Crown Foundation Created for U of S Can Mean Substantial Tax Savings for Donors
By Tom Bowman
The Crown Foundation Act, recently passed by the Government of Saskatchewan, created a Crown Foundation for the University of Saskatchewan. This status can spell significant tax savings for donors who make large gifts, by increasing the limit on the size of donations they can claim on their tax.
Ordinarily, donations to registered charities can be used to calculate credit against your income tax, provided the donations do not total more than 50%* of your net income in any one year. If they do exceed that amount, the donor can carry the unclaimed portion of the donation forward, calculating the resulting tax credit as they claim the balance of the donation. Unclaimed donation balances can be carried forward up to five years.
Gifts to Crown Foundations can offset all federal and provincial income tax payable.
If you give to the University of Saskatchewan through its Crown Foundation, the limit on your donation is increased to 100% of your net income in the year you make the gift. This substantially increased limit makes it possible for donors to make gifts in excess of the normal 50%* limit and claim the larger resulting tax credit in the same tax year. The 100% limit also applies to bequests where any unclaimed balance can be carried back for one year.
How does it work?
Suppose that a donor with a net income of $100,000 has surplus capital and decides to give $100,000 to the University of Saskatchewan Crown Foundation. The Crown Foundation would issue a tax receipt for $100,000, and the donor could claim a donation of up to $100,000 (100% of her net income) rather than the $50,000 (50% of net income) which would be allowed under the normal process. The increased limit would help offset a greater portion of federal and provincial income tax payable.
"The benefit is most useful in a year when you have an unusually large income which is taxable," says Lyle Hislop, the University's Development Officer, Planned Giving. "For example, it might be that an investment has matured which significantly increases your income. In this case, a donation to the Crown Foundation would be particularly appropriate in order to help offset the increased tax on the increased income."
Donations to the Crown Foundations are accepted and disbursed to the University by a five-member Board of Trustees: Sheila Whelan, BA '73, LLB '76, Chair; Sylvia Fedoruk, BA '49, MA '51, PhD (Western); D.E. (Tom) Gauley, LLB '43; Don Gass, BComm '68; and A.J. (Tony) Whitworth, V.P. (Finance and Administration), U. of S.
Alumni and friends who are interested in more information should discuss their ideas with their financial advisor(s). Information is also available through Lyle Hislop at the Planned Giving Office on campus. *Note: In the March 6, 1996, Federal Budget, Paul Martin announced that the annual limit for claiming tax on charitable gifts would move from 20% to 50% of net income. This will take effect in the 1996 tax year.