How to Know If Your Charitable Donations Are Tax Deductible

The end of the financial year is behind us and that means you can officially start digging into all things tax.

When it comes to preparing your tax return, there are a lot of things to consider. Do you need to log your government payments? How about those cryptocurrency investments? Is it all so confusing you’d rather just get a tax agent to do it for you?

Regardless of whether you’re using an agent or lodging the return yourself, one thing you don’t want to forget about is charitable donations.

Tips for claiming donations on your tax return

The Australian Taxation Office has gifted us with some tips for dealing with donations at tax time.

ATO Assistant Commissioner Tim Loh warned in a media release that not all charitable donations are tax-deductible. He outlined a number of reasons why this might be the case:

“The first is giving to an organisation that is not endorsed by the ATO as a deductible gift recipient (DGR). The growth in online crowdfunding is proving that Australians are looking to be charitable online. Unfortunately, unless your donation or gift is made to an endorsed DGR it will not be tax deductible.”

The same goes for overseas charities and not-for-profits – they must be registered as an Australian DGR to be tax-deductible.

To confirm whether an organisation is DGR endorsed you can check by searching the business on ABN Lookup.

“The second reason your donation may not be tax-deductible is where you receive or expect to receive a monetary or personal benefit or advantage in return,” Loh said.

“We know Australians love raffles and fundraising chocolate. Sadly, if you buy chocolate, a raffle ticket or an item from an Op Shop this isn’t considered a tax-deductible gift.”

Pour one out for all those Cadbury chocolate boxes.

One thing that’s very important regarding charity donation deductions is to keep records. Loh says:

“Most organisations will usually issue you with a receipt, but they don’t have to. We will accept third-party receipts as evidence of a gift to a DGR if the receipt identifies the DGR and states the fact that the amount is a donation to the DGR.”

“However, if you made one or more donations of $2 or more to bucket collections conducted by an approved organisation for natural disasters, you can claim a tax deduction of up to $10 for the total of those contributions without a receipt.”

The ATO recommends taking advantage of the myDeductions tool in the ATO app to store images of your receipts. However, you can still enter the donation information directly into myTax or send it to your tax agent.

So while you can, and should, go wild by donating to the charities of your choice, just remember not all things can be claimed at tax time.