Are My Donations Tax Deductible?

Tax deductible donations – what are they and will my donations for bushfire relief qualify?

Australians are incredibly generous. This year alone we’ve already donated nearly $500 million dollars towards bushfire relief. But even in years without terrible tragedies, five out of six Aussies give to charitable organisations, with the average annual deductible donations being nearly $650 per person.

While most of us are donating because it makes us feel good to help, it also makes sense to keep track of what we give. Come tax time, tax deductible donations are a great way to keep more of your money in your pocket.

We’re often asked if a donation to a crowdfunding campaign, or to a child’s school will count as a deduction. And now, we’re being asked about bushfire donations. Unfortunately, not all donations are tax deductible.

Donations that are tax deductible

So, what is required to make a tax-deductible donation? There are five requirements.

1. It must be made to Deductible Gift Recipients.

For a donation to be tax deductible it must be made to an organisation that is accredited as a Deductible Gift Recipient or DGR. You can easily find out if the charity you’re donating to is a DGR by checking the Australian Charities and Not-for-profits Commission’s (ACNC) Charity Register.

Most of the big names will be DGRs. Places like the Australian Red Cross, The Salvation Army Australia and WIRES will most certainly have their status as a charity confirmed by the ACNC and all donations to them will be tax deductible.

However, where you might run into trouble are donations to smaller organisations – perhaps local companies that are organising fundraising that they’ll then move on to a larger entity. If the person that you give the money to is not a registered DGR, you won’t be able to claim it on your tax return, regardless of where the money finally ends up.

2. It must be $2 or more.

You can claim the amount of the donation but it must be at least $2. It can be made in the form of money or property as long as the value exceeds the base amount.

3. You cannot receive a material benefit in return.

Your donation must be truly a gift. In other words, you can’t receive or expect to receive any material benefit, advantage or item in return for your donation.

Let’s consider the typical car wash fundraiser. Imagine your son’s cricket team is having a car wash, with all the proceeds to go to bushfire relief. Even if the donations are made straight through to an accredited charity, the money you are giving is not tax deductible because in return you’ve received a great (or not so great) car clean. It’s still a great thing to do – but you can’t claim it on your tax return.

4.Your donation must comply with any applicable conditions.

For some DGRs, tax law adds extra conditions on the types of deductible gifts they can receive. An example of this is when you donate to the Australian Disaster Relief Fund. That donation must be made within two years of the disaster (or from the date the Treasury minister declares).

You can read more about conditions on certain charities on the ATO’s website. Or the DGR that you are donating to will be able to confirm what types of donations they are able to accept.

5.You must have a record.

For every donation you make, you must have a record. In most cases the DGR that you’ve donated to will issue you a receipt. But if they haven’t (and they don’t always) you can simply show your donation on your bank statement, or if you gave via your workplace, your payment summary, your income statement or with a written notification from your employer.

There is one exception to the records rule, and that is for bucket donations. Many of us have popped some change into the red Salvos bucket at an outdoor cinema event, or even in one of the seeing eye dog collection statutes in your local Woolworths. In those situations, you may deduct up to $10 total for contributions without a receipt or record of any kind.

What donations are not tax-deductible

Donations that don’t meet the above five requirements are not tax deductible, and it pays to be on your toes. It’s not always crystal clear when a donation will be permitted especially in terms of receiving a ‘benefit’.

For example, art union or raffle tickets are not tax deductible even though you may not win (and therefore, won’t receive a benefit). Likewise, donating to a Facebook fundraiser organised by your local butcher or directly to family or friends who have been affected by bushfires won’t be deductible.