Australians are a generous bunch, rolling up their sleeves to get involved with volunteer and charitable organisations they care about and opening their wallets to provide financial support as well.
Published in June 2022, the eighth edition of the Australian Charities Report - the annual analysis of the charity sector by the Australian Charities and Not-for-profits Commission (ACNC) - showed there was strong public support for work done by more than 49,000 charities during the 2020 reporting period.
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According to the ACNC, 3.4 million of us volunteered our time, and we also donated $12 billion, an increase of 8 per cent on the prior reporting period.
Donating to charities is not only a good way to support causes we care about it, but it may also come with incentives at tax time that can reduce your tax bill at the end of the financial year.
Figures from the Australian Tax Office (ATO) indicate that only a fraction of the $12 billion in donations reported by the ACNC was claimed as a tax deduction in the 2019-20 year, with around 4.2 million Australians claiming deductions for $3.7 billion in gifts and donations to charities and not-for-profits.
The Australian Tax Office (ATO) expects significant charitable donations to support flood-impacted areas and urged taxpayers to make sure that if they want to claim a tax-deductible deduction in their tax return, it meets the criteria to be tax-deductible.
"Before rushing to claim a donation in your tax return, it's important to understand what makes a donation tax-deductible," ," ATO Assistant Commissioner Tim Loh said.
"The donation needs to be made to a deductible gift recipient (DGR)."
Australian Tax Office rules specify that donations made to deductible gift recipients (DGRs) of $2 or more are tax-deductible, meaning the amount can be claimed on your tax return and reduce your taxable income.
A few things to keep in mind when claiming a donation this tax time:
- Not all charities are deductible gift recipients (DGRs); therefore, your gifts to these organisations aren't deductible.
- You must not receive any material benefit for the gift or donation. Items that would be considered promotional, such as pens, stationery, so on, are exempt.
- The gift must be of either money or property - this can include shares.
- It must comply with any relevant gift conditions.
- The ATO may ask for evidence to support your claims, so you must receive a receipt from the DGR and keep it on file.
"We want to make it easier for you to support the charity of your choice," Mr Low explained.
"The myDeductions tool in the ATO app can store photos of donation receipts throughout the year. Then simply upload your donation information to myTax or send them through to your registered tax agent."
