1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

What are the limits on charitable donation deductions for a Canadian business?

By

Question: What are the limits on charitable donation deductions for a Canadian business?
Answer:

Whether you are filing personal Canadian income tax or corporate income tax, the rule for charitable donation deductions is basically the same.

As a sole proprietorship or partnership filing a T1 income tax return, you can claim on line 340 charitable deductions and gifts of up to 75 percent of your net income (line 236). The exception to this rule relates to the taxpayer’s death; "For the year a person dies and the year before that, this limit is 100 percent of the person's net income" (General Tax and Benefit Guide, Canada Revenue Agency).

The maximum amount of charitable donations that a Canadian controlled corporation filing a T2 income tax return can claim is the same; 75 percent of its net income (line 300).

You cannot claim charitable donations to create or increase a loss but unused charitable donations can be carried forward and used in any of the five following tax years.

For more information on what charitable donations a corporation may make and how a corporation may increase the amount of charitable deductions it is allowed to claim on its income tax, see the Canada Revenue Agency's T4012: T2 Corporation Income Tax Guide.

Back to > Canadian Income Tax FAQs Index

Back to > Small Business Canada FAQs Index

©2014 About.com. All rights reserved.