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Yuletide guide to gifts and donations

At this generous time of year (or any time of year really), don’t forget that you can generally only claim a tax deduction for gifts or donations to organisations that have “deductible gift recipient” status (DGRs).

Deductions for gifts can only be claimed by the person that makes that gift (the donor).

The Tax Office stipulates that for you to claim a tax deduction for a gift, it must meet four conditions:

  • the gift must “truly be a gift” — that is, a voluntary transfer of money or property where you receive no material benefit or advantage
  • the gift must be made to a DGR
  • the gift must be money or property (which includes financial assets such as shares)
  • the gift must comply with any relevant conditions — for some DGRs, the income tax law adds extra conditions affecting the types of deductible gifts they can receive.

It is worth pointing out, in regard to the first point, that paying for an item such as a pen or ribbon in support of charitable organisation means the money you hand over in exchange for that item renders that amount a “payment”, not a “donation”.

How much to claim
The amount you can claim depends on the type of gift. For gifts of money, it is the amount of the gift but it must be $2 or more. For gifts of property, there are different rules, depending on the type of property and its value.

A tax deduction for most gifts can be claimed in the tax return for the income year in which the gift is made. However, you can elect to spread the tax deduction over five income years in certain circumstances.

Bushfire and flood donations
If you made one or more donations of $2 or more to what are sometimes dubbed “bucket” collections (because the money is thrown into any receptacle) that is conducted by an approved organisation for bushfire and flood victims, you can claim a tax deduction without a receipt provided this is less than $10.

What you can't claim
You cannot claim as a gift or donation items that provide you with some personal benefit, such as the pens or ribbons mentioned above. Included in this area of the rules are items such as:

  • raffle or “art union” tickets
  • generally, the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner — unless certain conditions are met (see your tax professional)
  • membership fees
  • payments to school building funds made, for example, as an alternative to an increase in school fees (unless the fund itself is a DGR)
  • payments where you have an understanding with the recipient that the payments will be used to provide a substantial benefit for you.

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