Tax Benefits of Charity Donations

July 14, 2016 by Edge Financial Planning

We all like to help those less fortunate than us, but did you know such donations could be considered a tax deduction? According to the ATO, all cash donations (of $2 or more) are completely tax deductible.

What does this mean for our generous givers? Most donations to charities can be claimed as a tax deduction in our tax return. A tax deduction reduces our taxable income and therefore the amount of tax we pay.

But first, the donation/gift needs to meet the following 4 conditions:

1. The gift must be made to an organisation that have a ‘deductible gift recipient’ status (DGRs).

2. A gift must be a 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 imposed on the DGR. Some DGRs are restricted by the income tax law, which imposes the types of deductable gifts they can receive.

For all claims, you will need to produce a receipt.

What donations you can’t claim:

– Raffle Tickets

– Items such as chocolates or pens

– The cost of attending fundraising dinners

– Membership fees

– Payments to school building funds

– Payments where you have an understanding with the recipient that the payments will be used to provide a benefit for you.

Who can you donate to?

For a full list of DGRs approved charities, jump on over to the ABN website and download an updated list.

The advice in this article is of general nature. For more information on how to claim a tax deduction or for further financial advice, contact our team of financial advisers today!

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Important information and disclaimer

This publication has been prepared by Leigh Stafford, Penny Collicoat, Little Miss Stonnington Pty Ltd (trading as Edge FP) Authorised Representative(s) of Apogee Financial Planning Limited ABN 28 056 426 932, an Australian Financial Services Licensee (“Licensee”), Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia Bank Limited group of companies (“NAB Group”). Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information. Information in this publication is accurate as at the date of writing (July 2015). In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of the NAB Group, nor their employees or directors give any warranty of accuracy, not accept any responsibility for errors or omissions in this document. Case studies in this publication are for illustration purposes only. The investment returns shown in any case studies in this publication are hypothetical examples only and  do not reflect the historical or future returns of any specific financial products. Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. If any financial products are referred to in this publication, you should consider the relevant Product Disclosure Statement or other disclosure material before making an investment decision in relation to that financial product. Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.