Cash in on the Cash Donations

Who doesn’t love giving, right? Whether it's to your favourite charity or a cause that speaks to your heart, donations are the way to go. But hold on – did you know that your generosity might also be worth a little something back when tax season rolls around?

So, How Does This Work?

There are a few hoops you’ve got to jump through before you can claim your charitable contribution on your taxes. Don’t worry though, it’s not as complicated as assembling IKEA furniture. Just follow these four simple rules:

1. Is the Recipient a DGR (Deductible Gift Recipient)?

   You can’t just donate to anyone off the street and expect a tax deduction for it. Your gift has to go to a DGR (a fancy term for a charity or nonprofit approved by the tax office). If they’re legit, they’ll usually let you know if your donation is tax-deductible. But if they don’t, you can always look up their ABN (Australian Business Number) on the ABN lookup to check. Or, follow this link to get the full list of DGR’s.

   
   

2. No Strings Attached

   If you’re receiving something in return—like a free keychain or a token gift—your donation isn’t really a donation, and that means no tax deduction for you. If you get a nice thank-you note, though, you're still in the clear. Essentially, no material benefits (benefits with monetary value) should be received in return for your donation.

   
   

3. Money or Property Only

   The donation has to either be money or property – this can include financial assets such as shares.

   
   

4. Follow the Rules

   You must comply with any relevant gift conditions. For some DGR’s, the income tax law adds extra conditions affecting the type of deductible gifts they can receive.

   
   

Other Considerations:

If someone else is collecting donations for a DGR (say, a local business doing a charity drive), you can still claim that donation—as long as it follows the four rules (see above). Just make sure you get a receipt from the third party stating that the donation is indeed going to the DGR.

And if you do get a little thank-you gift for your generous donation, then your donation may turn into a “contribution” and extra conditions apply.

How Much Can You Claim?

If your donation is in cash (the easiest and most straightforward type), the amount you can claim is… drumroll… the amount you gave, as long as it’s over $2. Less than $2? Sorry, not deductible.

Also, if you’ve tossed a few coins into a bucket at your favourite charity event, keep in mind: bucket donations under $10 don’t need a receipt, but anything over $10 does. So, don’t forget that receipt if you’re feeling generous.

For gifts of shares and/or property, the rules are a little more complicated – contact us for more information on these!

Are GoFundMe Donations Deductible?

Generally, donations to personal GoFundMes (think: your cousin’s fundraiser for his new electric guitar) aren’t tax-deductible. But if it’s for a registered charity, then you’re golden! You’ll even get a tax receipt from the PayPal Giving Fund to prove it.

Are School Fees Deductible?

Unfortunately, school fees don’t come with a tax break as these are considered private expenses. However, if you make a donation to a school’s building fund and it’s a DGR, that could be deductible. Note that you cannot claim a deduction to a building fund if it is an alternative to increasing your child’s school fees.

Things You Cannot Claim

Here’s where it gets fun:

• Charity auction purchases

  That “limited edition” T-shirt you bought at the auction? Sorry, that’s not a donation.

• Raffle tickets or union tickets

  Buying a ticket doesn’t count as donating, no matter how much you wish it did.

• Chocolates, pens, and low-cost knick-knacks

  Don’t kid yourself; those pens aren’t “donations,” they’re just pens.

• Fundraising dinner or concert tickets

  If you’re getting dinner or entertainment in return, that’s not deductible.

• Membership fees

  If you’re paying to be part of a club, it’s not a donation.

• Providing a service

  If you volunteer your time or services, you can’t claim a deduction.

• Gift vouchers donated to a DGR

• Donations made to social media or crowdfunding platforms...

  Unless they are a registered DGR 

Record Keeping (Boring, but Necessary)

The following list contains the records you must keep to claim a tax deduction for a donation you make:

• Receipts for donations or contributions – if you don’t have a receipt, you can use other records e.g. bank statements

  • If you do have a receipt, it must state the name of the fund, the authority or institution to which the donation has been made, the DGR’s ABN and that it was for a gift

• If you give through a workplace giving program, your evidence can be from either your income statement or payment summary or a receipt from a third party or a written record from your employer

• A signed letter from the eligible organization confirming the amount of your donation or contribution

• If you received a minor benefit (e.g. a charity dinner) as the result of your donation, the value of the benefit must also be shown

Got questions?

If you have any other questions about what you can (or can’t) claim, or if you’d like help navigating the rules around charitable donations and tax deductions, don’t hesitate to contact us. We’re here to help make giving — and claiming — as simple as possible!