Are you unsure what it means to make a tax deductible donation, or how to clarify the eligibility of your chosen charity? Read on to have your questions about donating for tax benefits answered.
What is a tax deductible donation?
A donation is considered tax deductible when an amount of $2 or more is donated to an eligible charity or nonprofit organisation, such as the Sisters of Charity Foundation. Your eligible donations are subtracted from your taxable income, decreasing the portion of your income that can be taxed in a given financial year.
The donation must be a gift or contribution to the eligible charity or nonprofit organisation, with no benefits provided to you as part of the exchange. For example, donations made in exchange for raffle tickets, event admission and other charity fundraisers are ineligible for tax deduction.
The recipient of the donation must also be a ‘Deductible Gift Recipient’ (DGR), listed in the charity register with the Australian Charities and Not-for-profits Commission (ACNC).
What types of donations are tax deductible?
Your donation to charity is tax deductible regardless of the type of donation made. The donation must be an amount greater than $2, and could take the form of a:
- One-off donation
- Regular monthly donation
- Donation in support of a specific appeal, such as our 2023 Winter Appeal for homelessness
- Corporate sponsorship
- Donation in lieu of a gift
Remember, as a business or individual, you cannot receive benefits in exchange for your contribution.
Are corporate sponsorships and donations tax deductible?
Yes. Corporate sponsorships as part of social responsibility programs and commitments are tax deductible.
End of financial year is routinely a time for businesses to evaluate their corporate social responsibility commitments and seek out new charity partners. Your donation is tax-deductible whether it takes the form of a recurring sponsorship or one-off gift to the organisation of your choice.
How do I claim charity donations on my tax return?
All you need to do to claim your donation on your tax return is ensure you:
- Donate to a charity endorsed by the ACNC as a DGR
- Contribute an amount greater than $2.00
- Keep your receipt as proof of your gift
You must keep the receipts for any donations that you wish to deduct from your taxable income. The ATO says you should keep records of donations to DGRs for five years after lodging a claim in your tax return, as they can request proof from you in that time frame.
“The only exception to this is if you made donations of $2 or more to bucket collections conducted by an approved organisation for natural disaster victims. You can claim a tax deduction equal to your contribution without a receipt, provided the contribution does not exceed $10,” said a spokesperson from the ATO.
How do I know I am donating to an eligible charity or nonprofit organisation?
There are several ways you can be certain that the charity or nonprofit organisation you’d like to support is a DGR registered entity.
Some organisations display a DGR registered badge on their website, and all eligible charities are entered in the ACNC charity register. Simply visit the ACNC website, and check the listing of your chosen charity. The listing will refer you to their ABN records, which will indicate their DGR status.
As an example, you can see here that the Sisters of Charity Foundation is DGR endorsed.
Is it worth claiming charitable donations on my tax return?
If you’d like to reduce your taxable income, while contributing to meaningful and practical efforts to assist the vulnerable in our community, then yes, claiming charitable donations on your tax return is a good idea.
You’ll get a boost on your tax refund, while disadvantaged or at-risk groups will receive the vital support they need.
Donate now to boost your tax return
If you’d like to donate to charity and boost your tax return, the Sisters of Charity Foundation could really use your support.
Your donation, of any amount over $2, will be tax deductible if you donate before 30 June. You’ll help us fund:
- Innovative approaches to assist the socially marginalised as part of our Community Grants program
- Life-changing tertiary scholarships for students who have lived in out-of-home care
- Housing support for asylum seekers and survivors of modern slavery in Australia
Whether you’re donating individually or on behalf of a business, please make your tax deductible donation now.
Please note, this article contains general information only. You should obtain specific, independent professional advice in relation to your particular circumstances.
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Each year we’re able to make a difference to thousands of people across the country with funds generously donated by compassionate Australians. We support initiatives that focus on benefiting the disadvantaged, marginalised and socially isolated people in our community.