DONATIONS

Feeling charitable in the lead up to the festive season?  Whether you’re digging deep to support your favorite charity or dropping five bucks into a donation bucket, hang onto those receipts! You might be able to claim a deduction next tax time.

For your donation to be deductible, it must be for $2 or more and made to what’s called a ‘deductible gift recipient’ (DGR).

Organizations entitled to receive tax-deductible gifts are called 'deductible gift recipients' (DGRs). You can only claim a tax deduction for gifts or donations to organizations that have DGR status.

The person that makes the gift (the donor) is the person that can claim a deduction.

What is a DGR?

A deductible gift recipient (DGR) is an organization or fund that can receive tax-deductible gifts.

Not all charities are DGRs. For example, in recent times crowdfunding campaigns have become a popular way to raise money for charitable causes. However, many of these crowdfunding websites are not run by DGRs, therefore donations to these campaigns aren't tax-deductible.

When a gift or donation is deductible

To claim a tax deduction for a gift or donation, it must meet four conditions:

• It must be made to a DGR.
• It must truly be a gift or donation – that is, you are voluntarily transferring money or property without receiving, or expecting to receive, any material benefit or advantage in return. A material benefit is an item that has a monetary value.
• The gift or donation must be of money or property. This can include financial assets such as shares.
• The gift or donation must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting types of deductible gifts they can receive.

Bucket donations

If you made donations of $2 or more to bucket collections – for example, to collections conducted by an approved organization for natural disaster victims – you can claim a tax deduction for gifts up to $10 without a receipt. To claim contributions of more than $10 you need a receipt.

What you can't claim

You can't claim gifts or donations that provide you with a personal benefit, such as:

• raffle or art union tickets – for example, an RSL Art Union prize home
• items such as chocolates, mugs, keyrings, hats or toys that have an advertised price
• the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner. You may be eligible to claim a deduction as a contribution if the cost of the event was more than the minor benefit supplied as part of the event.
• membership fees
• payments to school building funds made in return for a benefit or advantage – for example, as an alternative to an increase in school fees or placement on a waiting list
• payments where you have an understanding with the recipient that the payments will be used to provide a benefit to you
• gifts to family and friends, regardless of the reason
• donations made under a salary sacrifice arrangement
• donations made under a will.

You can't claim a tax deduction for donations made to crowdfunding platforms unless they are a registered DGR.

Keeping donation records

You should keep records of all tax-deductible gifts and the contributions you make.

When you donate the DGR will usually issue you with a receipt, although they are not required to. If these circumstances you can still claim a deduction by using other records, such as bank statements.

If a DGR issues a receipt for a deductible gift, the receipt must state:

• the name of the fund, authority or institution to which the donation has been made
• the DGR's ABN (some DGRs listed by name in the law may not have an ABN)
• that the receipt is for a gift.

If you give through a workplace giving program your payment summary, income statement or a written record from your employer is enough evidence.