From Revenue Canada, Registered Charities Newsletter, Autumn 1996 In reference to the Canada-United States Income Tax Convention (1980), referred to as "the Treaty", and in particular to paragraphs 5 and 6 of Article XXI. U.S. charities and their Canadian donors Under paragraph 6 of the Treaty, Canadian donors can get tax relief for donations they make from U.S.- source income to U.S. charities. Claims for tax relief are limited to 20% of that net income. The claim will not be restricted to U.S.-source income (although the 20% limitation will still apply) if the recipient charity is a U.S. college or university at which the donor, or a member of the donor's family, is or was enrolled. Donors can claim donations in the year they donated them, or in any of the five years immediately following. They can carry forward any excess contributions they make for up to five years from the year of the donation. The most recent Canadian federal budget proposed raising the limit to 50% and, where appropriate, 50% of taxable capital gains. It also proposed raising the limit to 100% in the year of a donor's death with a one-year carry back provision. This will be applicable to 1996 and subsequent taxation years. Revenue Canada will recognize U.S. charities that qualify under section 501(c)(3) of the U.S. Internal Revenue Code, referred to as "the Code." The U.S. charity does not need to apply in Canada, but it may have to show proof that it qualifies under the Code. This recognition does not mean that U.S. charities are "qualified donees" for the purposes of the Income Tax Act. If the recipient U.S. charity is not listed in IRS Publication 78, the donor should verify if the organization qualifies under section 501(c)(3) of the Code by asking for a copy of the organization's IRS determination letter. Donors may also contact the IRS to verify a U.S. charity's status. For tax purposes, a Canadian donor must get a receipt from the qualified U.S. charity. Depending on how the donor files his or her income tax return, the donor must either subrnit the receipt with the return or keep it for possible review at a later date. For more information contact the: Charities Division, Revenue Canada, 400 Cumberland Street, Ottawa ON KIA 0L5. By telephone you can contact us at (613) 954-0410 for local Ottawa calls, or 1-800-267-2384 for toll-free calls within Canada.