The festive season is a time for giving, but don’t forget about the many people who will need your help this Christmas. Consider making a donation to a charity to help spread the joy.
A number of charities and organisations comply to receive tax deductible gifts. These organisations are known as DGR’s. When you make a donation to a charity with DGR status, you are entitled to claim that donation on your next tax return.
How do I know if I can claim a donation?
To claim a tax deduction for a gift or donation, it must meet four conditions:
- It must be made to an organisation with DGR status.
- It must truly be a gift or donation – that is, you are voluntarily transferring money or property without receiving, or expecting to receive, any material benefit or advantage in return. A material benefit is an item that has a monetary value.
- The gift or donation must be of money or property. This can include financial assets such as shares.
- The gift or donation must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting types of deductible gifts they can receive.
You must also keep a record of your donation to accompany your claim.
What types of gifts can be claimed?
- Gifts of money – you can claim the amount of the gift, but it must be $2 or more.
- Gifts of property or shares – there are different rules depending on the type and value of the property
- Gifts under the Heritage and Cultural programs – there are special circumstances where donations can also be deductible
You can claim a tax deduction for gifts up to $10 without a receipt such as bucket collections. To claim contributions of more than $10 you need a receipt.
What donations am I not entitled to claim?
Gifts or donations that provide you with a personal benefit are not able to be claimed:
- Raffle or art union tickets
- Items such as chocolates, mugs, keyrings, hats or toys that have an advertised price
- The cost of attending fundraising dinners, even if the cost exceeds the value of the dinner
- Membership fees
- Payments to school building funds made in return for a benefit or advantage
- Payments where you have an understanding with the recipient that the payments will be used to provide a benefit to you
- Gifts to family and friends, regardless of the reason
- Donations made under a salary sacrifice arrangement
- Donations made under a will.
If you’re thinking about making a donation this Christmas and are unsure if you will be eligible to make a tax deduction claim, please get in touch and our Bendigo Accountants can clarify.
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