The COVID endemic has put a financial strain on Not for Profit organisations. Donors are less likely to make donations due to loss of jobs and extra costs. To encourage people to donate certain donations are a tax deduction.
The ATO uses a term called a Deductible Gift Recipient (DGR). These are organisations or funds that have registered with the ATO to receive tax deductible gifts. Not all charities or Not for Profits are DGRs. For example, there are many crowdfunding websites like gofundme where anyone can start a "cause" and ask for donations. Unless these are created by a registered DGR any money paid to them cannot be claimed as a donation in your tax return. The same applies to donations to sporting groups and other non DRG charities. If you are a business owner you can claim that the payment relates to sponsorship and you are advertising your business and so is tax deductible.
To check if an organisation is a DGR go to the ABN Look up website and enter their ABN in the search function. The report you get will show if they are registered.
The donation must be truly a gift, which means by making that donation you are not receiving any benefit or advantage in return. The purchase of art union or raffle tickets are not a donation as you are receiving the chance to win something. If you receive a token item like a lapel pin or a sticker this is considered of no material value and you can still claim the donation.
You must maintain a record of your donation by keeping the receipt but the ATO will allow up to $10 for bucket collections per year without a receipt.
You can also make donations in the form of property or shares. There are different requirements depending on the type of property donated.
To encourage people to donate cultural items to public art galleries, museums, libraries etc., there is a Cultural Gifts Program which offers tax incentives to the donor. You need to get two or more valuations of the property and your donation deduction is the average value. Again there are various rules involved so it is best to get advice before proceeding.
- Helen Warnock is a partner in a Central Qld Chartered Accountant firm. This article offers general information only. You should consult your personal advisor to seek advice relevant to your personal circumstances before taking action.
