All About Estates
By Sebastien Desmarais
July 15th, 2025
Philanthropy can strengthen one’s estate plan. In Canada, an estate plan may integrate charitable donations to leave a legacy to our community while taking advantage of the associated tax benefits. Such strategy can be implemented during the donor’s lifetime or upon the donor’s death.
If the donor is a U.S. citizen living in Canada (hereinafter referred as a “U.S. donor“), does the strategy work?
U.S. donors are entitled to a deduction for charitable donations to charitable organizations that are organized in the U.S. and that meet specific criteria. Interestingly, charitable donations to foreign organizations are not deductible unless an exemption applies; this is where the relevancy of the Canada-U.S. Tax Treaty (the “Treaty“) is important. The Treaty provides an exception where U.S. donors are entitled to a deduction on their U.S. tax return for their charitable donations to Canadian charities with some limitations…
Canadian professional advisors ought to be cautious when advising U.S. donors. Although most charitable donations to Canadian charities are likely allowed as a deduction for U.S. tax purposes, it comes with some limitations; notably, the deduction is only applied for Canadian source income and only if the Canadian registered charity meets the U.S. requirements of a qualified charity.
