Valentine's Day is synonymous with gift giving. Flowers, chocolates and diamonds, if you're lucky, all wrapped in a ribbon and accompanied by a hand written card.
But there can also be financial benefits with some gifts, not only for the gift giver but also to the recipient when it comes to gifts to a charity.
If it's over $2, is it tax deductible?
I'm sure you've seen the charity stands at your local shopping centre with the sign 'donations over $2 are tax deductible', which is true – when the donation is made to the right kind of recipient. According to the ATO, for a gift to be deductible, it must be:
- Made to a deductible gift recipient (DGR)
- Comply with any relevant gift conditions
- Truly be a gift
- Be a gift of money or a certain type of property
A charity may be a DGR and the best way to find out if you are donating to a DGR is to look it up on the Australian Taxation Office website. An easy search of an Australian Business Number (ABN) will ensure you are donating to a legitimate DGR.
Unless an organisation is a DGR, you cannot claim a tax deduction for your gift or donation.
When is a gift not a gift?
Before you rush out to buy your Valentine a gift from a fund raiser or charity, keep in mind that sometimes, gifts are not really gifts.
Buying items at a charity auction, purchases of raffle tickets and art union tickets, buying chocolates, pens and similar low cost items and the cost of attending a fundraising dinner or concert, even if the cost exceeds the value of the dinner are not gifts.
There are many ways you can give your loved one a gift that is tax deductible – from restoring sight to those who are needlessly blind, improving the health of indigenous Australians or sponsoring a child fighting poverty.
Start searching for something that you are both passionate about and make a difference this Valentine's Day and if you receive this kind of gift, understand that it's all about you, and not the tax benefit!
Why not increase the financial savviness of those around you – pay it forward and pass on these tips to your family, friends and kids.
Olivia Maragna is the co-founder of Aspire Retire Financial Services and is a respected and independent financial expert. Olivia's advice is general in nature and readers should seek their own professional advice before making any financial decisions.