Faculty Author Type

Current Faculty [David Duff]

Document Type

Working Paper

Publication Date



Tax policy; personal income tax; charitable contributions


The last fifteen years have witnessed significant changes in the way that charitable contributions by individuals are treated under the Canadian Income Tax Act. The most significant of these changes involves the conversion in 1988 of what had previously been a deduction for charitable contributions whereby the value of the tax benefit depends on the donor?s level of income, into a tax credit under which the value of this benefit depends on the total amount of charitable contributions claimed in the particular taxation year. As a result of this amendment, Canada has become the only developed country that recognizes charitable contributions by individuals in the form of a tax credit rather than a deduction. This paper evaluates the merits of this policy change and the structure of the Canadian charitable contributions tax credit in light of alternative possible rationales for the recognition of these gifts in computing the amount of tax payable under an income tax. Part II reviews the history of Canadian income tax provisions regarding charitable contributions by individuals and explains the structure of the current tax credit and related provisions governing the tax treatment of charitable contributions by individuals. Part III examines alternative rationales and related tax designs for the recognition of these charitable gifts in computing the amount of tax payable under an income tax, rejecting the views that recognition is necessary to define income or reward altruism, but accepting the arguments that tax assistance may have a useful role to play to promote pluralism by encouraging donations. Part IV offers conclusions.

Included in

Tax Law Commons



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