To win elections, politicians need votes. And to run the election campaigns needed to garner those votes, they need an organization, volunteers, and money – a lot of money. To wage the federal election held last month, the major political parties needed to raise and spend millions of dollars. Their task of raising that money was undoubtedly made somewhat easier by the fact that Canadian taxpayers who donate money to political parties or candidates can obtain some tax benefit from doing so.
Individuals who donate money to the political party or candidate of their choice may or may not be happy with the outcome of the election, but no matter which registered party or candidate they donated to, it will be possible for them to claim a federal tax credit for those donations when they file their returns for 2025 next spring.
The credit provided under the Income Tax Act is available with respect to funds contributed to either a registered political party or to candidates running in a federal election. Contributions can be made at any time, not just during an election campaign, as long as the donation is received by an official candidate or by a registered federal political party or association.
While the parties which currently hold seats in the House of Commons are, of course, the most well known, there are in fact 16 political parties currently registered and in good standing with Elections Canada. They are as follows, in alphabetical order:
- Animal Protection Party of Canada
- Bloc Québécois
- Canadian Future Party
- Centrist Party of Canada
- Christian Heritage Party of Canada
- Communist Party of Canada
- Conservative Party of Canada
- Green Party of Canada
- Liberal Party of Canada
- Libertarian Party of Canada
- Marijuana Party
- Marxist-Leninist Party of Canada
- New Democratic Party
- Parti Rhinocéros Party
- People’s Party of Canada
- United Party of Canada
Contributions to any one of these registered parties, within prescribed limits, would qualify for the federal political contribution tax credit. Where a qualifying contribution is made, an official receipt must be issued in order for the contributor to claim that tax credit.
The federal political contribution tax credit is calculated as a percentage of donations given, with the credit percentage decreasing as contribution amounts increase. The credit percentages allowed for different contribution levels are as follows:
|
Contribution amount |
Allowable tax credit |
|
$0.01 to $400.00 |
75% of the contribution |
|
$400.01 to $750.00 |
$300 plus 50% of the contribution over $400 |
|
$750.01 and over
|
$475 plus 33.33% of the contribution over $750 |
The maximum credit claimable in any taxation year by a single taxpayer is $650. Once the arithmetic is worked out, it becomes clear that the maximum credit obtainable is reached once contribution levels reach $1,275.
Contribution amount Allowable tax credit
$400 times 75% = $300.
$350 times 50% = $175.
$525 times 33.33% = $175.
$1,275 $650.
Where donations exceed $1,275 in any one taxation year, no tax credit can be claimed on any “excess” donation. As well, there is no provision which allows the taxpayer to carry over any “excess” contributions to a subsequent taxation year, meaning that no credit will ever be obtainable with respect to those “excess” donations.
Many Canadians who are committed to a particular political party or candidate volunteer their time during a nomination or election campaign – canvassing for the candidate, putting up election signs, or telephoning voters to encourage them to vote for the candidate. However, in such cases, the work must be its own reward, as no income tax receipts can be issued for most such non-monetary contributions and consequently no credit can be claimed for the value of any non-monetary contribution (including volunteer hours) donated.
The credit for qualifying donations made is calculated and claimed on the tax return for the year in which the contribution was made. The amount of the credit is calculated (according to the formula outlined above) on the Federal Worksheet and the amount of the actual credit amount entered on line 41000 of page 7 of the federal tax return. By the time the 2025 return is filed, of course, the election will long since have been concluded, the newly elected government will be in place in Ottawa, and the taxpayer who contributed will be in a position to assess whether it was, in fact, money well spent.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
