Question

For 2020, has Net Income for Tax Purposes of $480000 and Taxable income of $220000. During the year, he makes eligible charitable gifts of $200000. Determine Mr. Shoemaker's 2020 charitable donations tax credit.. *CANADIAN TAX*

Answer 1

For federal tax rates it is 15% for the first $ 200 = 200 * 15 / 100 = $ 30

For remaning it is 29% ( 200,000 - 200) = $ 199,800

tax credit = 199,800 * 299 / 100 = $ 57,942

Total federal tax credit nfor charitable amount = $ (30 + 57942) = $ 57,972

provisional tax credit can also be received ( taking Alberta as province)

for first $ 200 is 10% = 200 * 10 /100 = $ 20

for another $ 199,800 is 21% = 199,800 * 21 / 100 = $ 41,958

Total provisional tax credit = $ (20 + 41958) = $ 41,978

So if you clain both federal and provisional charitable tax credit it would be = $ (57,972 + 41,978) = $ 99,950

each provision has it different tax credit for charitable donations.

Thanks.