Donations: The Gift That Keeps On Giving!
Making a charitable donation is not only a great way to give back to the community, but it can also help to reduce your taxable income. If you’re feeling a little generous, here’s a KMT good news story to encourage you to donate and claim back your charitable tax donations. So remember, generally any donation over $2 is TAX DEDUCTIBLE!
One of our special clients, Janet Champion, donated more than $17,000 in the 2015-2016 financial year to variety of charities! What an amazing contribution and one which not only helped more than 70 different charities, but also had some positive tax benefits for Janet.
So, what can you claim a deduction for?
From street fundraising to bushfire, flood and natural-disaster appeals, donations can be made in many different ways to a host of organisations created to aid different causes – but be careful, because not all of them will result in a tax deduction.
In order to claim a tax deduction for a donation, the donation generally must be made to an organisation that the ATO has awarded the status of deductible gift recipient (DGR), and the total donation must exceed $2. In addition, the gift must truly be a gift and not result in a material benefit or advantage.
The most common gift is money, however deductions may be claimed for other types of gifts, such as a certain type of property. There are rules around how much you can claim – usually this depends on the value of the property – however for gifts of money you are eligible to claim back the amount in total. In certain circumstances, you may elect to spread the gift deduction over a period of up to five years.
Unplanned generous donations – such as those on street corners – count towards your tax deductions too. If in the last financial year you have made one or more donations of $2 or more to bucket collections conducted by an approved organisation for bushfire and flood victims, you can claim a tax deduction equal to your contribution without a receipt. This is provided that your contribution does not exceed $10.
What can’t you claim a deduction for?
Common fundraising initiatives that you can’t get a deduction for include raffles or art union tickets, donations made for items such as chocolates and pens, the cost of attending fundraising dinners (even if the cost exceeds the value of the dinner), membership fees, payments to school building funds (for example, as an alternative to an increase in school fees).
You can get a limited deduction for contributions made to political parties, even though they are not DGRs. The most that contributors or donors can claim in an income year is $1500 for contributions and gifts to political parties, and $1500 for contributions and gifts to independent candidates and members.
Ensuring you get your deduction (record keeping)
While you don’t need a receipt to claim a tax deduction for a donation of less than $10 (to an approved organisation for an approved appeal), for all other donations you will need to keep records of your donation to ensure you are able to claim a deduction.
Most DGRs will provide you with a receipt, however DGRs are not required by law to issue them. If you don’t receive a receipt, you can support your claim by recording the name of the donor, the date the gift was received by the DGR and the amount or value of the gift.
As a guide, keep track of the following things:
- the date the gift was made
- the name of the donor
- the name of the DGR receiving the gift
- the amount of the gift
- a description of the gift if it was property
If you are unsure about whether or not your donation is tax deductible, please feel free to contact the KMT office.