New Alternative Minimum Tax rules mean wealthy might want to donate more to charity this year

financialpost.com:

The start of fall brings wafts of pumpkin spice everything, from seasonal lattes to limited-edition Cheerios, and changing colours, but also the beginning of the final push for charitable giving, which must be done by Dec. 31 if you want to reap the tax benefits on your 2023 tax return.

But if you’ve noticed an extra chill in the air this year, it may be coming from a fear that proposed changes to the Alternative Minimum Tax (AMT), set to take effect Jan. 1, 2024, will significantly damper the tax benefits traditionally associated with charitable donations, thus reducing the level of charitable giving.

My goal here is to reassure both donors and charities that, for the most part, the new AMT won’t affect very many people, and that even high-income donors, who earn most of their income from employment or self-employment, are unlikely to be affected.

There are, however, some unique situations where AMT could apply in 2024, suggesting that for a very select group of philanthropists who donate significantly to charity, doing some planning this fall, perhaps by making a significant gift in 2023 instead of in 2024 (or beyond), could reap significant tax savings.

The AMT system imposes a minimum level of tax on taxpayers who claim certain deductions, exemptions or credits to reduce the tax they owe to very low levels. There is a parallel tax calculation under the AMT that allows fewer deductions, exemptions and credits than under the regular income tax calculation. If the amount of tax calculated using the AMT system is more than the amount of tax owing using the regular tax system, the difference owing is payable as AMT for the year.

In the 2023 federal budget, the government announced that “to better target the AMT to