The four-week Canada Post strike had a major impact on a range of businesses, including retailers struggling to ship packages during the busy holiday season. But some of the most affected organizations were charities. Many saw important year-end mail-in donations decline dramatically due to the mail stoppage (case in point: the Salvation Army reported a 50 per cent decline in donations during the holiday period). This week the federal government took steps to mitigate that impact by extending the charitable donation deadline for 2024.

Canadians will now have until February 28^th, 2025, to donate to an eligible registered charity (also known as a ‘qualified donee,’ using the Canada Revenue Agency’s official terminology), receive a tax receipt and claim the contribution on their 2024 tax return. The previous deadline was December 31^st, 2024.

The Liberal government plans to introduce legislation that would enact the change once Parliament resumes sitting on January 27^th, 2025. The legislation’s passage assumes that the government survives a possible series of non-confidence votes. If the government falls before the measure is enacted, an election would be called, and this proposed charity relief would be scuttled.

As Finance Minister Dominic LeBlanc noted in announcing the proposed measure: “This extension recognizes the impact that the Canada Post service disruption had on [charities’] fundraising campaigns, and will give charities additional time to receive and process donations so that they can continue their vital work.”

The proposal is also good news for taxpayers poised to report significant capital gains for the 2024 tax year—in particular investors with assets in non-registered accounts, who have benefitted from a red-hot stock market in recent months.

As we noted in a recent blog, an effective year-end tactic to minimize or eliminate tax liabilities and support qualifying charities is to make a ‘gift-in-kind’ of publicly-traded securities with accrued capital gains. Doing so not only entitles the taxpayer to a charitable tax receipt for the fair market value of the shares, but the accrued capital gain may also be exempt from tax, thereby reducing tax amounts owing to the CRA.

With the proposed increase in the capital gains inclusion rate taking effect in late June, 2024—which increased the rate to two-thirds from one-half on annual capital gains exceeding $250,000—the charitable donation deadline extension could deliver added benefit. Yet another caveat: While the capital gains inclusion rate is being implemented by the CRA, the measure has yet to receive royal assent in Parliament. There is a scenario where parliamentary maneuvering and a non-confidence motion directly related to the capital gains inclusion rate change could see its implementation reversed. Expect regular updates from our team as the legislative situation evolves.

The RH Partners Tax Team

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