In this article, we will walk you through what qualifies your donation to be tax deductible, as well as how much tax you can claim on your donations.
What qualifies a donation or gift as a tax deduction?
For a donation or gift to qualify as a tax deduction, it has to meet the following criteria:
- You must be willingly giving the money away without receiving or expecting to receive any sort of material advantage, gain or benefit – ie. prize home, win a car, win a meat tray, etc.
- It has to be a money or property donation (which can include financial assets like shares)
- The gift or donation must be made to a registered Deductible Gift Recipient (DGR)
- It must comply with current DGR gift conditions (see below)
- You need to have a receipt
What types of gifts or donations can you claim as a tax deduction?
The types of gifts or donations you can claim as a tax deduction include:
- Property
- Money donations that are at least $2 or more
- Donations under the heritage and cultural programs (donating items to a public museum or gallery)
What types of property can be donated for a tax deduction?
You can donate all kinds of property as long as the donation qualifications previously mentioned above are met.
These can include:
- Antiques
- Art
- Books
- Buildings and Land
- Cultural Artefacts
- Film
- Historical Pieces
- Jewels
- Relevant Scientific Materials
When is a donation not a tax deduction?
The donation is not a tax deduction if:
- Donations are made under a will
- Gifts made to family and friends
- If you receive something in return for the donation
- If the organisation is not a DGR
What is a Deductible Gift Recipient (DGR)?
If the charity is a registered DGR, it means you will be able to claim donations made to them as a tax deduction in your return. A registered DGR is essentially the way the Australian Business Register (ABR) proves if a charity is legit or not.
You can usually see if a charity is a DGR on their website or on the ABN Lookup page.
How much do you get back from tax deductible donations?
The amount you get back as a tax deduction from the ATO depends on your income tax bracket – your tax deduction rate on your donation is the same as your marginal tax rate.
For example: If you earn between $18,200 – $45,000, you’re taxed 19 cents for every $1 you make, when you donate, you will get 19 cents back as a tax deduction for every $1 you donate.
Unsure if your donation is tax deductible? Or want to start your tax lodgement now? Contact our friendly team today!
