Jump to content
Premed 101 Forums
Leon

Taxes and donations to charities

Recommended Posts

Hi everyone, 

I'm partway through a speciality residency and have started to think about staffhood. I understand the average taxation rate for us to fall between 30 to 40 percent depending on how much we work. I am strongly interested in supporting certain charities designated as such with the Canadian government. I have not yet spoken to an accountant but was wondering if anyone had any insight into the effects of donating large sums of money to charity and the effect on taxes. Let's say the gross income is 350K and one makes a charitable donation of 100k or more, how exactly does that impact taxes? Is it possible to 'give away' all or most of what you would otherwise pay to the government as income tax? I'm not sure about the specifics and hope to recruit some feedback before speaking to my accountant. Many thanks in advance. 

Share this post


Link to post
Share on other sites

I think the way it works is that whatever you donate gets deducted from your taxable income i.e you don't pay taxes on the sum of money you donated. I might be wrong though. Hopefully someone else chimes in because I really want to know this as well.

Share this post


Link to post
Share on other sites
32 minutes ago, Fortress said:

I think the way it works is that whatever you donate gets deducted from your taxable income i.e you don't pay taxes on the sum of money you donated. I might be wrong though. Hopefully someone else chimes in because I really want to know this as well.

Not quite. The way it works (as I understand), you get two tax credits when you make a donation: one at the federal level, and one at the provincial level. The two tax credits can be calculated using the following table: https://www.canada.ca/en/revenue-agency/services/charities-giving/giving-charity-information-donors/claiming-charitable-tax-credits/charitable-donation-tax-credit-rates.html

Per the table, you get a reduced tax credit on the first $200 donated,  and a greater tax credit on any money donated beyond the initial $200.

e.g. OP makes $350,000 gross in the province of Ontario in 2019. He donates $100,000 of his net income.

He will now receive a federal and provincial tax credit as follows:

Federal: 0.15*200+0.29*(100000-200)= $28792

Provincial (for ON): 0.0505*200+0.1116*(100000-200)= $11147.78

$28792 + $11147.78 = $39939.78

He will therefore receive a total tax credit of $39,939.78 for the year of 2019 which will apply to future taxes paid.

Share this post


Link to post
Share on other sites
37 minutes ago, Fortress said:

I think the way it works is that whatever you donate gets deducted from your taxable income i.e you don't pay taxes on the sum of money you donated. I might be wrong though. Hopefully someone else chimes in because I really want to know this as well.

Definitely not how it works ahaha, at least not for individuals versus giant mega-corporations.

Share this post


Link to post
Share on other sites
On 11/28/2019 at 6:26 PM, Leon said:

Hi everyone, 

I'm partway through a speciality residency and have started to think about staffhood. I understand the average taxation rate for us to fall between 30 to 40 percent depending on how much we work. I am strongly interested in supporting certain charities designated as such with the Canadian government. I have not yet spoken to an accountant but was wondering if anyone had any insight into the effects of donating large sums of money to charity and the effect on taxes. Let's say the gross income is 350K and one makes a charitable donation of 100k or more, how exactly does that impact taxes? Is it possible to 'give away' all or most of what you would otherwise pay to the government as income tax? I'm not sure about the specifics and hope to recruit some feedback before speaking to my accountant. Many thanks in advance. 

Probably want to talk to an accountant about this.  When you're into six figures, there might be ways to structure it more advantageously.  Or at least get a small piece of infrastructure named after yourself by your appreciative recipient (if you're into that).

But I don't know, mostly because I don't have a hundred large burning a hole in my pocket every year.  You might not, either. 

While $350k per year sounds like an outrageous amount of money, by the time you account for overhead, taxes, mortgage, debt repayment, insurance, retirement savings etc it will likely be a lot less and you might not have a spare $8300 per month to donate to charity.  More power to you if you do, but make sure you've done the math.

Share this post


Link to post
Share on other sites
On 12/1/2019 at 10:48 PM, ploughboy said:

Probably want to talk to an accountant about this.  When you're into six figures, there might be ways to structure it more advantageously.  Or at least get a small piece of infrastructure named after yourself by your appreciative recipient (if you're into that).

But I don't know, mostly because I don't have a hundred large burning a hole in my pocket every year.  You might not, either. 

While $350k per year sounds like an outrageous amount of money, by the time you account for overhead, taxes, mortgage, debt repayment, insurance, retirement savings etc it will likely be a lot less and you might not have a spare $8300 per month to donate to charity.  More power to you if you do, but make sure you've done the math.

I agree, there are definitely better ways to gift 100k per year than just writing a yearly cheque. An accountant and maybe a financial advisor would be good to talk to before you start dropping large sums of money. 

I also agree that staff money looks great but once you get into running the business, paying massive taxes and repaying what you owe, it's not the Scrooge McDuck money pool it seemed to be when you were in medical school. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...