On January 23, 2025, the Federal Department of Finance (Finance) released draft legislation to extend the 2024 charitable donation deadline to February 28, 2025.
We encourage readers to review the draft legislation, explanatory notes, and CRA guidance.
We have summarized the key points here, along with some comments:
General
- The draft legislation and supporting materials help "fill in the blanks" in Ottawa's December 30th announcement. They provide some much-needed clarity to donors and charities after Parliament was prorogued in early January and as Canadians head into the tax season.
- Although no legislation has been passed, the Canada Revenue Agency (CRA) is confirming that it will proceed with administering the 2024 deadline extension for charitable donations. Finance has indicated that the CRA will be administering the proposed legislation, consistent with the CRA's longstanding practice.
For Donors
To be eligible for 2024 tax support, a gift made in January/February 2025 must be in the form of cash, cheque, credit card, money order, or electronic payment.
A gift in another form (e.g. real property, public listed securities, private company shares) made during January/February 2025 will not qualify for 2024 tax support.
Individuals
- Individuals may claim the eligible amount of certain donations up to February 28, 2025, on their 2024 personal income tax and benefit return (T1).
- The gift must be in the form of cash, cheque, credit card, money order, or electronic payment. A gift in another form (e.g. real property, public listed securities, private company shares) made during January/February 2025 will not qualify for 2024 tax support.
- The gift cannot be made through a payroll deduction or by an individual's will, if the individual died after 2024.
- If an individual does not claim January/February donations on their 2024 return, they can still claim the amount on their 2025 return or carry forward the amount.
Graduated Rate Estates (GREs)
- A GRE is an estate that arose on and as a consequence of the individual's death that meets certain conditions and that qualifies for marginal tax rates, among other benefits.
- To be eligible for the gift deadline extension and 2024 tax support, a GRE must have a taxation year that ended after November 14, 2024, and before January 1, 2025.
- If an eligible GRE made gifts in January/February, it may claim the eligible amount of the gift on its 2024 trust income tax and information return (T3).
- If an eligible GRE does not deduct January/February gifts on their 2024 return, it can still deduct the amount on their 2025 return or carry forward the amount.
Corporations
- To be eligible for the donation deadline extension and 2024 tax support, corporations must have a taxation year that ended after November 14, 2024, and before January 1, 2025.
- If an eligible corporation donates in January/February, it may deduct the eligible amount of the gift on its 2024 corporate income tax return (T2).
- If an eligible corporation does not deduct January/February donations on their 2024 return, it can still deduct the amount on their 2025 return or carry forward the amount.
Finance advises all donors to keep official donation receipts in the event the CRA requests to see them.
For Charities
- Charities should continue to issue official donation receipts according to the receipting rules.
- Charities are not required to issue official donation receipts specific to the extension period. However, they may wish to do so as a courtesy, if donors generally receive only one annual receipt for multiple donations.
- For in-person donation or electronic transactions, the date of donation is the date on which the charity receives the gift. For example, if the charity receives a donation by e-Transfer or credit card on January 10, 2025, the charity may issue an official donation receipt with the date of donation listed as January 10, 2025.
- For donations sent by mail, the CRA considers the date of the postmark on the envelope as the date of donation. The charity should keep the stamped envelope as part of its books and records. If an envelope is postmarked December 28, 2024 but the charity receives the donation in the mail on January 10, 2025, the charity may issue an official donation receipt with the date of donation listed as December 28, 2024.
- All official donation receipts issued during a charity's 2025 fiscal period should be reported on the charity's 2025 T3010 information return.
- While it is not mandatory, Finance recommends that charities keep all postmarked envelopes of donations received by mail and document which receipts were issued during the extension period.
Additional Notes
- Finance is not soliciting feedback on the draft legislation, citing the need to provide taxpayers with certainty as to how donations made during the extension period will be treated.
- The legislation is in draft form. While it does not necessarily represent the legislation's final form, the CRA has indicated that it will administer the draft legislation. As such, Canadians would be wise to comply with the draft and to heed the CRA's Guidance on the subject.
- The Government of Canada plans to introduce the legislation in Parliament to effect the extension and the accompanying changes "in due course." The earliest date on which Parliament can meet is March 24, 2025. Even then, it remains uncertain whether the legislation will be passed, let alone be introduced, in the next parliamentary session.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
