tax deductible donationA tax deductible donation make redundant any excuses of “being too poor” to give to those less fortunate than yourself. Charity organisations are incredibly important and compassionate bodies that provide much needed funds and support to groups or individuals who suffer from poverty, malnutrition, disease, or unfair conditions. There are thousands of charities in Australia all vying for your support. Often the pleas to donate from so many organisations can create a muddle of confusion and indecision that results in us avoiding all charities like tax time. However, quite ironically, giving to charities can actually, in turn, make tax time a little less daunting and a little more rewarding.

On top of knowing that you are giving money or gifts to a worthwhile cause to selflessly help others, you can also be reimbursed for your generosity by the government. However there are a number of criteria that a donation needs to satisfy in order to qualify for a tax deduction.

Criteria for Tax Deductible Gifts

In order to qualify as a tax deductible donation in the form of a gift it must:

  • Be made to a Deductible Gift Recipient (DGR) – an organisation entitled to receive tax deductible gifts and which is listed by name in the tax law and endorsed by the Tax Office. View the entire list of DGR listings here.
  • Truly be a gift in that you acquire no material benefit or advantage from. The gift must be a voluntary benefaction in that it arises from ‘detached and disinterested generosity’.
  • Be covered by one of the gift types: $2 or more in money, property valued over $5000, shares valued at $5000 or less and acquired at least 12 months before the gift is made, trading stock, cultural gifts, cultural bequests or heritage gifts.

Criteria for Tax Deductible Contributions

Contributions come under a tax deductible donation at fundraising events or auctions that give minor benefits to those who contribute. Contributors may be able to deduct a portion of their payment if:

  • The contribution is made to a DGR either for the purpose of attending or participating in a fundraising event or purchasing goods or services at an auction that is a fundraising event (in Australia)
  • The contribution is more than $150
  • The GST inclusive value of the contribution is not more than $150 or 20% of the value of the contribution, whichever is less
  • The contribution is made by an individual
  • Comply with relevant gift conditions of the DGR

Examples of Organisations that Meet the DGR Endorsement

In order to be endorsed as a DGR, an organisation must have an Australian Business Number (ABN), fall into a DGR category, have acceptable rules dealing with transfer of surplus gifts and deductible contributions and be in Australia. There are over 40 general DGR categories, however the main ones include:

  • Necessitous circumstance funds – these constitute funds established for relief, usually from natural ┬ádisasters such as floods or bush fires. Bucket donations for such institutions can be tax deducted without a receipt if under $10
  • Public benevolent institutions – here the relief provided extends beyond the distribution of money or goods. It must a not-for-profit organisation that is dedicated to providing direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness.
  • Overseas aid funds – provide relief for countries declared by the Minister of Foreign Affairs to be a developing country. They must meet the approval requirements stipulated by AusAID. A great example of this is Noble Endeavours, which is dedicated to growing sustainable communities in the Philippines.
  • Developed country disaster relief funds – provide relief for people in distress following an incident recognised by a Treasury minister as a disaster.

noble endeavors

Choosing a Charity

Because of the sea of charities available all jockeying for your support, it is important you conduct sufficient research to ensure you are giving a tax deductible donation to the ones closest and most important to you. Rather than being swayed by every person wearing a colourful shirt in the city rallying you to support their charity, do your own unbiased and independent research in your own time. Choose the causes you are passionate about so you can limit your charity base and be proud of the ones you support. Decide whether you are more passionate about donating to scientific research, helping sick kids, making a donation for water and agricultural development in poor countries or for disaster reliefs in your state. You can then also avoid receiving thousands of emails each week from charities you have previously donated to and make a larger difference to the few ones you do support.

It is particularly important that you consider helping organisations, which support poor and suffering communities in foreign, developing countries. Disaster situations are also pertinent for giving aid as people in disaster and emergency situations require incredible amount of funds and support to rebuild their lives and get their communities back on track. As an example, helping out affected communities in the Philippines following the wreckage of Typhoon Haiyan is a great way to make a worthy tax deductible donation. You could donate for children as they were particularly affected by the disaster.

Other Ways to Donate

On top of making simple gifts or contributions you could also make an ongoing tax deductible donation, which provides regular funds to a cause without you having to go to the effort of transferring money each time. You could also bequest money to a charity in your will, however, you should contact individual charities directly to sort out plans for a bequest. Alternatively, if your workplace has a giving program with a Deductible Gift Recipient (DGR) you could also support a charity through automatic deductions from your salary. Of course you could also offer your time or services to help out those less fortunate than yourself and to truly give something back to others.

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