Donating and taxes. Here’s what you need to know.
We give to charity because it’s good for others. Giving brings rescue and respite to those who need it most. It brings culture to our streets, a richer fabric to our society, and a reservoir of hope when luck’s run dry.
The fact is, Australians give to make a difference. Some 93 per cent of respondents to Australia’s largest study into charitable giving donated with a strong commitment to build a better future. And for this, we’re granted tax benefits. The $12 billion donated from Australian pockets each year saves significant public funds and is encouraged with handsome tax exemptions.
Here are our six tips to ensure you too get a healthy tax return on your giving.
1. Choose your charity wisely
There are approximately 50,400 charities in Australia. They meet requirements upheld by a national regulator, and each of them are setup to tackle one of the fourteen cause areas outlined by modern legislation. While these charities do wonderful work, under half of them have the tick of approval from the Australian Tax Office (ATO) to offer supporters tax deductions for their donations.
As donors, it’s important to find charities with Deductible Gift Recipient status. This is commonly referred to by accountants and organisations as DGR status and can be found through the ATO or talking to the charity’s fundraising team.
2. Get a receipt – even for cash donations
Any donation above $2 can be claimed, and to provide scope for supporting a disaster appeal and throwing money into a bucket you can claim up to $10 per donation without a receipt. However, the average annual donation in Australia sits well above $700 and it’s important to ensure all of this can be claimed.
Ask your charity for a receipt, even for cash donations. Keep these filed, or better yet, make your donation through your employer’s workplace giving program and they’ll manage this for you.
3. Document the value of your gift
Time, talent and treasure: and treasure doesn’t have to be cash. You can also give items of value. Best practice for this is to get a written market appraisal of your item’s worth before donating it. This is particularly important for goods to the value of $300 or more. If you haven’t got a market appraisal, document the item’s value with detailed photos and market comparisons to be able to justify your own appraisal as need be.
4. Remember, you can’t deduct the value of your time
While the tax office doesn’t accept deductions for your volunteering hours, what it does do is accept the associated costs for doing so. Like other work expenses this includes uniforms, laundry of these, associated travel costs while volunteering and other items required to complete this work.
5. Make the most of your company’s workplace giving program
Thousands of Australian employers offer staff the option to donate direct from their pay. That is, their pre-tax pay. Not only are the charities that you support through these programs already vetted for DGR status and approved for tax deductions, but coming direct from you pay means that you receive the tax benefit immediately.
That means no sorting through receipts come June 30. That means no risk of missing out on the financial benefits.
6. Know the value of your incentives
Make sure you’re getting the most out of your return by using our Workplace Giving Tax Calculator. Here you can calculate just how much you’ll be out of pocket with each donation and how much you can claim back this financial year. It might just be enough to tip the bracket that you’re taxed at.