Tax Deduction for Donations?
Tax Return - Tax Deduction for Donations?

Tax Deduction for Donations?

Published on January 1, 2018
Sam Inayat - Bookkeeping, Tax return and BAS expert

Senior Accountant at Top Accountants

There are lots of charities and worthy causes out there that rely on the generosity of taxpayer donations in order to help the less fortunate. The good news is when you give money to a charity, your gifts may be a tax deductible donation

You can only claim a tax deduction for gifts or donations to organisations that have the status of deductible gift recipients (DGRs).

In this article we will cover followingdonation and gifts tax deduction questions:

  1. Eligibility criteria to claim donations and gift as tax deduction?
  2. How much tax deduction I can claim for donations and gifts?
  3. When I cannot claim tax deduction for donations and gifts?
  4. How can I prove tax deduction for donations and gifts?

Tax deductible donations are a great way to give your refund a boost while contributing to worthy causes.

1. Eligibility criteria to claim donations and gift as tax deduction?

For you to claim a tax deduction for a gift, it must meet four conditions:

  1. The gift must be made to a deductible gift recipient. ATO call entities that are entitled to receive tax deductible gifts 'deductible gift recipients' (DGRs).
  2. The gift must truly be a gift. A gift is voluntary transfer of money or property where you receive no material benefit or advantage.
  3. The gift must be money or property, which includes financial assets such as shares.
  4. The gift must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting the types of deductible gifts they can receive.

2. How much tax deduction I can claim for donations and gifts?

The amount you can claim depends on the type of gift. For gifts of money, it is the amount of the gift but it must be $2 or more. For gifts of property, there are different rules, depending on the type of property and its value.

A tax deduction for most gifts is claimed in the tax return for the income year in which the gift is made. However, you can elect to spread the tax deduction over five income years in certain circumstances.

Bushfire and flood donations

If you made one or more donations of $2 or more to bucket collections conducted by an approved organisation for bushfire and flood victims, you can claim a tax deduction equal to your contribution without a receipt provided the contribution does not exceed $10.

3. When I cannot claim tax deduction for donations and gifts?

You cannot claim as a gift or donation items that provide you with some personal benefit, such as:

4. How can I prove tax deduction for donations and gifts?

As with any other tax deduction, in order to claim your tax deductible donations on your return, you must have a receipt. To make it easier to keep track of your receipts use ATO app.