How can you get the government to give more money to your favorite charity or cause?

One way may be to lobby your MP or MLA. The prospect of a positive response would be less than certain, and the effort might not be the best use of your time.

A certain way to get the federal and provincial governments to support your charity is through their support of your contribution.

How does that work?

When you make a contribution that qualifies for a tax receipt, you get a credit against your income tax liability.

For the first $250 of receiptable donations, the tax credit is based on the lowest rate of tax.  However, if your donations total over $250 during the year, the tax credit is then based on the highest tax rate, currently 43.7%.
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Effective January 1, 2010, you now have another $5000 contribution room for your TFSA.  This is in addition to any unused contribution room you may have left from the $5000 entitlement for 2009.

Also, if you withdrew money last year, you can now replace it without affecting this year’s limit.

As with RSPs, personal investments can be transferred into TFSAs to avoid tax on future income.  Don’t forget though, you might trigger tax on any capital gains earned to the date you transfer investments.

If you are like most investors, this can be confusing.

Whether you receive a cash distribution from your mutual fund, or leave it invested within your mutual fund, the investments held within in your fund’s portfolio may have still generated taxable income during the year.

Depending on how your mutual fund is invested, the income generated can be:

Capital gains, from when the portfolio manager makes changes within your fund’s portfolio, and sells securities that result in a profit. Only 50% of the capital gain is included in income. Capital losses are not reported, but do offset capital gains within the fund.

Dividends, from companies that distribute part of their earnings, results in a taxable amount that is first ‘grossed up” to produce a taxable income total, then the tax is reduced by a dividend tax credit. (This rather complicated calculation is designed to reflect that the corporation has already paid tax on its profits.)
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