For so many of us Christmas is a time to spend with family and friends, eating, giving and receiving presents and enjoying each others company. It is also the time of giving to those less fortunate. Both Individuals and organisations alike can claim a tax deduction for such donations.
In order to make a tax deductible donation, the donation or gift must be made to a Deductible Gift Recipient (DGR). Only certain organisations are entitled to receive income tax deductible gifts and tax deductible contributions. To check if an organisation is a DGR, you will need to refer to the ATO’s website. One common misconception is that all charities are DGR’s, however this is not the case. For this reason it is important to ensure that the charity you are donating to is a DGR.
The recognition criteria for tax deductible donations are that they must:
• be made to a DGR
• really be a gift
• be a gift or money or a certain type of property
• comply with any relevant gift conditions
• Amount must exceed $2
Donors have the choice to spread the donations for certain gifts over a period of up to five years, as a deduction cannot add to or create a tax loss for the donor.
All monetary donations can be claimed up to the full amount however, all other types of donations will be subject to various valuation rules.
An organisation can put into practice a workplace giving arrangement where:
• part of an employee’s pay is paid, or is to be paid, as a gift to a deductible gift recipient (DGR)
• the gift is paid by the employer at the direction of the employee
• the gift is made under a regular planned giving arrangement.
Employees can individually make donations through salary sacrifice arrangements whereby:
• the employee agrees with their employer that a certain amount of their pre-tax pay will be paid to a DGR
• the employee pays income tax on the reduced salary or wages
• the employer claims the tax deduction for the payment to the DGR, not the employee
• from 1 April 2008, the payment to the DGR is not a fringe benefit.
Remember, if you are planning on claiming a deduction make sure to keep any relevant receipts or documents!
These tax deductions are designed to make the joy of giving that little bit more rewarding. The accountants at the Quinn Group are able to help you manage your tax and claim your deductions. For more information on managing your finances, contact us on 1300 QUINN or submit an online enquiry.