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Tax Breaks for Volunteers

weather: partly cloudy
outside: 6°C
mood: curious
I can't be the first person to think of this. There must be something that blocks its implementation. One of you who knows better could maybe clue me in.

It occurred to me that more people would likely volunteer for all kinds of things if they got a tax credit for the amount of time they spent volunteering.

Example: I volunteer for 2 hours a week for a registered non-profit charitable organization. First Job/Entry Level minimum wage in BC is $6.00, so let's go with that instead of $8/h. In a year, my "pay", would be approximately $6.00 × 2 × 50 = $600.00 (two weeks off in a year sounds reasonable; and I like working with nice round numbers =). Then I'd get a tax deductible receipt for $600 that I could use on my tax return like a donation. I didn't donate the money, but I donated my time which is worth something.

I'd be okay if it were capped at whatever amount was deemed reasonable. I'd be okay if only a portion of the "wages" were elligible for use as a tax credit. The idea is to add a slight incentive to encourage community service.

I imagine if there weren't huge problems in doing this, we'd already be able to do it. So, what would be the problem(s) in doing that (other than "they collect less in taxes that way")? What assumptions am I making that are not valid or not applicable?


Comments

( 22 comments — Leave a comment )
(Deleted comment)
bride
Dec. 22nd, 2003 12:26 pm (UTC)
Re: Hm!
I was thinking if there isn't a big hole with my logic, I'd start badgering my MP (Member of Parliament) about it =)
ducks
Dec. 22nd, 2003 12:32 pm (UTC)
It would be a great idea since I spend like 500 hours volunteering every year (although I probably spend less time nowadays). How would you go about proposing this idea to the gov't?
bride
Dec. 22nd, 2003 12:39 pm (UTC)
I was thinking about writing to both my MLA and MP, follow up with phone calls, sleep on their office doorstep until they do something about it... okay, maybe not that far =)
ducks
Dec. 22nd, 2003 01:51 pm (UTC)
Hey can you work on Ontario too? hehe...
bride
Dec. 22nd, 2003 02:00 pm (UTC)
You pester them from your edge of the country, I'll work on my edge. I'll try to get pasticcio to work from the middle. =)
yueni
Dec. 22nd, 2003 12:42 pm (UTC)
What about people who do volunteer work who aren't taxpayers? E.g. young children, teens who are not working. I'm assuming that the tax deduction just doesn't apply any more?

Also, what counts as community service? What sort of community service would count? What about community service you are doing to fulfill requirements for something else, like a club membership. Would those count?
yueni
Dec. 22nd, 2003 12:44 pm (UTC)
Oh, and another thing, how would one document this community service? Who would be in charge of confirming the number of hours spent on these projects?
bride
Dec. 22nd, 2003 01:04 pm (UTC)
What about people who do volunteer work who aren't taxpayers? E.g. young children, teens who are not working. I'm assuming that the tax deduction just doesn't apply any more?

Teens can work. The malls employ teens all the time. I don't know what the age minimum is, but I vaguely remember the magic age of 14 for some reason (I think I applied for my Social Insurance Number so that I could start working). I was earning a tiny amount of income by 15. It was so puny that no one would have been on my case for filing a tax return, but technically, I could.

Re: Children

You're right. That would be something that needs to be decided. Do the parents get the credit then? Or is it just lost to the wind? My Dad used my tuition fee tax credit while I was in school, so transferring the credit to the parent/guardian is conceivable.

Also, what counts as community service? What sort of community service would count?

Community service is defined as "unpaid work at an organization that is registered as a non-profit under the BC Charities Act" or the equivalent of the BC Charities Act, wherever it's implemented. They are required to submit financial statements, executive and general meeting minutes and be available for auditing (as I understand it). I don't remember the ins and outs of it, but I do remember that there are certain things they must comply with in order to be "A Charity" and be able to issue tax deductible receipts for donations.

What about community service you are doing to fulfill requirements for something else, like a club membership. Would those count?

That's a good question. Highschools now require a community service component (I think)...

Oh, and another thing, how would one document this community service? Who would be in charge of confirming the number of hours spent on these projects?

All organizations are required to log and report their volunteers' hours anyway. And if they're not legally required, they usually do anyway for reporting purposes — what got done, who did what and more importantly, did they have enough volunteers to do what they wanted to accomplish, did they have too many people, too few, how much did they spend on their volunteer support infrastructure, etc.

It might be a matter of streamlining how the information is presented for auditing.
serennig
Dec. 22nd, 2003 02:28 pm (UTC)
Sorry, no, you're not the first one to think of it. :)

The idea was first academically proposed by in a modern philosophy journal not that long ago. If I could recall who or what, we'd be set. But I don't remember.

In any case, the arguments against it were very straightforward. If only I could remember them clearly. I'll see what I can recall:

It would be too hard to tally. Not every volunteer has an obvious and direct supervisor. There's nobody watching over my shoulder to see if the number of hours I report every year actually match the number of hours I really did. How do you tally the number of hours it takes to manage a website? Or the number spent sorting through old paperwork and calling around to figure out what members have
passed on without being removed from strength? What about the "soft volunteering"? The people who donate their time to shovel their neighbour's driveway or sit in grocery stores reminding people to donate their receipt tapes? The logistics of defining "what counts" and how to legally keep track of it would be horrendous.

Hmm. I know there was more but it's been so long since I've had to think about it that I can't remember. They were some damn good arguments against it, though.

Here's some more discussion when a bill was presented in parliament:
http://www.parl.gc.ca/37/2/parlbus/chambus/house/debates/106_2003-05-27/han106_1825-E.htm

As much as I would *love* to get a tax credit for the number of hours I chuck in the heap every year (between Michael and I we usually top 3000/year, though this year I've been a bit out of the game). Fact is, they couldn't afford us, even at half of minimum wage. And I can't help but say, with a small amount of exclusivity, that given the number of obnioxous me-me-me volunteers we already have who waste our time and make it more difficult, not easier, to get the work done, making it easier for selfish people to volunteer doesn't really excite me that much.
bride
Dec. 22nd, 2003 04:00 pm (UTC)
How do you tally the number of hours it takes to manage a website? Or the number spent sorting through old paperwork and calling around to figure out what members have passed on without being removed from strength?

You look at the clock when you start working; you look at the clock when you leave for lunch; you look at the clock when you resume; you look at the clock when you pack up to go home. Just like any other job. =) That's how software companies bill for their work. We all submit electronic versions of timesheets. Most IT companies do. And there's presumably a maximum cutoff amount, so overlogging hours shouldn't be a problem.

In the past, regardless of what job I did with my volunteer group, we worked a set amount of time. Between x o'clock and y o'clock, then we'd leave. The charity we worked with always had a Volunteer Manager or someone in charge of keeping track of volunteers. They kept track of all the hours and we kept track of all our hours. Is that rare?

The people who donate their time to shovel their neighbour's driveway or sit in grocery stores reminding people to donate their receipt tapes? The logistics of defining "what counts" and how to legally keep track of it would be horrendous.

Like I said, registered non-profits and charities. The ones who are allowed to give out tax deductible receipts for monetary donations.

Fact is, they couldn't afford us, even at half of minimum wage.

They wouldn't actually be paying you. They're just allowing you to claim an equivalent of a charitable donation on line 349 of your tax return. If the government couldn't afford to have people claiming the maximum for donations and gifts, then they'd set the max lower. Hmm... but that would, like, make sense and we just don't do that around here. =)

In any case, the arguments against it were very straightforward.

Sounds like the infrastructure is half there, but half isn't. Not that it affects me a whole lot, I'm still starting in January.
sertrel
Dec. 22nd, 2003 02:29 pm (UTC)
In the United States, it is possible to deduct out-of-pocket expenses incurred while volunteering. In addition, for charitable contributions in which you receive something in exchange, you can deduct the difference between the contribution and the fair-market value of the item or services received (e.g. you buy $100 in raffle tickets and win a $40 item, $60 is tax-deductible). In addition, incidental expenses incurred that you are not reimbursed for are deductible, e.g. cost of transportation to and from volunteering, cost of uniforms and equipment, etc.

The immediate problem that I see with deducting the value of time and services is how do you calculate it fairly? What if you're volunteering above an entry-level position? For example, if an accountant, a lawyer, or a physician contributes professional services to a charitable organization, would it be fair that they be compensated the same as someone who performs other tasks?

I wish I had access to a law school library! I'm sure there's a historical precedent for why time and services are considered non-deductible, and why expenses are. Tax law is just like all other law, that the implementation is not an end unto itself, but a means of pursuing some sort of theoretical good.
bride
Dec. 22nd, 2003 04:08 pm (UTC)
would it be fair that they be compensated the same as someone who performs other tasks?

For volunteering? Yes. It's in lieu of a monetary donation. If they wanted a bigger tax deduction, they can donate, but volunteering should be a fixed rate.

I wish I had access to a law school library! I'm sure there's a historical precedent for why time and services are considered non-deductible

If you find out, I'd like to know too.

I just refuse to donate money because there's administrative overhead, salaries for fat executives who don't get it, and a lot of crap that I didn't give my money for. But I'll donate time and volunteer to the causes I want to support.
razorw
Dec. 22nd, 2003 04:24 pm (UTC)
Interesting idea. --Ray
bride
Dec. 22nd, 2003 04:25 pm (UTC)
Yeah, too bad it doesn't sound do-able though =P
razorw
Dec. 22nd, 2003 05:28 pm (UTC)
Well . you never know. Try writing to your MP, or even call them up, you never know.

Personally though, I think the volunteering is self-rewarding as it is. For those who don't find it as such .. need to find something else. There's always different oppertunities or ways to help out. If not time, then money .. right?

Whose your MP btw? --Ray
bride
Dec. 22nd, 2003 05:31 pm (UTC)
Sophia Leung (Lib.)... but I should make sure.
razorw
Dec. 22nd, 2003 09:28 pm (UTC)
Ah ic. Interesting...
astral
Dec. 23rd, 2003 08:09 am (UTC)
hmm hey, did u delete the entries from your chinese journal? i saw an entry awhile ago, just checked back now as didn't have chinese on that comp...
bride
Dec. 23rd, 2003 09:41 am (UTC)
I don't think so... oh wait, maybe I did, sorry =P I wrote a new one though =}
astral
Dec. 23rd, 2003 04:52 pm (UTC)
gah! i was looking at the one with the underscore! got utterly confused cos it had the same userpics and all :P

sorry! :P
nightshift
Dec. 23rd, 2003 10:45 pm (UTC)
The taxpayer in me warms to this idea. But the academic and public servant in me is averse to the whole concept. Granted, I am making some big assumptions here but hear me out.

I'm basing this off the assumption that those who genuinely care about their community would do community service work regardless of whether they get compensated in terms of favourable tax treatment or not. I'd think it's a fairly reasonable assumption. So that means that many of the new volunteers wouldn't be as committed or as passionate about their charitable activities.

That being said, there are logistical difficulties in verifying volunteer hours worked and preventing abuse particularly for those who are doing it just for a tax deduction/credit. Often times, volunteers work on their own without supervision and it's not like these charities can turf you for poor performance like an employer can. Uncommitted volunteers are not people I'd like to give tax credits to.

Moreover, having the people there to do this in addition to the charity's other activities seems to be a waste of the organization's resources. People already complain now about charities spending too much on administrative costs.

Another point, no tax breaks are given to those who are employed full-time working for charitable organizations. That presents some difficulty there. Why should ordinary volunteers get tax credits but those who work for the charity full-time not get any at all?

One of the biggest reasons why I'd oppose it is that there are other, more efficient vehicles to reduce taxable income like RRSPs and a myriad of methods (ex. education, energy savings, etc...) to yield a tax credit that are more conducive to a self-sufficient, productive and socially conscientious society. Statistics show that Canadians, by and large do not max out their RRSP contributions or do things that earn them tax credits anyway. Given these results, I'm satisfied with how tax deductions are treated presently.
Lastly from a personal point of view, I see volunteering as its own reward and to give favourable tax treatment to it lessens the experience of it for me. Volunteering to me is something fundamentally selfless you do for your fellow neighbour.
bride
Dec. 24th, 2003 01:26 pm (UTC)
I'm basing this off the assumption that those who genuinely care about their community would do community service work regardless of whether they get compensated in terms of favourable tax treatment or not.

Absolutely. But it just didn't quite make sense that someone could just write a cheque for a donation and get a tax break whereas someone who actually volunteered didn't get anything for it.

Statistics show that Canadians, by and large do not max out their RRSP contributions or do things that earn them tax credits anyway.

Heh, I'm convinced we're the only people who do. =)
( 22 comments — Leave a comment )

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