When is a Donation Deductible?

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To claim a deduction for a donation, you must be the person that gives the donation and it must meet the following 4 conditions:

  1. It must be made to a Deductible Gift Recipient (DGR).
  2. It must truly be a donation – that is, you are voluntarily transferring money without receiving, or expecting to receive, any material benefit or advantage in return. A material benefit is something that has a monetary value.
  3. It must be money or property – this can include financial assets such as shares.
  4. It must comply with any relevant gift conditions – for some DGRs, the income tax law adds conditions affecting the types of deductible gifts they can receive.

DGRs sometimes authorise a business to collect donations on their behalf. For example, a supermarket may be authorised to accept a donation at the register that they then send onto the DGR. You can claim a deduction for a gift or donation you make in this way, if:

  • it meets the 4 conditions above
  • you have a receipt from the third party

If you receive a material benefit in return for your gift or donation to a DGR – for example, you purchase a ticket to a fundraising dinner – it’s considered a contribution.

What Is A Deductible Gift Recipient (DGR)?

A DGR is an organisation or fund that registers to receive tax deductible gifts or donations.

Not all charities are DGRs. For example, crowdfunding campaigns (eg. GoFundMe) are a popular way to raise money for charitable causes. However, many of these crowdfunding websites are not run by DGRs. Donations to these campaigns and platforms aren’t deductible.

You can check the DGR status of an organisation at https://abr.business.gov.au/Tools/DgrListing

Bucket donations

If you made one or more small cash donations, each of $2 or more, to bucket collections – for example, to collections conducted by a DGR for natural disaster victims – you can claim a total tax deduction of up to $10 for those donations for the income year without a receipt.

To claim donations of more than $10, you need a receipt.

Political party and independent candidate donations

In some circumstances, you can claim a deduction for gifts and donations to registered political parties or independent candidates.

This includes paying a membership subscription to a registered political party.

You must have made the gift or donation as an individual (not in the course of carrying on a business) and it can’t be a testamentary donation.

Your gift or donation must be worth $2 or more. If the gift is property, the property must have been purchased within 12 months of making the donation.

The most you can claim in an income year is:

  • $1,500 for contributions and gifts to political parties
  • $1,500 for contributions and gifts to independent candidates and members

To claim a deduction you must have a written record of your donation.

What can’t you claim?

You can’t claim gifts or donations that provide you with a personal benefit, such as:

  • raffle or art union tickets – for example, an RSL Art Union prize home
  • items such as chocolates, mugs, keyrings, hats or toys that have an advertised price
  • the cost of attending fundraising dinners (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 – for example, as an alternative to an increase in school fees or placement on a waiting list
  • 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, regardless of the reason
  • donations made under a salary sacrifice arrangement
  • donations made under a will.

You can’t claim a tax deduction for donations made to social media or crowdfunding platforms unless they are a registered DGR.

 

Author

Peta Stephen