Are donations tax deductible? Well, yes and no.
Donations to eligible charitable organisations can offer financial benefits to you as an individual through tax deductions (as well as being a great way to give back to the world, of course!) – but there are some caveats attached.
Let’s dive in.
What does ‘tax deductible donation’ actually mean?
Well, it’s what it says on the tin! A tax deductible donation is, well, a donation that’s tax deductible.
Basically, when you donate to a registered charity, you can claim that donation as a tax deduction. What that does is reduce your taxable income, which should reduce the amount of tax you’ll need to pay come tax time.
Think of it as getting a little reward for your generosity. It’s a win-win – you get to support a cause dear to your heart, and get to keep more of your hard-earned money. Nice, right?
What donations are tax deductible?
Not all donations are created equal when it comes to tax deductions. For a donation to be tax deductible, it must be made to a registered Deductible Gift Recipient (DGR). These are organisations that have been recognised and registered by the ATO as eligible to receive tax-deductible gifts.
Common examples of DGRs include charities, public funds for schools or hospitals, and certain environmental or cultural organisations. Before you hand over your cash, it’s a good idea to check if the organisation is a DGR. You can usually find this information on the charity’s website or you can look it up on the ATO’s DGR register – just to be sure your donation is doing double duty.
Keep in mind that only donations of $2 or more are eligible for a tax deduction. This includes one-off gifts, monthly or other regular donations, and donations to appeals. So, if you’re cleaning behind the couch and find spare change, make sure it adds up!
Finally, your donation must be a genuine gift. This means you shouldn’t receive anything in return, aside from maybe a token item like a pen or a bumper sticker. If you’re getting something of more substantial value, such as a ticket to an event or a raffle entry, that donation won’t be tax deductible.
As a matter of interest, are GoFundMe donations tax deductible? Only if you make them to GoFundMe’s charity fundraisers (as opposed to personal fundraisers that the platform also hosts). The organisation’s charity partner PayPal Giving Fund automatically issues tax receipts for these donations.
How do you claim tax deductible donations?
It’s pretty simple:
- Keep your receipts throughout the year. They should include the name of the DGR organisation, the date of the donation, and the amount donated.
- Calculate your total donations: At tax time, add up all your eligible donations.
- Include donations in your tax return: Enter the total amount of your eligible donations into the relevant section.
Claim donations with Hnry
With Hnry, claiming your tax-deductible donations is a breeze. As soon as you make a donation, simply upload your receipt to the Hnry app, and we’ll automatically track and categorise it for you. When tax time rolls around, Hnry takes care of the calculations and includes your donations in your tax return, ensuring you get the full benefit without any of the hassle.
It’s one less thing to worry about, so you can focus on what matters most – running your business and making a difference in the world.
Join Hnry today!
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