You can only claim a tax deduction for gifts or donations to organisations that have the status of deductible gift recipients (DGRs).
Deductions for gifts are claimed by the person that makes the gift (the donor).
For you to claim a tax deduction for a gift, it must meet four conditions:
- The gift must be made to a deductible gift recipient. We call entities that are entitled to receive tax deductible gifts ‘deductible gift recipients’ (DGRs).
- The gift must truly be a gift. A gift is voluntary transfer of money or property where you receive no material benefit or advantage.
- The gift must be money or property, which includes financial assets such as shares.
- The gift must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting the types of deductible gifts they can receive.
How much to claim
The amount you can claim depends on the type of gift. For gifts of money, it is the amount of the gift but it must be $2 or more. For gifts of property, there are different rules, depending on the type of property and its value.
A tax deduction for most gifts is claimed in the tax return for the income year in which the gift is made. However, you can elect to spread the tax deduction over five income years in certain circumstances.
What you can’t claim
You cannot claim as a gift or donation items that provide you with some personal benefit, such as:
- raffle or art union tickets
- items such as chocolates and pens
- the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner
- membership fees
- payments to school building funds made, for example, as an alternative to an increase in school fees
- payments where you have an understanding with the recipient that the payments will be used to provide a benefit for you.
The above information has been supplied by the Australia Taxation Office. Please contact us if you wish to clarify any of this information.
Article Written by Callinda Beale.
Callinda is a member of the Institute of Chartered Accountants
and a Director of South East Accounting.