As we approach the "Season of Giving" I'd like to interrupt our series on types of endowment funds to discuss a topic that many people find confusing - the personal tax savings from giving to a registered charity.  In BC, after the first $200 in donations per year has been given, every additional dollar a taxpayer donates results in a tax reduction of 43.7 per cent.  In other words, a $100 donation to your favourite cause this Christmas will lower your final 2007 income tax bill by almost $44.

Sounds good, doesn't it?  Donation related tax benefits have always been large, and changes over the past few years have made them even more generous and flexible.  For example, you can donate up to 75 per cent of your net income to charity in any given year.  You can also take up to five years to use your donation to reduce your taxes,  If you are in a low tax bracket paying around 20.7 per cent tax on your income, a 43.7 per cent benefit from your donation goes a long way.

Let me explain what I mean with an example.  If you earn an extra $1,000, you might normally owe approximately $210 in itaxes on this extra income.  If you give an extra $1,000 in cash at the same time you'll save around $440 in taxes, resulting in a net $230 tax savings.  Publicly traded shares that are donated create even far greater tax benefits.  Talk to your accountant about the specific details of your situation.

The federal and provincial governments have given us larger financial reasons to give this season (on top of the real reasons we support worthy causes).  If you're able to give a little (or a lot) becase you have more than you need, I'm sure your favourite charity would be delighted to receive a gift this holiday season.  If you'd rather create a lasting financial gift for a favourite cause or charity, give us a call at 604.591.2699 or email us at info@surreyfoundation.org