Marriage, Common-law Partnerships And The Charitable Donation Tax Credit

In Canada, the end of the calendar year is often referred to as “charitable giving season” as taxpayers tend to focus on their giving plans at that time and, provided eligible donations are made by December 31st of the year, look to claim related tax credits for the year. For 2024, however, the Department of Finance proposed an extension to the eligible donation period to February 28th, 2025, citing concerns with the four- week Canada Post mail stoppage, which began in November 2024. See here for more information on the extension.

While, as of the date of this article, the proposal above had not yet become law, the CRA’s confirmation that they will administer the measure as though it has passed has inspired many Canadians to take a closer look at their charitable giving strategies to maximize benefits. For some Canadians, this means incorporating a spouse or common-law partner (CLP) into their plans.

The tax rules permit donations by a spouse or CLP to be claimed on the tax return of either spouse, generally for a total claim of up to 75% of net income for the year.1 Amounts not claimed in the current year can be carried forward for use in any of the next five years. This provides flexibility for couples: when one spouse makes an eligible donation to a registered Canadian charity, that donation can be claimed by the person who made the donation or their spouse (or CLP) in the current year or in any of the following five calendar years. It often makes sense to claim all donations on the tax return of one spouse to maximize tax savings for the family.

This creates some interesting scenarios, one of which was recently addressed by the CRA in technical interpretation 2024-1022711E5. Consider the following:

Kevin and Rebecca have been married for 10 years. In 2019, Kevin made a donation to an eligible charity. Kevin claimed tax credits for portions of the donation on his tax returns for the 2019 through 2024 tax years, but an unclaimed portion remained after the 2024 tax year. No other individual, including Rebecca, claimed donation tax credits for any portion of Kevin’s 2019 charitable gift.

Following the end of the 2024 tax year, because the five-year carry forward period had expired, neither Kevin nor Rebecca could claim the unclaimed portion of Kevin’s 2019 donation for 2025 or beyond. However, Rebecca wondered if she could amend her tax returns for the 2019 to 2024 tax years to include Kevin’s unclaimed 2019 amounts.

Generally, within a 10-year time limit, the tax rules allow an individual to make a written request to allow the individual to claim a refund, or reduce taxes payable, for a past year if the individual was not aware of or missed claiming a deduction or credit for that year. This provision, combined with the ability to claim a spouse’s donation on a tax return, would normally allow Rebecca to claim Kevin’s unused donations from the 2019 to 2024 period on her tax return for those years.

Taking this a step further, how would the scenario above change if Kevin and Rebecca were recently married? If we assume that Kevin and Rebecca were married in 2022, would Rebecca still be able to claim Kevin’s unclaimed donations for the period of 2019 to 2024?

In the technical interpretation above, the CRA confirms the ability to claim spousal donations even for the period prior to marriage or common-law partnership, provided the couple’s status is married or common-law for the year the claim is made. The claim must also be made for a year that is within five calendar years of the donation being made. In other words, in the revised scenario, even if Kevin and Rebecca were not married or living common- law in 2019 when Kevin made his donation, subject to net income limitations, either Kevin or Rebecca can claim Kevin’s unused donation amount from 2019 in tax years 2022 (the year of marriage), 2023 or 2024 because their status was married in those years. This could be helpful for newly married or common-law couples that are looking to maximize donation credit claims for the family.

Flexibility When Claiming Donations

The tax rules offer flexibility when it comes to claiming charitable donations. This flexibility is enhanced for couples who are married or living common-law. For the 2024 tax year, subject to the passing of enabling legislation, donations made in January and February of 2025 will be claimable on 2024 tax returns. In the case of spouses and common-law partners, combining the donations and claiming them on one spouse’s tax return can maximize tax savings. And, for unused donations, taking advantage of the five-year carry forward period, including where spouses are recently married or living common-law, can ensure that available tax credit claims are realized.

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¹ For Quebec residents, this 75% of net income donation limit applies to federal tax returns, but not to Quebec tax returns since 2016. https://www.budget.finances.gouv.qc.ca/budget/2016-2017/index_en.asp