How to claim tax-deductible donations?

How to claim tax-deductible donations?
Written by
Joe Allanson

Donating to a meaningful charity or cause is extremely rewarding. You get to experience a feeling of joy as your contribution helps to make the world a better place. If you make a tax-deductible donation, you could also boost your tax return, all whilst supporting a cause that is close to your heart. Charities rely on the generosity of people like you who give to their campaigns and work. Without your regular support, charities wouldn’t be able to achieve their lifesaving and world-changing goals.

Remember; every time you make a donation greater than $2 to a registered charity, your charitable donation may be tax-deductible. So whilst you're creating your important social impact, you could also be boosting your tax refund — that’s definitely a win-win situation!

Let’s delve deeper into what you need to know to correctly claim tax-deductible donations on your tax return.

The importance of a DGR Status

If a charity is registered as a Deductible Gift Recipient organisation (DGR) by the ATO, it means that donations made to the charity may be tax-deductible. Finding out if a charity is DGR registered is easy. Search for the charity on the ABN lookup, scroll down to the Deductible gift recipient status heading, and you’ll be able to see if they are entitled to receive tax-deductible gifts or not. 

You can always contact a charity for proof of their DGR status if you are still unsure.

For example, let’s explore You Belong Australia — an inspirational charity that empowers refugees and migrant background people to integrate and thrive in Australia. If we head on over to the ABN lookup and search “You Belong”, it’s easy to see their profile.

Click on their ABN and scroll down to the heading, Deductible gift recipient status. It says, “YOU BELONG AUSTRALIA LTD is endorsed as a Deductible Gift Recipient (DGR) from 06 Jul 2019”. This means that all donations to You Belong Australia Ltd are tax-deductible donations.

If you search for a charity and scroll to the heading, Deductible Gift Recipient status, but it says “Not entitled to receive tax-deductible gifts”, then it means that donations made to this particular charity are not tax-deductible donations.

When you’re giving through Little Phil, it’s even easier to see the DGR status of a particular charity. Next to each charity or campaign, you can immediately understand if your donation will be non-tax deductible or tax-deductible within Australia. It makes giving a breeze and gives you extra confidence when supporting your favourite charities.

You’ll notice from the two charities below that AWL QLD has DGR status, and donations made will be tax-deductible within Australia. Whereas FutureSense Foundation does not have DGR status, therefore, donations made will not be tax-deductible.

Charity on the left has DGR status, whilst the charity on the right is not tax-deductible.

Once you’ve chosen your cause to support, you’ll be able to see your impact summary. This is the final step before you send your giving directly. 

To make things 100% transparent, we’ll present you with a detailed breakdown to help put your mind at ease. Let’s look at this particular donation as an example — giving $30 to a DGR registered charity.

You can see what your direct impact will be and if you want to cover the fees (i.e. our little platform fee and the transaction fee). This will then provide you with your Giving Total — in this case, $32.75. 

  • Your direct impact = $30
  • Our little platform fee = $1.80
  • Transaction fee = $0.95

Underneath your Giving Total, you can see that your DGR tax-deductible amount is $32.75. This is because you are giving to a DGR organisation, which means this will be a tax-deductible donation. The little ( i ) near your deductible amount provides you with some information about DGRs that we’ve already explored, but it’s always good to have a clear understanding of your giving.

You'll always receive a breakdown of your giving on Little Phil.

Other gifts you can claim

The amount you can claim as a tax deduction depends on the type of gift. In addition to your giving to an organisation with DGR status, you may be able to claim:

  • Gifts of property or shares
  • Gifts under the Heritage and Cultural programs 

According to the Australian Taxation Office, you may claim the deduction for your gift for the income year in which the gift was given. In certain circumstances, you can elect to spread the tax deduction over a period of up to five income years.

Bucket donations

Donations of $2 or more made to bucket collections, for example, collections conducted by an approved organisation for natural disaster victims, you may claim a tax deduction for gifts up to $10 without a receipt. To claim contributions of more than $10, you need a receipt.

What other donations are not tax-deductible?

Ensuring a charity has DGR status is the first step to understanding if your giving will be tax-deductible, but there are a few other things you must know.  Your giving will not be tax deductible if you make a donation and receive something like:

  • A raffle ticket 
  • Dinner attendance
  • Event entry
  • Even chocolates

Essentially, if you receive something as a result of your donation, then you can’t claim the giving as a tax deduction. 

However, if you receive a token item for your donation, you can still claim a deduction. Token items are things of no material value that are used to promote the Deductible Gift Recipient organisation, things like lapel pins, wristbands and stickers.

Is my giving to a church tax deductible?

If you’re donating to a church, some people assume that gifts to a church are always tax-deductible donations. However, like all organisations, donations to a church can only be claimed if the church is a registered deductible gift recipient (DGR). 

Sometimes the ATO demands repayment from people who claimed ineligible deductions, so ensure you are following the correct processes if you are making a donation with the intent for it to be a tax-deductible donation. To be safe, follow the earlier procedure of searching for the organisation's DGR status on the ABN lookup.

Keeping track of your tax-deductible donations with Little Phil

There are many ways to keep track of your giving, creating lists and saving receipts in safe places. However, receipts often fade, and our lists regularly go missing when we need them most.

So we thought, let’s make your giving simple — from beginning all the way to tax time. When you donate to causes and charities on Little Phil, it’s easy to keep track of donations. Firstly, you’ll know from the start if your giving will be classified as a tax-deductible donation or not. 

If your giving is tax-deductible, all the information will be stored on your Little Phil account in your My Impact hub. This way, you won’t have to worry about manually keeping track of all your donations, wondering if they’re tax-deductible and fearing you forgot a donation. 

The best thing is, at the end of each financial year, Little Phil will send you your personalised tax statement. This document will give you a rundown of your year in giving — a great opportunity to experience your Little Phil Good Moments all over again. 

You’ll be able to see the exact date you made your donation, the total donation amount and the tax-deductible amount from each one. Presented in an easy to read table, complete with total amounts, it’ll be your accountant’s dream when you send this through to them. 

While you're saving the world with your giving, we’ll do the hard work.

An example of how your Little Phil EOFY Statement will appear — an accountant's dream!

What if I made a donation, but it wasn’t through Little Phil?

If you donate to a DGR registered organisation, they’ll usually issue you with a receipt, but they are not required to. If you do not receive a receipt for your donation, you can still claim a tax deduction by using other records, like your bank statements.

If you are issued a receipt for your donation to a DGR registered organisation, the receipt must include:

  • The name of the fund, authority or institution to which the donation has been made
  • The DGR's ABN (Please note: some DGRs listed by name in the law may not have an Australian Business Number)
  • That the receipt is for a gift

How can I claim my donation as tax deductions?

If your donation is $2 or more, and you’ve made it to a deductible gift recipient organisation, you may claim the full amount of money that you donated on your tax return. When you’re processing your tax return, the easiest way to ensure you’ve provided your complete tax-deductible amounts, send your Little Phil tax statement to your accountant. Happy accountant, happy life.

If you have other donations that weren’t completed through Little Phil, you will have to provide the donation details along with your receipt or bank statement.

Our Little Summary

To claim tax-deductible donations on your tax return, your donation must be:

  1. Made to a Deductible Gift Recipient (DGR) charity, and
  2. Be $2 or more

Proof is vital! You need to keep your receipts or bank statement of any donation you make. You also need to calculate the total dollar amount of all donations you make in a tax year. If you’ve donated through Little Phil, your Little Phil tax statement will compile all the information you need automatically.

Furthermore, it’s very important that you be aware of these points:

  • You cannot claim your donation on your tax return if you receive something for your donation (e.g. raffle ticket, dinner attendance). 
  • There are different rules for donating property, shares, and other goods
  • Some charities have special rules that limit the donation amount you can claim

It can feel quite overwhelming when you’re reading all these dos and don’ts when it comes to claiming your tax-deductible donations. So to make your life a little bit easier and less stressful, experience giving, the way it should be — Little Phil. 💛

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