With December 31st fast approaching, taxpayers are reminded that to claim a donation and get some money back when they file their 2013 personal income tax returns next spring, they need to ensure donations are made prior to midnight on December 31st. But if new draft legislation is passed, you may have a bit more time to make that donation in future years.

A private member’s bill introduced by Kitchener-Waterloo MP Peter Braid in late 2012 proposes to extend the tax deadline so that eligible donations made in the first 60 days of the following calendar year can be claimed in the previous calendar year. This would mimic the normal March 1 (Feb. 29 in leap years) RRSP contribution deadline Canadians have to contribute and claim a deduction when filing their prior year’s taxes.

“Moving the deadline for charitable donations to the tax preparation season in February will increase awareness of the tax benefits that are available when contributing to charities, and provide an incentive to increase donations in order to ensure a larger tax credit,” Mr. Braid stated in a news release.

Mr. Braid says our current tax deadline of Dec. 31st “falls during the busy holiday season, when Canadians are not usually focused on strategic financial planning. In addition, many families have financial constraints at this time, and are unable to maximize their donations in order to provide a greater charitable tax credit.”

Canada’s tax system provides a federal non-refundable donation tax credit equal to 15% on the first $200 in annual donations, and a 29% credit on anything above that. Provincial or territorial credits further increase the total combined value of the donation tax credit. In addition, the new First-Time Donor’s Super Credit (FDSC) can provide an additional 25% federal non-refundable tax credit for a “first-time donor” on up to $1,000 of donations. (See Jeffrey Brown’s article)

Imagine sitting down at your computer to prepare your tax return in early February 2014, only to realize that you owe a few hundred dollars in tax on that capital gain you realized in 2013. What if you could, with a few mouse clicks, make an online donation to the charity of your choice, generating an instant electronic tax receipt that you could immediately enter into your tax preparation software package. Voila, presto! You’ve eliminated your tax owing and maybe even generated a small refund.

Bill C-458, which will also establish the last seven days of February as National Charities Week in Canada, passed second reading unanimously in the House of Commons on May 29, 2013, and the bill was referred for further study to the Standing Committee on Finance.

With the prorogation of Parliament announced by Prime Minister Harper on September 13th, however, all bills died on the Order Paper and will have to be reintroduced once Parliament resumes sitting in mid-October.  As a result, we will have to patiently wait for the next session of Parliament to see if Mr. Braid’s bill becomes law.