As tax time approaches when we reach the end of the financial year, many of us look into varying ways to reduce assessable income. For most it comes in the form of declaring items or services bought to assist your position such as work safety equipment or working from home expenses. The other way people may add deductions is via a tax-deductible donation to charity.
Often referred to as a DGR, a deductible gift recipient is an organisation or fund that registers to receive tax deductible gifts. To check DGR endorsement you can enter an ABN or name in the search box, or the advanced search to search one record at a time.
How to claim a tax deduction for a gift or donation you make
To claim a reduction, your donation is required to meet the following conditions, according to the ATO.
The gift or donation:
- Must be made to a DGR
- Must truthfully be a gift without any material benefit or advantage in return.
- Must be of money or property, including financial assets such as shares
- Must comply with any relevant gift conditions, for example some DGRs income tax law adds extra conditions affecting the types of deductible gifts they can receive.
- If you receive a material benefit in return for your gift or donation to a DGR, it’s considered a contribution and extra conditions apply.
To claim any deduction, you must have a receipt or any other record of your donation to the cause or company like a bank statement. The receipt must state the name of the fund, authority or institution to which the donation has been made, the Australian business number (ABN) and that the receipt is for a gift.
On the ATO app there’s a tool called myDeductions that can assist you with keeping track of your expenses and receipts throughout the year, allowing you to simply upload photos you’ve taken of your receipts. It’s a fast, easy way to capture information on the go by taking and uploading photos of receipts. As long as the images of the receipts are clear you don’t have to keep the original paper copy, saving you space and minimising the chance of it going astray.
The ATO has listed the below as items that cannot be claimed as they provide a personal benefit:
- Raffle or art union tickets
- 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.
- Club membership fees
- Payments to school building funds made in return for a benefit or advantage
- 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
- Donations made under a salary sacrifice arrangement
- Donations made under a will
- Donations made to social media or crowdfunding platforms that aren’t a registered DGR
