Donations and Deductions

aleisha Hey woman with long brown hair smiling at camera with long sleeve green blouse on

Aleisha Hey

Bishop Collins

Is your donation or gift eligible to be a tax deduction?

Recently Australia has been faced with some of the most shocking natural disasters seen in our lifetime.

From drought ravaged farmlands, to catastrophic raging fires. Torrential rain, record breaking hail stone sizes, damaging floods and storm damaged properties.

Throughout it all, the Australian people have shown generosity beyond belief. Donations have been made to buy hay bales, support the Royal Fire services, The Australian Red Cross, The Salvation Army and many other providers of help to those in desperate need.

Due to this we thought it might be a timely reminder of which donations are classed as tax deductible and which ones are not. Not all donations meet the criteria needed to qualify as a deduction at tax time. You should check with your accountant if you can claim your donations.

When is a donation a deduction?

For a donation to be tax deductible it must be made to an organisation endorsed as a Deductible Gift Recipient (DGR). It must also be a genuine “gift”.

This means if you donate to a charity and in return you receive raffle tickets or your donation purchases a fundraiser dinner, your donation is not usually tax deductible. These donations are considered as “contributions” and in these cases other conditions apply (to see if your donation is a gift or a contribution click here).

The ATO outlines a donation can be claimed as a tax deduction if it meets the following four conditions:

  1. It must be made to a DGR – You can check this by visiting the ACNC charity register and then navigating to “will my donation be tax deductible”.
  2. It must truly be a gift or donation – Where you receive no items of monetary value in return.
  3. The donation must be of money or property. This can include financial assets, such as shares.
  4. Any relevant donation conditions the DGR has, must be complied with.

Donations and tax deductions

In some case you may not need a receipt of your donation. For example bucket donations of up to $10 can be claimed without a receipt. Bank statements can be used as proof of a donation also. If you make a cash donation you may need to ask for a receipt as it is common not to receive one.

In some cases you may be given a small item which may be promotional material for that DGR, such as a pen or a wristband. These donations are still tax deductible over $2.

Tax deductible donations can be confusing when using third party sites to donate. If you were one of the many Australians who donated to the Celeste Barber GoFundMe page, during the bush fire crisis, your donation would classify as a tax deduction. This is because your donation was made to a registered DGR (The Trustee For NSW Rural Fire Service (RFS) and Brigades Donations Fund) through the Pay Pal Giving Fund.

On the other hand if you donated to a personal GoFundMe page to directly help a friend or someone directly affected by the fires, this donation would not be guaranteed to be tax deduction as it would be considered a personal gift.

If you have made a substantial donation to assist others during these disasters, or at any other time, it is worth checking with your tax agent or accountant if you can claim it as a deduction.

We all know making a donation is an act of kindness and generosity, and no one expects to reap any rewards or benefits by doing so. However, it is worth keeping in mind when it comes to tax time, as you may receive an unexpected deduction in your return.

For further information on donations and tax deductions you can visit the following websites:

https://www.acnc.gov.au/for-public/charity-tax-concessions/my-donation-tax-deductible

https://www.ato.gov.au/non-profit/gifts-and-fundraising/claiming-tax-deductions/is-it-a-gift-or-contribution-/

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Gifts-and-donations/

https://support.gofundme.com/hc/en-us/articles/360001977948-Requesting-a-Receipt

Or contact Bishop Collins Accountants on (02) 4353 2333 or www.bishopcollins.com.au