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Albertans will receive smaller tax credits after Thursday’s provincial budget chopped the amount received for charitable donations, a move designed to save the government up to $90 million annually.
As part of a highly anticipated budget looking for ways to cut costs amid relentlessly low oil prices, the province is looking to find savings and increase revenues wherever possible.
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Blaming “the ineffectiveness of former credit enhancements and the current fiscal environment,” the province will return the tax credit rate on donations over $200 back to 12.75 per cent — the rate in effect before 2007 – by next year.
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In 2007, the charitable donations tax credit was increased to 21 per cent on total donations over $200.
While that higher credit was expected to encourage higher donation levels to charities, Thursday’s budget said “it was not as effective as anticipated.”
The enhanced credit provided donors with significant tax savings, but it had limited success encouraging higher total donations.
“It was not an effective tax measure,” the budget said, adding that the outcome proves “charitable donors are often motivated by factors other than tax savings.”
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