Take advantage of the tax advantages before the end of the financial year
The end of the financial year is an important time for Australian businesses, but if you don’t work in finance or own a small business, your experience with the EOFY might purely be filing your tax return and cashing in on all the EOFY sales at your favourite retail stores.
Not only is the EOFY the time to file your tax return, but it also presents individuals with the opportunity to take advantage of tax advantages they might not be familiar with.
Advantages of charitable giving
There are many advantages to charitable giving, both for you and for the causes and communities you choose to support. Giving to charity makes you feel good, strengthens personal values, protects your local community, inspires those around you…just to name a few. But there are also significant tax advantages that come from your charitable contributions.
The last day of the tax year falls on 30 June, and we encourage you to take advantage of the tax advantages of charitable giving before we close out the year. We’ve compiled 5 top tips to help you prepare for the EOFY.
Tip 1: Donate to a Deductible Gift Recipient (DGR) organisation to receive a tax advantage
You can claim tax deductions for charitable contributions, but not all donations are the same. For your donation to be tax-deductible, it needs to meet four conditions:
- Your donation is made to a registered deductible recipient (DGR)
- You voluntarily transferred money or property and received no material benefit
- The donation is comprised of money or property (including financial assets such as shares – more on this later!)
- You have a record of the donation such as a receipt.
What is a DGR?
A deductible gift recipient (DGR) is an organisation or fund that can receive tax-deductible gifts. But, not all charities are DGRs. You can check whether your donation was made to an endorsed DGR on the Australian Business Register website.
All recipient charities on the Good2Give platform are DGRs, so you can be confident your donations made through our Workplace Giving Platform are tax-deductible.
Tip 2: Contribute directly from your pay as a tax-effective and impactful way to contribute to charity
Donating to charity directly from your pay is the most tax-effective and efficient way to make a difference in your community. By contributing a small portion of your salary, you receive the tax benefit straight away. For example, if you donate $5, it will only cost you $3.40* but your chosen charity will receive the full $5. And, in many cases, your employer may match your donation meaning the charity receives $10.
*Applying tax rate for income between $45,001 and $120,000 per annum @ 1 April 2021.
Tip 3: Donate unmarketable shares and claim a tax deduction of the shares full market value
ShareGift Australia is a not-for-profit organisation that provides you with an easy way to sell and donate small parcels of shares that would otherwise be unmarketable. Share giving provides you with a cost-effective solution to help tidy up your share portfolio, with no need to use a stockbroker which means you save on brokerage fees.
You can take advantage of the tax advantages by donating before 30 June and claim a tax deduction of the shares full market value.
Tip 4: Reduce your taxable income and bring your tax bracket down
A tax-deductible gift or donation to charity can reduce your taxable income. By lowering your tax bracket, you’ll receive a higher refund on tax paid throughout the yet. Good2Give’s Workplace Giving Platform makes it easy to set up regular donations throughout the year, and also one-off donations. By monitoring your giving through our platform, you can decide if an additional one-off payment before EOFY makes financial sense.
If you’re on the brink of your tax bracket, use our Workplace Giving Tax Calculator to see how easily a regular donation from each pay, or a one-off donation, will save you in tax. As an added benefit you can see how much more funding a charity receives when donations are made directly from your salary.
Tip 5: Diversify your giving and maximise your charitable impact
EOFY is the most popular time of year to donate, with Good2Give’s Workplace Giving Platform experiencing a 25% spike in donations between March and June. But with many rushing to take advantage of the tax advantage, large donations are often made to only one charity. With Good2Give’s Workplace Giving Platform, you can nominate multiple charities to receive funding with the click of a button – and you only need to make one payment.
Diversify your giving and support all of the causes you care about. Browse over 2,700 charities on the Good2Give platform and make your EOFY donation now.