Canada Gives

The Tax Advantages When Using Donor Advised Funds

There are so many ways to give, and donor advised funds are some of the best options. Setting up a private foundation for our charities in Canada is possible with donor-advised funds (DAF). With these funds, you have a chance to create a gifting plan for the charity organizations you want. If you are doing this for the first time, then it is useful to know what to expect.

Current Year Deductions

The tax benefits of donor-advised funds are some of the reasons you should consider them. One tax benefit is the current year tax deduction that you get when you put money in your DAF account. It does not matter if you intend to gift the money at a future date. With all the taxes you have to pay, a deduction would be a great relief. The tax deductible, however, is applicable when you put money in and not when you give it out.

Tax-Free Income

You can donate money or assets to your DAF account. The donations go into various investments depending on the choices you have. The advantage is that you would not have to pay taxes on the future gains you get from those investments. It means that your donations earn you tax-free income.

Tax Exemptions

Any assets put in your DAF account get tax exemptions. When it comes to appreciated assets, you don’t have to worry about capitals tax gains. Another benefit is that there are no restrictions on the type of assets you can donate to your DAF account.

With donor-advised funds, you have a chance to park your money in diversified investments without worrying about too many taxes.

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