New Tax Benefits for Small Donations: What You Need to Know

The Australian Government has recently announced an exciting change to tax rules: donations under $2 can now be claimed in your Income Tax Return. This change is especially relevant for taxpayers who frequently use "rounding up" mechanisms at supermarket checkouts or other point-of-sale charity initiatives. Here’s everything you need to know about this update, including how it works, when it starts, and the current status of the legislation.

What’s Changing?

Under current tax rules, only donations of $2 or more to registered charities and deductible gift recipients (DGRs) are tax-deductible. This has excluded smaller donations, such as those made by rounding up your bill to the nearest dollar when shopping at supermarkets or making micro-donations through apps and platforms.

With the new policy, these smaller contributions will now be eligible for tax deductions, making it easier for Australians to support charities and claim back their generosity.

How Will It Work?

Here’s how this change will benefit taxpayers:

1. Cumulative Tracking of Donations:
   Instead of requiring individual donations to meet the $2 threshold, taxpayers will be able to group all their small donations together. For example, if you round up your shopping bills multiple times over the year, these small amounts can now be combined to reach a total eligible for deduction in your Gotax Online Income Tax Return.

2. Proof of Donations:
   Charities and businesses offering rounding-up mechanisms will issue receipts or annual statements to help you keep track of your total donations. This document will be essential for substantiating your tax deduction claims.  Alternatively, keep your checkout receipts and add them up at the end of the year.

When Will It Start?

The new rule is set to take effect for the 2024–25 financial year. This means donations made from 1 July 2024 onwards can be claimed in your 2025 Income Tax Return. It’s worth noting that donations made before this date will still need to meet the old $2 minimum requirement.

Has the Legislation Passed?

As of now, the legislation to enable this change has been introduced but not yet passed. It’s currently being reviewed by Parliament. Once passed, this initiative will align with the government’s broader agenda of encouraging charitable giving and making tax deductions more accessible to everyday Australians.

Keep an eye on updates from the Australian Taxation Office (ATO) or subscribe to our Gotax blog for the latest developments.

Gotax Advice: Claiming Small Donations Made Easy

This change is a win for taxpayers and charities alike. However, to maximise your tax deductions, it’s essential to keep accurate records of your donations. To make this easier, Gotax offers the Gotax Deduction Grabber App. With this handy app, you can:

• Log every donation you make (big or small).
• Store receipts on Deduction Grabber for hassle-free tax return preparation.
• Access your records anytime to maximise your maximum refund.

Final Thoughts

This policy is a step forward in recognising the small but impactful contributions Australians make to support charities. It’s a great reminder that every dollar counts—and now, it counts for your tax refund too!

At Gotax, we’re here to help you maximise your refund and make tax time stress-free. Keep updated on tax changes like this, and ensure you’re always claiming everything you’re entitled to.

Gotax, Online Tax Experts. Maximise your Refund… 2024 Complete Return $55, Simple Return $15. Small Business $120, Rental $99+.