Australia is known for its generous spirit, especially when it comes to supporting charitable causes. One of the most impactful ways to contribute is by donating to Deductible Gift Recipients (DGRs). Not only do these donations support vital causes, but they can also offer tax benefits.
What is a Deductible Gift Recipient (DGR)?
A DGR is an organisation or fund that has been endorsed by the ATO to receive tax-deductible gifts or donations. Not all charities and not-for-profits qualify as DGRs, so it’s important to verify an organisation’s status before making a donation (if you’re wanting to claim a tax deduction). You can check an organisation’s DGR status using the ABN Lookup or the Australian Charities and Not-for-profits Commission (ACNC) charity register.
Tax Deductibility of Donations
Donations to DGRs can be claimed as tax deductions, provided certain conditions are met:
Monetary Donations: Gifts of cash to the value of $2 or more are tax-deductible if the organisation receiving the gift is endorsed as a DGR. Most DGRs will issue a receipt, which you should retain for your tax records. A bucket donation is a small cash contribution made to bucket collections conducted by approved organisations, often for natural disaster relief efforts. You can claim a tax deduction for these donations without needing a receipt, provided the total amount does not exceed $10.
Non-Monetary Donations: If you donate goods such as groceries, clothes, or other items to a DGR, you may also be able to claim a tax deduction, subject to specific conditions. Firstly, the value of the donated goods must be determined. This can be done through a qualified valuation or by using the market value of the items. Secondly, you must obtain a receipt from the DGR, detailing the description and value of the donated items. Thirdly, the items must not have been used for personal purposes before the donation. Finally, you must have maintained records of the donation, including the receipt and any valuation documents, for your tax records.
Fundraising Events: Contributions to DGRs for eligible fundraising events may be tax-deductible if they meet certain criteria (see next paragraph). However, if you receive a material benefit in return (e.g., purchasing a t-shirt or raffle ticket), the donation is not tax-deductible.
In order to be tax-deductible; the event must be an eligible fundraising event, such as fetes, balls, gala shows, dinners, performances, or similar events. The DGR must run fewer than 15 events of the same type in one financial year. The actual contribution can be in the form of money or property, (depending on the type of event). For money contributions, the amount must be over $150. For property contributions, the property must be purchased within 12 months before making the contribution and valued at more than $150, or valued by the ATO at more than $5,000. Shares must be acquired at least 12 months before making the contribution, valued between $150 and $5,000, and listed for quotation on the Australian Securities Exchange. Finally, the benefit received by the contributor must be no more than $150 and no more than 20% of the value of the contribution. A receipt must be obtained detailing the contribution and any benefits received.
Crowdfunding: Most crowdfunding donations are not tax-deductible unless the recipient is a registered DGR. Crowdfunding is the practice of raising funds for a project, venture, or cause by soliciting small contributions from a large number of people, typically via the internet. It involves three main parties:
Promoter: The individual or entity initiating the project or venture.
Intermediary: The platform or website facilitating the crowdfunding campaign.
Contributors: Individuals or entities who contribute or pledge money to the campaign.
There are four main types of crowdfunding:
Donation-Based: Contributors donate money without expecting anything in return eg: Go Fund Me
Reward-Based: Contributors receive goods, services, or rights in return for their contributions.
Equity-Based: Contributors receive shares or equity interests in the company undertaking the project.
Debt-Based: Contributors lend money to the promoter, who agrees to repay the principal with interest.
Each type of crowdfunding has different tax implications for the parties involved, including potential income tax and GST obligations.
Supporting the Cancer Council
We are thrilled to announce that Freshwater Taxation are now offering the option of rounding all tax return purchases up by $1 for donation to the Cancer Council. For every dollar donated by our clients, we will match an additional $1. Cancer is a cause very close to our heart as it is so many of us. If you’re in a position to do so, I strongly encourage you to make a charitable donation this month, which will be deductible in your 2024 financial year income tax return.
One of the most prominent DGRs in Australia is the Cancer Council. This organisation is dedicated to reducing the impact of cancer through research, prevention, and support services. By donating to the Cancer Council, you are contributing to a cause that affects millions of Australians.
Why Support the Cancer Council?
Research: The Cancer Council funds groundbreaking research to find better ways to prevent, diagnose, and treat cancer.
Prevention: They run programs to educate the public about cancer prevention and early detection.
Support Services: The Cancer Council provides support services for cancer patients and their families, including counselling, financial assistance, and accommodation.
How to Donate
You can donate to the Cancer Council through their official website. Ensure you receive a receipt for your donation, which you can claim as a tax deduction in your next tax return.
Conclusion
Donating to DGRs like the Cancer Council not only supports vital causes but also offers tax benefits. Always verify the DGR status of an organisation before making a donation and keep records of your contributions. By doing so, you can make a meaningful impact while also benefiting from tax deductions.
Feel free to reach out if you have any questions or need further assistance with your donations and tax deductions.
Together, we can make a difference!
