As a followup to my previous post on charitable donations, I thought I better discuss federal political contributions.
With charitable donations, you benefit from saving your receipts over 6 years since the percentage you receive back is higher on money contributed over $200. Federal political contributions are the opposite, the percentage you get back is higher on the first dollars contributed and reduces the more you contribute.
The first $400 is eligable for a 75% credit, the next $350 is a 50% credit and the final $525 receives a 33.33% credit. $1,275 is the maximum amount that you can claim a tax credit on. The maximum credit works out to $650.
With this tax structure, you’ll get the most for your money by contributing up to $400, after that it begins costing you more of your own money. Of course even the lowest tax credit (33.33%) is higher than the highest credit you receive from charitable donations (29%). Maxing this out works out to about a 51% overall credit so it may not be a bad idea if you really want to support a federal party.
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Tom Drake is the owner and head writer of Canadian Finance Blog.
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