After a lifetime of diligent saving and investing, many Canadians find themselves in the fortunate position of being able to support those charitable endeavours that they deem most worthy. Supporting charities is a distinguishing trait of Canadians among global economies, and we are ever-ready to lend a helping hand when there is need.

The methods by which Canadians can support their charity of choice have broadened over the past few years, and we now have the opportunity to be even more generous while receiving more tax incentive than ever before. One of more popular strategies is the designation of a charity as the beneficiary of a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF). This allows donors to receive income during their retirement in a tax-efficient manner, and then pass on the remainder of their retirement accounts to their chosen charity.

If an individual designates a charity as the beneficiary of their RRSP or RRIF, there are a few key points to remember:

o The proceeds from the RRSP or RRIF can flow directly to the named charity after the donor passes away, avoiding the delay of probate and the cost of executor fees. Many banks or brokerages will not withhold taxes at source, so the entire amount of the RRSP or RRIF will be donated.

o The funds which flow from the RRSP or RRIF to the charity will still be reported as income to the donor in the year they pass away, and there will be taxes owing. The estate will be able to claim the charitable donation on the final tax return, which will offset the tax liability. The example below illustrates this in more detail.

o The donated amount can result in a tax credit of up to 100 per cent of your net income in the year you pass away. This means that designating an RRSP or RRIF to charity will result in zero tax liability in most cases.

To illustrate these key points, take the example of Andrew, who has designated his parish as the beneficiary of his RRIF. His RRIF is comprised of stocks and bonds valued at $100,000 at the time of death. This means that if Andrew is in the top tax bracket, he will have taxes payable of $46,400. The donation will allow his estate to claim a tax credit of $46,400. Thus, Andrew’s parish receives the benefit of his donation, and Andrew’s family and estate do not incur any tax payable because of his generosity.

Proper planning can ensure your philanthropic goals are met and you get the benefit of tax incentives to reward your generosity.

TORONTO  - Struggling with parish finances, Fr. Joseph Tap Van Tran needed money for restorations at St. Cecilia’s Church in Toronto’s west end. His prayers were answered through substantial bequests from various parishioners totalling approximately $800,000.

Due to this generosity, the parish is getting a new roof along with exterior work, such as brick work on external walls, stone work around the windows and restoration of the front stairs.

Nestled between houses near High Park Avenue in the Junction, the church is immersed in scaffolding, a testament to the help of bequests.

“It’s a blessing that we got the donations,” said Tran, pastor at St. Cecilia’s Church and The Mission of the Vietnamese Martyrs, a community that shares the parish.

“St. Cecilia’s is not a rich parish. The financial resources are very limited. We would not be able to repair the roof, which is a major renovation, but with the money from the bequests we are able to do it.”

One particularly large bequest came in the form of a house, along with all of its contents, said Tran. Everything was sold and the funds are being given to the parish.

Upon hearing about the large bequests from members of the community, Tran said he felt joy and a strong sense of thankfulness to both God and the donors.

“As Catholics, we know the church is the house of God,” he said. “It’s the place we experience God’s love and experience His presence in a special way.”

Established in 1895, St. Cecilia’s is a fairly old parish, said Quentin Schesnuick, manager of planning giving and personal gifts at ShareLife.

For parishes that need major work done, bequests can go a long way.

“You get a few gifts in your will and what happens is the parishes can go ahead and do the projects and (renovations) to repair the parishes for the next generation,” he said.