's a lot of people that are really struggling.
Speaker 2:Yeah, no for sure, we're very fortunate.
Speaker 1:So if you're looking around and you're saying, okay, my dad or my mom, whatever, we don't need another tie, we don't need another coffee table book, we don't need another gift card, maybe a sweater, though you know we all need a good. Yeah, well, these winters are getting colder, that's true, but you know, the person that has everything you know is the classic conundrum of like, what do we actually get? We're here today to propose a potential solution to that. What do you think, george? I like a solution.
Speaker 2:Yeah, I like a solution.
Speaker 1:Okay, so using a charitable gift to help someone or another organization in your community on behalf of, say, a parent or a grandparent or a friend or something like that, could be a really cool solution.
Speaker 2:Yeah, it can go over well. You know aware of circumstances where this has been done for someone and often the receiver. You know they don't receive anything necessarily other than you know a donation in their name, but it goes over better than you think it might. Or, you know, maybe sounds a little wishy-washy, but it actually can be received quite well.
Speaker 1:Yeah, and many charitable organizations actually have tools to be able to do this. I'm familiar with an organization that does development in third world countries and you can buy a goat for a family in Africa, for example, or you know school supplies for an entire village or something like this. You know you can make it a little bit more practical than yeah, I just gave some money to whatever organization, totally yeah. Okay. So if this is something that might be on the radar for someone that maybe has never made a charitable gift before, what does that actually mean in financial terms? Because there's tax implications of making a financial gift to charity.
Speaker 2:Yeah, there certainly can be, you know. I think it's important to distinguish between where you're giving it, whether it's a registered charity or not. You know, think of things like GoFundMe, for example. You know, we probably all have seen on social media or other places or been impacted by a GoFundMe campaign. Nothing wrong with that whatsoever. Gofundme is not a registered charity with the Canada Revenue Agency though, and so if you make a donation through a platform like that, if you give $100, it'll cost you $100 and there's no tax incentives for that, in comparison, would be or, in contrast, would be a registered charity. Let's take, like the local food bank, like the Sackatoon Food Bank here, for example. That'll be a registered charity with the CRA or the Canada Revenue Agency, which means they've gone through the paperwork and the application and the ongoing filing requirements and all the boring stuff in order to do so. But with that is, they get the right then to issue a tax receipt when you do make a donation. So if we give that same $100 to the food bank, you will get a receipt that you can then use come income tax time to offset the tax that you ultimately owe. Not advocating for one or the other, I think both the types of organizations have their place. Or even you think of donation at the checkout line at the grocery store or things like that. You're not going to get a tax receipt for that stuff, but that doesn't make it mean, lesser or wrong by any means. But when you are donating to those registered charities, there is a tax incentive to do so.
Speaker 1:Right. Okay, so say you're making a donation for the first time. You've never made a donation before. There are rules that are set up in Canada here for people making their first donations, so up to $200. And then after that the rules change a little bit from there. Can you maybe outline a little bit about how that works and what tax benefits there might actually be?
Speaker 2:Yeah, for sure. So we're talking here about making a donation to a registered charity. In that case, if you give money away to that charity and you receive a tax receipt, you get what's called a non-refundable tax credit. A tax credit directly offsets taxes that you owe. So if come tax time you owe $10,000 in taxes, often that'll have been deducted for you along the way from your paychecks. But let's say that number was $10,000 and you have a $1,000 tax credit Number. Taxes owing are directly reduced from $10,000 to $9,000, offset by that $1,000. The non-refundable part of it just means that you actually have to have taxes owing to get money back, if that makes sense, or to get the credit.
Speaker 1:So if you're a student and you're just in university, you may be working a summer job, if that.
Speaker 2:Exactly.
Speaker 1:You're not going to be able to get much money back here likely.
Speaker 2:Exactly, and there's other deductions and credits that also come into play. But yeah, if you don't owe any taxes, you can't take advantage of the donation tax credit. To your point about the different kind of bans, I guess so up to your first $200 of donations per year, there is one bracket, essentially for the tax credit that you receive, and then any donations over $200 are a different bracket. There's a federal, not to bore you with the credits here but there's a federal and a provincial component We'll just use here in Saskatchewan. For example, on that first $200 of donations you get 25.5% of that back and then on $200 and over of donations you get 43.5% back. That varies depending on your province. You can kind of get as high as like 50% to about 40%. So that's kind of your range there. But yeah, if you've never made a donation before let's say you do $100 donations you're under that $200 amount but you give $100 to a registered charity you can expect here in Saskatchewan to receive a tax credit of $25 and 50 cents.
Speaker 1:That's not bad. It's not bad. This is like out of pocket. You know you do a hundred dollars worth of quote-unquote good. You know, and it costs you 75 bucks and other provinces. I heard recently about a larger credit in Alberta for those first 200 bucks. So make sure you double check in your province which what's relevant for you. But what about if? If a charity is advertising something like a matching campaign, which is really common around giving Tuesday and just this time of year, sometimes there's a big corporate sponsor and how would that work in with the math there?
Speaker 2:Yeah, I was just looking yesterday. You know, make a wish, it was either Canada or the local chapter here, I forget but the first $50,000 of donations in a certain time period are going to be matched. It didn't say matched by who, by the alley he alluded to, often a corporate sponsor or anonymous donor on the back end or something like that. That is matching is exactly like it sounds. Often it's two times. So let's say you do that hundred dollar donation, that will get matched. Another hundred dollars will go to the charity and so the charity will ultimately receive $200 from the hundred that you originally gave. So we start to do the math on that. You know if we want to talk to crack tax credits and how much does it actually cost you and that sort of thing, using the kind of higher credit number there. So here in Saskatchewan if you give a hundred that gets doubled to $200, you don't get a credit for that matching part. I think that's important. You just get the credit on your hundred dollars, but you're gonna get 50. It's only gonna cost you $57 for your hundred, which went up to 200. So for 50 let's summarize this for $57 you can give $200 away with these matching programs. I'd say that's a pretty good bang for your buck.
Speaker 1:That's really good right, because I hear all the time that people Want to make a difference and they just don't really know what to do or what's valuable or something like that. You don't have to look too far, you know. There's tons of Organizations near and far that are interesting. So you know, I just personally I support a few local charities, but also one that builds water wells in Africa, which is all sorts of things. Now, thing to keep in mind for International charitable organizations is that they have to be registered in Canada as well. Many of them are. Many international charities will have different registrations in different countries and all that kind of stuff, but if you're hoping for a tax credit, make sure that the the charities actually registered in Canada as well. If it's one that's not in your local community, obviously that's a good point.
Speaker 2:There's lots of US organizations and charities that you may be support or you know you're connected to one way or another, but if they're not registered with the CRA, the, the tax incentives don't, don't apply there. I think to your point about. You know, where do I support? Well, you know, let's let's size back to the gift for the person that you don't know what to get them. What's important to mom and dad, maybe you know, is there sit kids? Is it locals in the community? Is it international countries that they have a heart and a passion for? Yeah, what about their former university? Yeah, even something like that, exactly, yep, totally.
Speaker 1:Locals minor sports organizations are often registered to be able to accept donations there.
Speaker 2:Religious organizations, education, like you said. Yeah, absolutely, there's lots of options.
Speaker 1:Yep. Is there a resource where people can look up different charities?
Speaker 2:Yeah, certainly. The CRA is not maybe the nicest place to go to to look, but it it's got the full list of any sort of registered charity that you might be wondering about, as well as the information on you know how to donate there and and where to get access to that charity.
Speaker 1:It sounds like a quick google search kind of a quick google, for sure it's.
Speaker 2:You know if there's something you're interested in, and charities can range, like we often talk about the food banks or the hospital foundations or things like that. Those are very large but there's a lot of very small charities that are registered, that have the ability to issue these receipts, that rely on every, every sort of donation. There's no minimum amount to you know, to qualify or to feel like you're making a difference. You know any amount can really, can really do a lot.
Speaker 1:Okay. So it's all willing good to get these tax benefits, and it's kind of cool to see how much difference you can make with Lower dollar amount when you factor in the credits and maybe a matching program or something like that. But at the end of the day, you're still going to be out money by giving to charity, right? So this is you know, maybe to get a little philosophical or a little looking inward here, it's a matter of like your, your heart, and like actually how you want to make the world or your community or your city, whatever a better place with the resources that you have. Would that be fair to say?
Speaker 2:Oh yeah, no, absolutely. I was at a presentation last week with a local advisor here in the city and he referred it. Referred to it as the, the philanthropic heartbeat of someone. So absolutely, it's. It's not free to do this, you know, even with the matching campaign, we're cherry-picking here to show how much your gift can be magnified. But back to that example. It's still cost you fifty seven dollars. If you are looking to kind of keep as much as possible, then this isn't the, this isn't probably the method for you. So, yeah, there definitely has to be that, that kind of incentive. It. The stats actually back that up too. So tax credit is important, but when it comes to deciding why to give, tax credit is at the bottom of the list. There's way more things that are kind of more driving to the, to the why, including just, you know, compassion for those in need or, you know, maybe you have ties to it, maybe your family member has been impacted, maybe you've been impacted by an organization. You know, religious reasons or education reasons or some sort of just alignment with your values are often the driver of why Tax credit to do come into play then, on deciding on how much you might want to give. But you know, what we're kind of talking about here is just kind of the everyday Generosity. We're not talking about big tax plays or anything like that. We're kind of talking about like what, evan, what you said, there is just, you know, an expression of your values, like using money to align your, your values with, with how you use your, use your funds, and I think there's something really beautiful with that and there's really cool opportunity of that.
Speaker 1:Okay, so from a financial planning perspective, what should people be considering before they might make a gift to charity?
Speaker 2:Yeah, you from. Certainly the tax aspect is a big part of that. You know, like we talked about the tax credits, you know there's some other nuance with the credits as well. He can transfer them to your spouse. You can carry forward for five years, you know. Talk about that one for a second.
Speaker 1:Yeah, say you're in that situation that we talked about, where you you're a student, you got a little bit of money. You're trying to buy dad a gift mom and dad a gift and you, you know, had a budget for a hundred bucks. He said, okay, well, I'd like to support the local food bank on their behalf Whenever you get a receipt for the gift that you made, but you don't have any taxes to pay here. How, what happens with that? Yeah, you don't. You don't lose it. You have to keep your receipt for the next few years.
Speaker 2:No, you wouldn't have to. If you, it's like there's other care credits and things that carry forward and so you know you'd submit it with your income tax whenever, whenever you do that in the spring, and then it would just say on your, your notice of assessment, that you have a carry forward credit of of whatever it is to be used. The charitable credits expire after five years. So you have five years, after you make the donation to, to use that. So yeah, in a student example, maybe your income is low but you know you're gonna graduate in a year or two, you know your income is gonna go up quite a bit. Just know you have that credit, then you can can use it at that time.
Speaker 1:Can you carry it backwards?
Speaker 2:you not, while living only in the the year of death gets a. It's a different ball of wax. But in general, for what we're talking about here, no gotcha, let me put it back on you. Why do you think anyone should care about this? I mean, like, what's your perspective on? Yeah, is it, is it, is it planning, motivated for you? Is it like, where does it, where does it come from? For you?
Speaker 1:for me, it's personal conviction of wanting to help others with the things that I've been blessed with. I have an example of my my parents and grandparents on both sides of the family, and they're very generous people. There's Some lean years and some really good years, but a common theme with that is that we're still very blessed, and so wanting to be consistent with how we use our Funds and our money to to help others is something that I learned from the generations before me and it's something that I've experienced as well. Just, you know, it feels good to help people. You know, maybe that's a selfish component that comes along with it, but it feels a lot better to help people than it does to buy another thing that fills up the counter with stuff. So this time of year, you know, go into a couple of charity dinners and things like that. It's like it's neat to see what these organizations are doing around around the city and around the country. It's so easy to get caught up in negativity, and so for someone that doesn't have, maybe, a faith background, that would, you know, instill some of these beliefs and helping others, just to kind of naturally, just give it a try for yourself, because you, you can see that. You know there's a lot of people that are less fortunate than you like, and it doesn't matter what spectrum you land on, there's always someone that could use a little bit more help. And and I found that in the times where I'm more Tight with my money you know Overspent on this or whatever yes, that does happen, even for financial planners of people with money podcasts you know you overspend on something or you're worried about the next big expensive purchase. We just bought a house this year and so things start to add up there and whatnot. Taking a step back and saying, wait a second, I still have a lot, I don't need every penny of it. What difference could I make with this money? It just kind of resets my, my philosophy and my you know you're my heart Around money and making sure that it doesn't have a grip on my life and I'm still in control of it, and when I have control of it, I can do some good with it. Oh, thanks for sharing.
Speaker 2:What about you? Oh no, I would align with a lot of that. Yeah, it's really something that was, was modeled for us. It's, it's I don't say all this, you know Just as a as a planner or a tax play or anything like that. I think there's a personal belief with it as well. We feel very fortunate and I feel like we've got opportunity to, to help give back, and we've been impacted by some organizations and Saskatoon here and more broadly, that you know we want to help Help provide for the next people that are able to be impacted by those as well. So, yeah, it's, it's certainly a cool opportunity to to, yeah, just just manager finds. You know we've got got young kids now, and so we're excited about the opportunity to kind of teach them about that too. We're not quite there there yet, but that opportunity will will come, and so, yeah, just trying to help help them frame their views on, on money for sure.
Speaker 1:Cool. So with this time of year, christmas is coming around lots of opportunities to get gifts for a lot of people. I just made my list. It is long for the number of people I need to buy gifts for and, you know, maybe consider that buying another thing might not always be the best gift and maybe Doing some good on behalf of someone in your life might be something that could either spark a cool conversation, do some good in the world and give you a bit of a tax break at the very least.
Speaker 2:Yeah, any other final thoughts? No, I think that's good. I think we'd love to hear if you do end up taking this, taking this route. Let us know what would be cool to hear about it.
Speaker 1:Yeah, I totally agree. My contact info is always in the show notes. But yeah, you can email me at podcast at evan newfeldcom. That's e-v-a-n. N-e-u-f-e-l-d dot com. Thanks so much for joining us and we'll see you next week. Thanks for listening to this episode of the Canadian money roadmap podcast. Any rates of return or investments discussed are historical or hypothetical and are intended to be used for educational purposes only. You should always consult with your financial, legal and tax advisors before making changes to your financial plan. Evan newfeld is a certified financial planner and registered investment fund advisor. Mutual funds and ETFs are provided by Sterling Mutuals Inc.