Feeling charitable? Taxation tips to be aware of

By Rainer Lamb, Client Manager | Created on September 14, 2021

Feeling charitable? Taxation tips to be aware of

There may be nothing more altruistic than donating money or gifting property that has value to others and expecting nothing in return.

If you do choose to donate to a worthy cause, well done on your contribution - but in the back of your mind you may also be thinking - ‘Can I claim this?’.

The ATO may actually award you for your contribution, as a donation or gift can be claimed as a tax deduction. However, there are some tips you should be aware of to ensure the ATO supports you in your gift to a cause:

  • The donation or gift must be made to a deductible gift recipient (DGR).

    • You can check online at ABN Look-up: Deductible gift recipients to see if the ABN of a charity you are considering donating to has the required DGR status for a donation to be tax deductible.
    • This means donations made directly to overseas charities, or to social media or crowdfunding campaigns will, in most cases, not have the required DGR status. Any donations to these causes will not be tax deductible in your Australian tax return.
  • The gift or donation must be $2 or more in value, without receiving or expecting to receive a material benefit in return.

    • Common charity-related activity will generally not be tax deductible to a taxpayer, including transactions such as: purchasing raffle tickets, buying items at a charity auction, costs for attending a fundraising dinner, buying certain items from a charity i.e., chocolates; mugs; keyrings; toys, or other low-cost items at an advertised price.
  • You can generally claim in your tax return donations made to a DGR of up to $10 without a receipt. To claim donations of more than $10 in your tax return, you will need a receipt.

    • The receipt should also help you identify if you can potentially claim a tax deduction, as it will normally state the ABN of the DGR and that donations over $2 or more may be tax deductible.
  • The donation to a DGR is deductible to the taxpayer(s) addressed on the receipt.

    • If for example a couple is making a gift or contribution to a charity, with the view the donation will be claimed as a tax deduction in the higher income earners name – when the donation is made it must be contributed in their name to the DGR and the valid receipt is addressed to them.
  • A gift or donation to a DGR cannot add to nor create a taxation loss.

If you wish to check if a certain philanthropic act will be eligible to be a tax deduction in your particular circumstances, contact your client manager to discuss and/or call WSC Group today on 1300 365 125.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

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