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Cross-border gifts --- what you need to know
by Sherry Rodney Kushner and Edward H. Pearce
June 18, 1997; Canadian FundRaiser

One common oversight by gift planning practitioners on both sides of the US-Canada border is the use of gift opportunities available to the "cross-border" donor. Although the reasons for the under-utilization of these valuable gift options may vary, cross- border giving can offer a potential to meet the needs of the donor while advancing the efforts of your organization.
Canadian donors and U.S. charities

A Canadian donor may claim charitable tax credits for a gift to a recognized US charity, provided that the charity would have qualified in Canada if it had been a Canadian charitable organization. The charitable credit is limited to the donor's US-source income, and subject to the normal donation ceiling. Any excess credits can be carried forward and used in subsequent taxation years. (Article XXI(6) Canada-US Income Tax Convention)
The commuter's charitable donation
A Canadian donor who lives near the US border, commutes to work in the US, receives their chief source of income for the year from that employment, and makes a gift to a recognized US charity, may claim charitable tax credits based on world income for the full amount of the contribution, subject to the normal donation ceiling.
Donations to Schedule VIII universities
Certain universities and colleges in the US whose student body normally includes students from Canada are listed in Schedule VIII of the Income Tax Regulations. A Canadian donor who contributes to these listed organizations may claim charitable tax credits based on the full amount of the gift, subject to the normal donation ceiling. The credit is not limited to US-source income.
Donations by Canadian alumni of US universities and colleges
A Canadian donor who contributes to a US university or college may claim charitable tax credits based on the full amount of the gift, provided that the donor or a family member attended the educational institution. The credit is not limited to US-source income, but is subject to the normal donation ceiling. The tax credit can be claimed regardless of whether the university or college is listed in Schedule VIII.
Donation to a US charity to which the Government of Canada has made a gift
If the Canadian government has made a gift to a US charity, a Canadian donor may, in the same year or the following year, make a contribution to the same charity. The donor is eligible to claim charitable tax credits based on the full amount of the gift. The claim is not limited to US-source income. Since 1991, however, the Government of Canada has not published the names of any foreign charities to which a gift has been made, so while obtaining charitable credits for donations to US charities based on this criteria is still possible, it is likely remote.
Substantiation of the donation
The Canadian donor should obtain a receipt or a written confirmation of the gift showing the name and address of the donor and the charity; the place where the receipt was issued; the amount of the donation; and, the year of the gift. While there is no need for a Canadian registration number, the receipt will need to be either serialized or signed by an official of the US charity.

U.S. donors and Canadian charities

A US donor may claim an income tax deduction as well as a gift tax deduction for gifts to a registered Canadian charity, provided that the charity would have qualified in the US if it had been a US charitable organization. The deduction is subject to the donor's Canadian-source income, and depending on several factors, the deduction ceiling is either 30% or 50% of Canadian-source income. Any excess can be carried forward and deducted in subsequent taxation years. (Article XXI(5) Canada-US Income Tax Convention)
The commuter's charitable donation
A US donor who lives near the Canadian border, commutes to work in Canada, receives their chief source of income for the year from that employment, and makes a gift to a registered Canadian charity, can deduct the full amount of the contribution, subject to the normal donation ceiling.
Canadian universities and colleges
A gift to a Canadian university or college is fully deductible, subject to the normal donation ceiling, provided that the US donor or a family member attended the educational institution. The deduction is not limited to Canadian-source income.
Substantiation of the donation
For charitable gifts over $250, the Canadian charity should provide a written substantiation of the gift, as well as a `good faith' estimate of the value of any goods, services or privileges received by the donor in return for the donation. For non-cash gifts over $250, the charity must describe the gift.

Sherry Rodney Kushner and Edward Pearce are the authors of a new manual: PLANNED GIVING: Making It Happen!, published by Strategic Ink Communications. This article is an adaptation from the Section on Cross-Border Gifts. To order your copy, call (416) 696-8146.