Heaven's Gift and the Alberta Advantage

It’s smart to save money. It’s even smarter to give money away—IF you give it wisely. God promises that “he who gives to the poor will never want” (Proverbs 28:27) and “the generous man will be prosperous” (Proverbs 11:25). Jesus Christ said ‘Give, and it will be given to you. They will pour into your lap good measure—pressed down, shaken together and running over. For by your standard of measure it will be measured to you in return,” Luke 6:38. But not all giving is prudent. The Bible warns that “he who gives to the rich will only come to poverty,” Proverbs 22:16. Therefore, do your charitable giving carefully.

If you live in Alberta, you have an advantage over every other province. Alberta promotes charitable giving! For example, for individuals with annual employment income of $42,000 who give more than $200 per year, the charitable tax credit in Alberta is higher than BC (15%) Saskatchewan (9%) and Ontario (8%). The chart below shows that at all income levels, the charitable donation tax credit is higher than Alberta’s marginal tax rate.


AB tax advantage

Sources:

Canada Revenue Agency. (2017, January 24). Charitable donation tax credit rates. Retrieved from https://www.canada.ca/en/revenue-agency/services/charities-giving/giving- charity-information-donors/claiming-charitable-tax-credits/charitable-donation-tax-credit-rates.html

Canada Revenue Agency. (2018, January 03). Canadian income tax rates for individuals - current and previous years. Retrieved from https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html

DiPietro, F. (2016, October). Donor Advice. Forum. pg 15-16


Therefore, give generously for at least three reasons:

  1. It helps the receiver
  2. It reduces your taxes
  3. It helps the giver.

It’s wonderful to see tax regulations line up with biblical instructions. In my practice as a financial planner, I have found that generous givers have much more financial contentment than those who are stingy—regardless of their net worth. I believe that givers have an inner awareness that they indirectly improve their own financial security by helping others, just like God promised, “Happy is he who gracious to the poor,” Proverbs 14:21.

For more on this topic read, “Happy Money – the Science of Smarter Spending” by E. Dunn and M. Norton, or look for the character Generous Genevieve here on the site.

Tom Lipp

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Friday, 16 November 2018
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