Page 26 - ECF-LIA-Mar-Apr-2024_20878_Web-Mag

LEGACY IN ACTION
26
The Cost
Proposed changes to the alternative
minimum tax raise alarm bells in the
charitable sector
of Giving
hen the federal government tabled its most recent budget in
March 2023, the collective eyes of the charity sector were drawn
to proposed amendments to a little-known feature of Canada’s
Income Tax Act: the “alternative minimum tax” or AMT.
While AMT has existed for decades, most individuals are not aware of
it because it has not affected them.
AMT is an automatic mandatory alternative calculation of a person’s
tax obligation using a different tax rate and different exemptions. If there
is a difference between the AMT and tax calculated the more familiar
way, the taxpayer is required to pay the higher value. In most cases, AMT
is lower than the usual tax calculation, so a person is not even aware of it.
While Budget 2023 proposed increasing the AMT exempt annual
income to $173,000, charities are concerned about proposed changes
regarding gifts of publicly traded securities and the charitable donation
tax credit associated with them. But, it was not included in the 2023
budget — though there are fears it could emerge again in 2024.
In short, the proposed changes to the AMT calculation would include
30 per cent of the capital gain that is inherent in gifts of publicly traded
securities; it would exclude 50 per cent of the taxpayer’s usual charitable
donation tax credits.
The changes have been framed as addressing lower than projected
government revenues by taxing those typically thought to benefit from
tax-preference items. But charities are concerned that they could also
negatively impact charitable giving.
“The concern that I have is how [the proposed changes] may impact
our donors who have been longtime supporters and have made donations
to us over the years,” says Edmonton Area Land Trust (EALT) Executive