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Tax Deductions on Donations and Gifts

To give is better than to receive, especially when it is a deductible donation. The Australian Tax Office (ATO) has endorsed a wide variety of organisations as deductible gift recipients, from the Australian Cancer Research Foundation to around 30,000 other not-for-profit organisations.

Claiming Tax on Donations and Gifts 

If you donate to a deductible gift recipients (DGR) organisation, then you can claim a tax deduction. Deductible gift recipients are the only organisations you can donate to and claim as a tax deduction. There is no material benefit in offering a gift. Unlike when you make a contribution and receive a benefit in return – such as purchasing tickets to a fundraising event. A fundraising event, raffle tickets, or something that provided you with a material benefit is not eligible for charity donation tax deductions. 

If you want to claim tax deductions for gifts and donations, you need to meet several conditions. 

  • The recipient must be endorsed as a deductible gift recipient. 
  • It must be a true gift, as in a voluntary transfer of property or money that you receive nothing for in return. 
  • The gift must be property or money, this includes financial assets like shares.

Steps To Make Tax-Deductible Donations 

If you want to make charity donations and tax deductions, you need to know the correct steps to take. 

You need a record of your donations if you want to claim donations tax. You can request a receipt for any donation you make to an endorsed organisation. The government offers charity tax deductions to residents to encourage donations. The tax benefits from charitable donations are steep – assuming you donate to deductible gift recipients, you can claim a donation tax deduction for any gift or donation over $2. Here's how to ensure you make the types of donations that come with a tax benefit so you can claim the full amount. 

  • Use the Australian Business Register to find an organisation with deductible gift recipient status. You will also get a clear picture of what your chosen organisation will do with your donation and the lives it can touch. 
  • Make your donation, whether it's by phone or online. 
  • Keep a record of your donations and gifts. 
  • At the end of the financial year, you can claim a tax deduction for a gift.

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What You Can & Can't Claim 

If you donate money, your donation needs to be at least $2. If it's a gift of property, the rules differ depending on the property itself and its value. You can substantiate your claim with a receipt or a bank/credit card statement. Businesses are unable to claim deductions on donations.

Types of deductible donations 

Though they are not DGRs, you may be able to reduce your taxable income by making political contributions. Your donation should exceed $2 but must be below $1,500, whether you contribute to a party, candidate or member. 

You can claim a donation to charity involving organisations approved to help with natural disasters. You do not need a receipt if your donation is $10 or less, but it does need to be $2 or more. 

You cannot claim donations that you receive in return for something such as raffle tickets and chocolates to fundraising dinners or school building funds that reduce school fees. Your payment summary can support workplace-giving donations. And the receipt a third party provides you with when you donate is also sufficient. 

If you attend an event, you can't claim the ticket as a deduction. However, you may be able to claim a tax deduction for the amount of money you spend over $150. Political fundraisers are not eligible for this. 

How QuickBooks Can Help 

If you want to keep your records organised, easily log deductions, track expenses, and make income tax season a cinch, then QuickBooks tax software can help. You don't need to wait till the end of the financial year to prove every claim in a financial year. It's all right there at your fingertips.

While every care has been taken to ensure the accuracy of the information presented as at 12 April 2024, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.

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