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Finance Minister Joe Oliver is facing pressure from charities to go further in the upcoming 2015 budget with a “stretch” tax credit that would reward donors with more generous tax credits as they increase their donations in comparison to previous years.Chris Young/The Canadian Press

A new "super" tax credit meant to encourage Canadians to make a charitable donation for the first time appears to be less effective than hoped, with a first year take-up that was only 20 per cent of what Ottawa expected.

The Conservative government's 2013 budget launched the "First Time Donor's Super Credit," which promised an additional tax break for Canadians who hadn't claimed any charitable giving since 2007.

Charities welcomed the move as a good first step toward a more ambitious enhancement of tax incentives for donations, which they hope will come in the upcoming federal budget now that Ottawa is promising a return to surplus.

There are more than 85,000 registered charities that provide a wide range of services in Canada and abroad, but the number and size of donations have stagnated in recent years.

The 2013 budget forecasted that the super credit would cost the government $25-million per year in lost revenue.

However, two years later, new figures from Finance Canada show the credit only cost $5-million in 2013 and is expected to cost $7-million in 2014, meaning results for the first year so far are just 20 per cent of Ottawa's initial expectations.

The figures come as Finance Minister Joe Oliver is facing pressure from charities to go further with a "stretch" tax credit that would reward donors with more generous credits as they increase their donations in comparison to previous years.

Finance Canada spokesperson David Barnabe confirmed that there has been "lower-than-expected take-up of the measure" to encourage first-time donations.

However Mr. Barnabe noted that donors have until the end of 2017 to claim up to the $1,000 limit. That means it is still too early to know exactly how many people will claim the credit.

The Canada Revenue Agency reports that 98,010 people claimed the first-time donor's super credit in 2013, based on a total amount of $20.9-million in charitable donations. The CRA was not immediately able to say whether that represents an increase or decrease over the number of Canadians who donated to charity for the first time the year before.

Imagine Canada, the umbrella group that represents Canada's charitable sector, views the number of people who claimed the credit as an encouraging result.

Michelle Gauthier, Imagine's vice-president of public policy and community engagement, notes that estimates have previously stated that about 590,000 Canadians would be eligible for such a credit. Her organization is encouraged that a solid percentage of them have already contributed.

"As more people become aware of the credit, we anticipate the take-up will increase," she said, noting that charities and the government are marketing the credit more than they did in the initial year.

Ms. Gauthier said that in response to growing demand for their services, charities have been urging government and MPs to support the "stretch" tax credit idea.

"For us, the stretch is the natural next step to the super credit," she said. "We are hopeful that we will see it in the next budget."

The federal government provides a 15 per cent credit on charitable donations up to $200 and 29 per cent for eligible amounts over $200. Provinces also offer their own additional credits, ranging from a high of 24 per cent in Quebec for donations above $200 to a low of 11.16 per cent for similar donations in Ontario. The super credit provides an additional 25 per cent tax break.

Over all, nearly 5.7-million Canadians made charitable donations in 2013 worth a combined $9-billion. The cost in terms of lost federal revenues of the basic Charitable Donation Tax Credit has climbed slightly from $2-billion in 2009 to $2.3-billion in 2014.

A recently released report by Finance Canada on charitable giving found that the number of individuals claiming a charitable donation increased significantly between 1998 and 2005, but has since been relatively stable.

There is a big difference between the number of Canadians who say they donate to charity and the percentage who actually claim a charitable donation at tax time.

Statistics Canada's survey on giving estimates that close to 23.8-million Canadians, or 85 per cent of the population aged 15 and over, made a financial donation in 2010. Finance Canada's report said the difference may be explained by the fact that many people make donations without requesting a receipt for tax purposes and also spouses may pool their donations. Another factor is that Canadians with incomes that do not require paying tax would not claim their donations.

The type of charities receiving donations has also shifted over time. In 1995, 47.6 per cent of charitable donations went to religious organizations. That percentage dropped to 37 per cent in 2012. In contrast, welfare groups accounted for 28.5 per cent of donations in 2012, up from 18 per cent in 1995.