How does giving to charities give me a tax saving?

Remember that dinner party you went to recently where everyone was enthralled in conversations about the end of financial year and getting their tax return done?

No, you wouldn’t. Because it’s just not that exciting. I don’t know anyone who enjoys doing their tax, although we do all enjoy the benefits of a refund when the tax office finds we have overpaid – and society at large certainly benefits from all of us paying our income tax.

If you’re not tax savvy, you might be a bit bewildered by people telling you to plan your charitable donations based on your tax bracket. How does money going out to a good cause equal a saving for you, right? Not only is it clever and beneficial to a great cause – it’s actually relatively easy and well worth the five minutes it will take you. I promise: no spreadsheets.

How does it work with workplace giving?

Here’s the deal with workplace giving and tax.

Your tax is calculated based on your taxable income. When you donate to charity through your company’s workplace giving program, the donation is made pre-tax so your taxable income is automatically reduced. You just earned less, so you have to pay less tax as a result of shelling out for your favourite charity.

You also didn’t need to save all those pesky receipts that I invariably misplace at precisely 11.59pm on 30 June. Every. Year.

How does it work without workplace giving?

This is where you do need to save the multiple receipts for your many generous donations. You can claim any donation over $2 that is made to a registered charity with DGR status in Australia. Bundle your receipts and give them to your accountant, or enter in the amounts if you’re doing your own return online.

I do have workplace giving – what now?

Glad you asked. If you have workplace giving available through your employer, allow me to introduce you to the Good2Give Donation Tax Calculator. Calculate your tax savings in three easy steps:

Step 1: Go to the Good2Give Donation Tax Calculator

  • Enter your income on a weekly, monthly, fortnightly, or annual basis and the amount you give to charity on a regular or one-off basis.
  • Discover how much your donation actually costs you and what tax savings you are making.

Step 2: On the same page, scroll down to view the 2017/2018 tax rates

  • Based on your calculations in step 1, you have your new taxable income amount. Take a look and see if you are wobbling on the edge of a tax bracket. Are you?
  • If you are, calculate how much more you would need to donate to tip yourself into the bracket below. Your donation could not only positively impact the lives of others, it could also provide you with a nice saving on tax your tax bill.

Step 3: Get giving to charity

  • Good2Give has over 2,000 registered charities on its platform, all of which hold DGR status. Search via cause here. If you have workplace giving, you can log in here. Click on ‘Charities’ and search EOFY18 to see all of the charities who are running specific EOFY appeals for this year.

Wait…I don’t think I can give every month

That’s ok.

When you have access to the Good2Give Workplace Giving platform, you can manage your donation amounts and frequency by logging in at any time. You can give a lot, or a little – once a year, once a month, or as often as you like.