Olev Edur answers your questions about your rights, personal finance, and estate planning
I received a sizable inheritance when my mother passed away at the generous age of 97. As I’m comfortably retired, I’ve been looking into donating some of this inheritance to those less fortunate. Is there any limit to how much I can give?
Yes and no. There are limits to how much you can claim as a charitable-donation tax credit in any given year, but that doesn’t mean you can’t donate more than this limit. It just means that any additional donations will be accorded no tax credit. Normally the limit is 75 per cent of your net income (line 23600 of your tax return) for the year you make the donation.
However, your executor (or your estate) is allowed to claim up to 100 per cent of your net income for the year of your death or the year preceding it. You can also claim up to 100 per cent of your net income if you’re donating cultural property or ecologically sensitive land. For more information on exactly what these are, as well as on the rest of the Canada Revenue Agency (CRA) rules regarding donations, you should get a copy of the CRA’s Guide P113, Gifts and Income Tax for the year you’re making your gift.
You don’t mention your income level, but you should be aware that if you make large donations of property or other “in kind” gifts such as securities, there may be capital gains and alternative minimum tax (AMT) to consider.
AMT is a sort of parallel tax regime that can kick in if your tax liability is a very low percentage of your income as a result of claiming lots of tax credits and deductions. For this reason, if you’re making such donations and claiming other deductions or credits to bring your tax bill to a disproportionately low level, you may want to consult a financial planner to ensure that you minimize any potential tax costs in the process.
Sellling a House
My mother gave me her house before she passed away in 1999, and I sold it last year. Since it wasn’t my principal residence, the sale will result in a hefty tax bill for 2025. How will that affect the quarterly income-tax instalments I pay?
You’re generally required to pay tax by quarterly instalments if your net tax owing is more than $3,000 in the current year and was also more than $3,000 in either of the two previous years. (For Quebec residents, the threshold is $1,800.) If this is the case, you’ll get instalment “reminders” indicating how much you should pay to avoid interest charges. But to accommodate the fluctuating incomes that are common with business owners and the self-employed, the CRA offers three instalment calculation options:
1. The “no calculation” option. If you’re already getting instalment reminders and you pay the suggested amounts on time, then you need not pay any interest no matter how high your 2025 income went. You will, however, have to pay the tax on those property sale gains by April 30, 2026, to avoid interest going forward, but you’ll have the sale proceeds to cover this tax.
2. The “prior year” option. You can base your 2026 instalment payments on your tax owing from the previous year (2025); as long as your payments are sufficient to cover your 2026 tax owing, there won’t be any interest charges. However, this isn’t a good choice in your situation, given the hiccup in your income for 2025.
3. The “current year” option. The suggested amounts in your reminders for 2026 will, of course, be higher as a result of those sale proceeds, but you can instead base your instalment payments on an estimate of what your tax owing will actually be for this year. As long as you end up having paid enough by quarterly instalments to cover your 2026 tax owing, there will still be no interest. The CRA website includes a chart for calculating your instalments based on expected income (tinyurl.com/n6srmh2r).
You might need to use the “current year” option again in 2027, but by 2028 at the latest, your instalment notifications should be back to normal. There’s no requirement that you notify the CRA in advance as to which method you use in any given year—they figure it all out when you submit your tax return.
