Donations, Gifts & Tax Deductions

Giving and donating is always a nice feeling, but what do you know about tax deductions as they relate to these things? Even though the rules seem relatively simple, there can be some complexity. Between crowdfunding pages, raffle tickets, and adding in the odd $2 donation in your weekly grocery shop there’s lots of places to give, so it’s worth understanding how the tax deduction part of giving works …

Let’s start with the four most important conditions of tax deductibility

To claim a tax deduction for a donation or gift, it must meet all four of the following conditions:

1. The gift or donation must be made to aDeductible Gift Recipient (DGR) – more on this below
2. It must truly be a gift or donation – you are voluntarily transferring money or property without receiving any material benefit or advantage in return (so those RSL Art Union tickets unfortunately lose out here)
3. The gift or donation must be of money or property
4. It must comply with any relevant gift conditions– for some DGRs, there are extra laws that affect the types of deductible gifts they receive.

What is a DGR?

A Deductible Gift Recipient is an organisation or fund that has registered to receive tax deductible gifts. Not all charities are DGRs so proceed with caution when donating to crowdfunding campaigns such as the popular GoFund Me campaigns. These websites and certainly not the folks listing on them asking for donations, are not DGRs (or run by DGRs) and as such donations made via these means are not tax deductible.

If you ever need to check out the DGR status of an organisation you can do a search here: ABNLook-up: Deductible gift recipients.

Cash donations

Provided your gift or donation meets the above four tests, you can claim a tax deduction for the value of the cash provided it was for $2or more. If you receive a small token (such as a sticker, pin or wristband)this is still okay as these are generally not of a material value.

• Bucket collections – anything over $2 to a bucket collection (such as collections conducted by an approved organisation for natural disaster victims) is deductible. IMPORTANT: You can claim a tax deduction up to $10 without a receipt.
• Supermarket collections – if you’ve ever included a little extra on your grocery shop for a supermarket accepting donations at the register then these will generally be tax deductible. Provided it meets the four conditions above and you have a receipt.

The receipt is generally the key with donations (and most any deduction in fact). If your donation meets the above four tests and it’s of a sizeable amount, you’ll want to make sure there’s a receipt on the other side if you’re looking to claim it as a deduction.

What isn’t tax deductible?

A good rule to follow is that you can’t claim gifts or donations that provide you with a personal benefit, such as:

• Raffle or art union tickets
• The cost of attending fundraising dinners(however some different rules can apply here, so if you’re ever unsure we suggest you clarify the DGR status with us if you’ll be considering claiming the cost as a deduction)
• Club membership fees
• Payments to school building funds made in return for a benefit or advantage
• Gifts to family and friends regardless of the reason
• Donations made under a salary sacrifice arrangement
• Donations made under a will

For the most part, the rules are simple enough to follow but for larger donations or any grey areas it’s best you speak with one of theAttune team to ensure the outcome works for your situation. For more info, callus on 1300 866 113 or send us an email.