How to Claim Donations as a Tax Deduction

If you are feeling generous and want to support a good cause, then donating to a charity or a community organisation is never a bad option.  And if it's a recognised charitable institution, then you'll also pick up a tax deduction for it.

Tax deductions for donations are available if they meet a certain criteria:

- They are made to an organisation that has the status of a deductible gift recipient (DGR). A DGR is an organisation that is registered to receive tax deductible donations. Not all charities are DGRs.

You can check the DGR status of an organisation at ABN Look-up: Deductible gift recipients.

- They are truly donations – that is, you voluntarily give money or property without receiving, or expecting to receive, any benefit or advantage in return. A benefit is something that has a monetary value, such as a raffle ticket, a chocolate, a mug or a ticket to a fundraising event.
- They are money or property – this can include financial assets such as shares or cryptocurrency.
- They comply with any relevant gift conditions – for some DGRs, the income tax law adds conditions affecting the types of deductible donations they can receive.

Some examples of donations that are claimable:

- Cash donations of $2 or more
- Shares valued at $5,000 or less
- Property purchased during the 12 months before making the donation
- Property valued at more than $5,000

To claim a deduction for donations, you need to keep records of your donations, such as receipts, invoices or bank statements. 

So, if you want the warm and fuzzies from helping the community and at the same time pick up a tax deduction, then the world is your oyster.  Now don't be mislead as to the financial benefit or claiming a donation as a tax deduction.  Don't mix up tax deduction with the effect it will have on your tax.  That's conditional on the rate of tax that applies at your income level.  For instance, if you're on $60,000 a year, your rate of tax plus medicare is 32%.  If you donate $1000 to your favourite charity then your tax savings will be 32% of $1000 or $320.  So your net cost, your out of pocket, of making this donation is $680.

And of course not all donations are tax deductible.  Quite often people get confused with Church donations, as an example.  When in doubt sound Gotax out.  Or go to the ATO link, https://abr.business.gov.au and enter the charity name or identifiers.

Get on board with the Gotax Online Tax Return system.  It will guide you through the process.