Most Australians have one or two charities that they feel passionate about. On the whole, we’re pretty generous when it comes to giving too – over 80% of Australians give to charity every year.
Whether your charity is a grass-roots community initiative, an issue that’s touched you or your family, or a cause that aligns with your personal values, it feels good to contribute.
But along with the satisfaction of knowing you’re making a small difference, donating to charity is a great way to boost your tax return.
That being said, not all donations are claimable. Here’s what you need to know to correctly claim tax donations in your tax return.
Is giving to charity tax deductible?
As a general rule, a tax-deductible donation must meet three criteria:
- Made to an organisation that is registered with the ATO as a deductible gift recipient (DGR)
- Be money or property including financial assets
- Be of $2 or more
To be classified as a deductible gift recipient organisation, charities must be not-for-profit organisations that meet specific definitions outlined by the ATO.
You can find out if a charity is a DGR by searching the Australian Business Register.
Just look up the name of the charity you want to donate to. On their details page, you’ll see a heading titled Deductible gift recipient status. If the charity is registered as a DGR, you’ll see its endorsement in this section.
What can’t I claim at tax time?
If you receive anything of material value in exchange for your donation, then the donation is not tax-deductible.
So if you receive a ticket, get chocolates or wine, or receive anything with material value, your donation can’t be claimed as a deduction.
Think of it this way: the donation must truly be a gift. It must be a voluntary transfer of property or money where you don’t receive anything in return.
You also cannot claim any time spent doing volunteer work at tax time. Your donation must be of monetary value to be an eligible deduction.
Fundraising events and contributions
If you make a cash contribution or attend a fundraising event such as a balls, fete, gala, dinner, or performance, you may still be eligible to claim a tax deduction.
According to the ATO, the donation must be for a DGR fundraising event conducted in Australia. The benefit you receive must be:
Of no more than $150 and,
No more than 20% of the value of the contribution.
For more information about event-related criteria, visit the ATO’s website here.
Are charity raffle tickets tax deductible?
When you purchase a book of raffle tickets from a charity, you are receiving something of material value in the exchange. So it cannot be claimed as a tax-deductible donation.
If you enter a competition and receive a single raffle ticket, that is not eligible as a tax-deduction either, because you have received something of value in return for your entry.
Are overseas charity deductions tax deductible?
The Overseas Aid Gift Deduction Scheme (OAGDS) enables Australian organisations to issue tax deductible receipts for donations to their overseas aid activities.
But not all international charities meet the criteria for the scheme. The best way to check if your overseas charity is part of the OAGDS is to check their DGR status on the Australian Business Register.
How do I claim my charity donation at tax time?
Make sure you keep your receipts from any tax-deductible donations you make throughout the year, just like you would for any other tax-deductible purchase. DGRs will usually give you a receipt. If they don’t (they are not legally required to), you can always ask for one for your records.
But if your charity donation was less than $10, you do not require receipt proof. You can claim the deduction by using your bank or credit card statement instead.
Just make sure you remember to tell your accountant about it at tax time. Keep a note somewhere with your other tax-related documents.
The ATO advises to keep records of donations to DGRs for 5 years after lodging a claim in your tax return, as they can request proof within that time frame.
If you’re looking for expert advice for your next tax return, we’re here to help. Call us on 07 8166 6705 or email info@nationalaccounts.com.au to see how we can help you make the most out of your money at tax-time.
