Claire’s Column – Donations
Welcome back to Claire’s Column. As Christmas is a time for giving, I am going to give you some advice on the deductibility of donations, specifically the conditions which decide whether a donation can be claimed as a tax deduction.
We often receive receipts for donations that are not valid as tax deductions (sorry to dampen your Christmas cheer), such as; raffle tickets, event tickets and charity auction receipts. There are a few basic points to check when claiming a donation as an individual tax deduction or even a business expense.
Start with the following:
Is it a donation? A donation is a gift of money or property given voluntarily to a recipient for no material benefit. For a donation to be valid there must be:
- A transfer of money or property
- The transfer must be voluntary
- The donor cannot receive personal or material benefit from the transfer. For example, a charity raffle ticket is not a donation as the donor receives a benefit for their donation (even if you don’t win).
For a tax deductible donation, the above definition of a gift applies as well as:
- The donation must be made to a Deductible Gift Recipient (DGR)
- The donation must be greater than $2.
- The donation must comply with any additional gift conditions. For example, gifts of property follow special rules relating to their deductibility.
If the above criteria are met, please check the recipient’s Deductible Gift Recipient (DGR) status. Searching the recipient’s name on the Australia Business Register website (ABN Lookup website
) will show you whether:
- The recipient you are donating to exists,
- The recipient is a registered charity with the Australian Charities and Non-for-profit Commission (ACNC)
- The recipient is an endorsed Deductible Gift Recipient (DGR).
An organisation must have a DGR endorsement from the ATO. Without this any donations made to an organisation are NOT tax deductible.
While donations can still be made to non-charities, and the purchase of raffle tickets, and charity auctions are usually supporting a good cause, when it comes to claiming a deduction, if it does not follow the above rules it is not claimable.
For businesses making donations, please consider the above rules and remember that while a valid donation is a claimable business expense it is NOT subject to GST.
Where a business contributes goods or services as sponsorship or in support of a fundraising event, this may be a business expense for which they may claim a tax deduction. Sponsorships and payments supporting fundraising events do not usually include GST, so please check all receipts.
Thanks for reading.
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