What are the tax deductible donations and how to claim them on your tax returns?

Are you looking to make a donation to charity? Some donations to charity can be claimed as tax deductions on your individual tax return each year. Donations can reduce an individual’s taxable income and money donated in June can result in money back in July.

How to check if donation is tax deductible?

A donation is only tax deductible if it is given to a charity that has been endorsed by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR) organisation. 

To receive a deduction the donation must be $2 or more and must be claimed in your tax return for the income year in which the donation was made. In some circumstances, you can elect to spread the tax deduction over five income years. For more information visit the ATO’s gifts and donations webpage. 

Is crowd funding tax deductible?

Most crowd funding websites do not have Deductible Gift Recipient (DGR) status so you will not be able to claim a tax deduction for the money you pledge.

However, the project creator may have DGR status. If so, it is up to them to provide you with a tax-deductible receipt if you request one.

You cannot claim a tax deduction if you have received a gift, reward or discount as a result of donation.

What you can’t claim

You can’t claim gifts or donations that provide you with a personal benefit, such as:

  • raffle or art union tickets – for example, an RSL Art Union prize home
  • 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. You may be eligible to claim a deduction as a contribution if the cost of the event was more than the minor benefit supplied as part of the event.
  • membership fees
  • payments to school building funds made in return for a benefit or advantage – for example, as an alternative to an increase in school fees or placement on a waiting list
  • 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.

You can’t claim a tax deduction for donations made to crowdfunding platforms unless they are a registered DGR.

Bucket donations

If you made donations of $2 or more to bucket collections – for example, to collections conducted by an approved organisation for natural disaster victims – you can claim a tax deduction for gifts up to $10 without a receipt. To claim contributions of more than $10 you need a receipt.

Donations to Churches

 As we already mentioned not all donations are tax deductible. Same thing applies to the donation or gifts made to the churches. It can be claimed as a deduction only if the church is a registered deductible gift recipient. 

To check if a charity or church is a Registered Deductible Gift Recipient (DGR) visit official ABN lookup sit: http://www.abn.business.gov.au/AdvancedSearch.aspx

Are you still not sure whether your donation is tax deductible? Contact Accurate Business and Accounting Services, registered tax agent for the help.

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