For clients with ties to both sides of the Canada-U.S. border, thoughtfully structuring charitable gifts can enhance tax efficiency and maximize a person’s legacy. It is not uncommon for a Canadian to have ties to the U.S. through work, family, education, property, travel or otherwise. The same applies for U.S. persons with ties to Canada. When selecting which charities to benefit during your lifetime and on death, giving across the border may have an impact on available tax credits and deductions.
This blog highlights considerations for Canadian taxpayers who wish to benefit U.S. charities and U.S. taxpayers who wish to benefit Canadian charities during their lifetime and on their death.
The Legal Framework
Cross-border charitable gifts sit at the intersection of three frameworks:
- Canada’s Income Tax Act donation tax credit rules,
- the U.S. Internal Revenue Code charitable deduction rules, and
- the rules under the Canada-U.S. Tax Treaty.
Broadly, these frameworks can affect whether a donation to a foreign charity is recognized for tax purposes in the donor’s home country and on what terms.
The Income Tax Act generally provides donation tax credits for Canadian taxpayers for eligible gifts to qualified donees.
For more information on the Canadian tax benefits of charitable giving and different ways to give, check out our Charitable Giving Advisory.
The Internal Revenue Code permits charitable deductions for U.S. taxpayers to tax exempt organizations. On top of that, the Canada-U.S. Tax Treaty contains provisions that can facilitate recognition of certain cross-border gifts.
Canadian Taxpayers Donating to U.S. Charities
A direct gift by a Canadian taxpayer to a U.S. charity will not always produce a Canadian donation tax credit. Recognition for Canadian tax purposes may depend on which charity the gift is made to, which can include:
- a Canadian registered charity that funds a U.S. charity’s work,
- a Canadian “friends of” or affiliate of a U.S. organization that is a qualified donee, and
- a Canadian donor-advised fund that can make cross-border grants.
Further, recognition for Canadian tax purposes may depend on certain qualified donees that are foreign charities, including:
- the United Nations and its agencies,
- certain foreign charities that have received funds from the Canadian federal government within the last or preceding year, and
- a foreign university customarily attended by Canadians.
Under the Canada-U.S. Tax Treaty, Canadians can donate to U.S. registered charities, as long as the charity would qualify under Canadian standards and get Canadian tax relief. The donation tax credits can be applied to the donor’s U.S. source income.
U.S. Taxpayers Donating to Canadian Charities
A direct gift by a U.S. taxpayer to a Canadian charity will not always qualify for a U.S. charitable deduction. Canada-U.S. Tax Treaty provisions can facilitate recognition in some circumstances, and similar to Canada, U.S. donors can use structures that provide a U.S. deduction.
Common structures include donating to U.S. donor‑advised funds that make grants to Canadian charities, U.S. “friends of” organizations that are recognized U.S. charities and support a Canadian operating charity, and U.S. affiliate organizations that receive gifts and fund Canadian activities.
Similar to the Canadian rules, there are specific Canadian charities that U.S. taxpayers can donate to that will qualify for deductions against U.S. income, including universities and colleges attended by the donor or a family member.
Under the Canada-U.S. Tax Treaty, U.S. donors can donate to Canadian registered charities during lifetime and receive a tax deduction against Canadian source income, as long as the charity would qualify under U.S. standards.
It’s important to identify which charities you wish to benefit and whether tax relief is preferred in Canada, the U.S. or both. Once identified, the giving vehicle can be considered, including giving directly, giving to an affiliate or “friends of” charity, or using donor‑advised funds.
It’s important to consider the non-tax benefits of giving and not to let the proverbial tax tail wag the dog. While the tax considerations are an important factor and thoughtful planning can help maximize charitable giving, a person’s objectives and goals are paramount.
Based on the objective and the amount of certain charitable gifts, legal and tax advice can be sought from an experienced Canada-U.S. cross-border tax advisor and estate lawyer to navigate these issues and to help plan intentional and thoughtful giving during lifetime and on death.
For Further Reading
The Many Advantages of Donor-Advised Funds (DAFs) – April 29, 2025
The Gift That Keeps Giving: Making Charitable Gifts Under Your Will – October 5, 2021
— Marly Peikes