The Government of Canada announced today that it plans to extend the 2024 charitable donation deadline to February 28, 2025.
Donors wishing to make a donation that would qualify for tax credits in 2024 will have until the end of February 2025 (not the end of December 2024) to make those donations.
The extension is intended to alleviate the effects of the four-week-long Canada Post labour disruption and mail stoppage that occurred between mid-November and mid-December.
During that time, many charities experienced a significant decline in charitable giving. For these charities, the holiday season and mail-in donations are critical to their fundraising efforts. Sector organizations such as Imagine Canada have advocated for an extension of the 2024 donation deadline in light of the impact of the postal strike on year-end donations.
Ottawa says the proposed extension would give donors more time to ensure that charities can receive and process their donations and help charities deliver vital services to the communities that depend on those services.
To effect the extension, the federal government intends to introduce legislation to amend the Income Tax Act "once Parliament returns in the new year".
The proposed extension raises several unanswered questions:
- Would the extension also apply to corporate donations? We would assume so, but we cannot confirm at this time.
- Would other tax consequences of the gift be pulled back? For example, would donating an appreciated asset in the first two months of 2025 result in a 2024 donation credit and a 2025 income inclusion?
- Would a donation made between January 1, 2025 and February 28, 2025 be able to qualify, at the donor's election, for 2025 tax relief (instead of 2024 tax relief)?
We expect that answers and further details will emerge only once the proposed amendments to the Income Tax Act are introduced. It also remains uncertain whether Parliament will be in a position in early 2025 to introduce and pass the legislative amendments. Opposition parties have indicated that they will introduce and support a non-confidence motion at their earliest opportunity once the House of Commons reconvenes. There is also the possibility that Parliament may be prorogued.
Given the uncertainty surrounding the start of the next legislative session, donors who are in a position to make year-end gifts before January 1, 2025 should consider doing so before January 1st. They should also consider doing so through alternative (non-mail) methods of giving, such as by credit card or electronic transfer.
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