Growing up I was taught by my parents that even with a little, we have a lot to give. From the days of having $5 pocket money, to now, I have been putting aside something to give to others.
Artists have shown their generosity in spades recently, whether the donation is something of value such as their work, skills, goods or the act of giving this money. It feels great to help those less fortunate than ourselves but it doesn't hurt to be aware of a way you, the donor, can benefit as well, right? Welcome to the tax-deductible donation!
A DGR (or Deductible Gift Recipient) is an entity that can receive tax deductible gifts. Basically, you can gift or donate money or property to a DGR, and you can receive the benefit of a tax deduction.
Unfortunately, not every donation that you make is tax deductible, but that doesn’t mean you shouldn’t still give to these organisations.
Some things to think about:
Accountants love receipts! Any donation above $2.00 to a DGR is tax deductible, so the best way to keep track of every donation you make is to request a receipt. Most online donations will provide you with a receipt, so this makes keeping track easy.
Hot tip: save the receipt in your Google Drive at the time so you don’t have to chase them later on.
What do you do if you make a donation to a DGR who is collecting outside of your local supermarket?
These are called bucket donations. The Tax Office allows you to make donations greater than $2 to approved organisations, and claim a deduction up to $10 without a receipt. However, if your donation is greater than that, ask for a receipt to be provided.
I bought a ticket to a fundraising dinner for the Cancer Council - can I claim that?
As you will be receiving a personal benefit from the ticket (in most cases it will be in the form of dinner and drinks), this cannot be claimed as a tax deduction. However, if you were to donate an extra $50 to a collection tin during the event, then you could claim that $50 donation. Boom. Dinner and a tax deduction, plus helping others.
I bought a raffle ticket for the Hospital Research Home Lottery - can I claim that?
Unfortunately this cannot be claimed as a tax deduction. As there is a chance you could win a brand new home from this lottery, the Tax Office deem this a possibly receiving a material or personal benefit from it, therefore making it non-deductible.
I once “invested” heavily into this before reading the T&Cs closely… still happy to have made the donation, but not happy to have missed out on a house AND on a tax deduction. Silly me.
I donated $5 to the Legacy stand outside my local shopping centre and received a Legacy lapel pin - can I claim that?
Yes you can. The Tax Office does not deem lapel pins to have a material value, therefore you can claim the $5 as a tax deduction.
I put $1 into a Royal Society for the Blind charity tin - is this deductible?
A tax deduction cannot be claimed for this donation, as it is under the deductible donation threshold of $2. The RSB will still appreciate this donation! They have the cutest doggos, doing such good work.
Generally speaking, there are no limits on how much you can donate to most DGRs. In fact, some DGRs have giving circles and programs where you can gift amounts that can be used for grants or fellowships to support local artists in a range of fields. However, there is a cap on how much you can donate to a political party or independent candidate. Donations are capped at $1,500 for contributions to political parties and $1,500 for contributions to independent candidates. These contributions can include membership subscriptions and donations to their cause, but cannot be a testamentary donation and must be made as an individual and not in the course of carrying on a business.
It’s great that we’re able to gain a tax deduction when making a donation to a DGR, however that’s not the only reason to donate! Any donation, whether it is monetary, goods or even your time, is truly appreciated by every cause. There are so many worthy causes out there who need your help; why not make the world a better place, whether or not you receive a tax deduction for it!
and my incredible co-author, Caitie Copley