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How To Claim Tax-Deductible Donations On Your Tax Return

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    Claiming tax-deductible donations on your tax return can be an easy process, but it does require some preparation beforehand. Then, all you need to do is fill out the appropriate forms and keep receipts for all of your donations. This blog post will show you how!

    Did you know that donating to a qualified charitable organisation is one of the best ways to reduce your tax bill? If you donated more than $250 in cash or property, then it's worth claiming on your tax return. You can even get an appraisal for donated items and provide the receipt with your tax return. Good luck and happy giving!

    Claiming your donations on your tax return is a great way to reduce the amount of money you pay in taxes. However, when claiming them, some things will need to be done first before they can be added to your return. 

    You will need to keep track of all receipts and any other documentation that shows how much you donated during the year.

    The best time to do this is when you're doing your annual filing with TurboTax or TaxAct at the end of December. 

    This process should only take about an hour or so. Still, it's worth it because if you didn't claim these contributions, they would not count as deductions for anything else like mortgage interest payments or child care expenses which are also deductible from income!

    It is important to know how to claim your tax deductions when you are in the process of filing your taxes with the Australian Tax Office (ATO). For example, if you donated any items or money during the year, then it is possible that you can reduce your taxable income by claiming these donations. 

    The process for claiming these donations on your tax return is different depending on whether they were given to a charity or not. 

    If you donate an item worth more than $2,000, it must be claimed as a "gift-in-kind". This means that the value of this donation will have been reduced from what was originally paid for it and, therefore, won't be subject to capital gains tax if sold at some point in the future.

    Something you should always do is make sure to claim your tax-deductible donations on your return. It might not seem like a lot, but it can really add up depending on what you donate and how much of the donation is tax-deductible. 

    For example, if you donated clothes worth less than $500, they are likely fully taxable, but if they're over $500, then some or all of the charitable value may be tax-deductible.

    Donating money to a qualified charity is a great way to help those in need and give back to your community. But what if you don't know how the donations will affect your taxes?

    A lot of people give money to charity and want to claim their donation on their tax return. Claiming charitable donations is a great way to get back some of the money you were taxed for in your paycheck or even reduce your total tax bill. If you're wondering how to do this, keep reading!

    This blog post will tell you all about claiming charitable donations in Australia-style.

    Let's get started!

    What is a tax-deductible donation?

    A tax-deductible gift or donation will reduce your taxable income, resulting in a higher refund on tax paid throughout the year or a reduced ATO debt when you complete your tax return.

    Every donation you make to charity is only tax deductible if the organisation is an ATO endorsed deductible gift recipient (DGR). 

    Australian Cancer Research Foundation (ACRF) is a DGR organisation and has the registered charity tick from the Australian Charities and Not-for-profits Commission (ACNC). This means that ACRF complies with the transparency and accountability standards of the ACNC Charity Register.

    To claim a tax deduction for a gift or donation, it must also meet the below conditions:

    • In addition, it must be made to a DGR organisation.
    • It must truly be a gift or donation – that is, you are voluntarily transferring money or property without receiving, or expecting to receive, any material benefit or advantage in return. A material benefit is an item that has a monetary value, such as a raffle ticket, fundraising chocolate or fundraising dinner ticket.
    • The gift or donation must be of money or property. This can include financial assets such as shares.
    • The gift or donation must comply with any relevant gift conditions. For some DGRs, the income tax law adds different conditions affecting the types of deductible gifts they can receive.

    To claim a tax deduction, you must have a record of your donation, such as a receipt. ACRF provides prompt receipting for all donations.

    How To Claim Tax-Deductible Donations

    When you give money to a charity, your gift can be a tax-deductible donation.

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    Like many Australians, you might have a charity or cause that's close to your heart. Tax-deductible donations are a great way to give your tax refund a boost while contributing to a worthy cause you care about. It is the definition of a win, win! 

    Charities rely on the generosity of the people who donate money to support them; without the generosity of people like you, they wouldn't be able to do the great things they do to help good causes.

    Every time you donate more than $2 to a registered charity, don't forget that your charitable donation is probably tax-deductible

    Charitable donations and tax deductions

    If the ATO registers a charity as a "Deductible Gift Recipient organisation", then donations you make to that charity may be tax-deductible.

    You can find out if a charity is a deductible gift recipient organisation by searching the Australian Business Register (more on that below – it is easy to check).

    Deductible gift recipient charities usually tell you on their website if donations are tax-deductible. If you're still unsure, ring the charity and ask for proof of their deductible gift recipient status.

    When is a donation not a tax deduction?

    First of all, if you receive a raffle ticket, dinner attendance, event entry, chocolates, or anything like that, then your donation can't be claimed as a deduction. So basically, if you receive something because of your donation, then don't claim the donation as a tax deduction.

    Next, if the donation was to an organisation that is not a registered deductible gift recipient, then you can’t claim it, either.

    Donations to churches

    Some people assume that gifts to a church are always tax-deductible donations. But, unfortunately, that's not right, and the ATO sometimes demands repayment from people who claim ineligible deductions.

    Gifts of money to a church (including gifts to a church’s building fund) can ONLY be claimed if the church is a registered deductible gift recipient. Read below to learn how to check if your church is eligible…

    How to check if a charity or church is a Registered Deductible Gift Recipient (DGR)

    This is easy.

    First of all, most charities will tell you. If they don't tell you, ask, "Is your organisation a registered Deductible Gift Recipient?" If they say "no" or are unsure, then your donation probably isn't tax-deductible. 

    Don't claim it unless you know that it's eligible because the ATO is pretty good at finding ineligible tax deductions.

    You can look up the DGR status of any organisation

    • Go to the official ABN lookup site at http://www.abn.business.gov.au/AdvancedSearch.aspx
    • Enter the name of the charity you want to look up, then hit 'enter' or 'search'
    • Next, you'll see a list. Find the right one and click on the ABN number link on the left
    • Next, you'll see a details page – down toward the bottom; you'll find a subheading called "Deductible gift recipient status". What does it say there?

    Let’s look at two examples:

    The Smith Family is an Aussie charity helping underprivileged kids to get a better education. If we go to the ABN lookup and enter “Smith Family”, we easily find their profile. 

    Under "Deductible gift recipient status" it says, "THE SMITH FAMILY is endorsed as a Deductible Gift Recipient (DGR) from 01 Jul 2000." That means all of our donations to The Smith Family are tax-deductible donations.

    On the other hand, what if we want to donate money to St Albert's Catholic School in South Australia? When we look up the school's name, we can see it says, "Not entitled to receive tax-deductible gifts." So, we can give the school money anytime we want to; however, that donation is not a tax deduction.

    How Do Tax Deductible Donations Work: The Impact Of Your Tax Deductible Donation

    How much of my donation can I claim on my taxes?

    The amount you can claim depends on the type of gift. For gifts of money, it is the amount of the gift, but it must be $2 or more. For gifts of property, there are different rules, depending on the type and value of the property.

    A tax deduction for most gifts is claimed in the tax return for the income year in which the gift is made.

    You need to be aware that the tax deduction claimed for donating a gift cannot add to or create a tax loss. The deduction can reduce your assessable income to nil in the tax year the gift is made, but any excess cannot be claimed in that year.

    However, in advance of lodging your tax return, you can choose to spread the tax deduction over up to five income years.

    Can companies make a tax-deductible donation to charity?

    Corporate donations to DGR organisations are tax-deductible. Businesses can claim the same benefits from donating that individuals do. Like an individual donation, a corporate donation must be $2 or more in value to be tax-deductible.

    Advertising or sponsorship

    If you are a business and support a DGR through advertising or sponsorship, this is generally not a gift. However, you may be able to claim a tax deduction as a business expense.

    Do I need a receipt to claim my donation?

    Like any other tax deduction, you must have a receipt. You should keep records of all tax-deductible gifts and contributions you make. The Australian Taxation Office recommends keeping receipts for five years after completing your tax return to support your claim.

    What is the minimum donation for a tax deduction?

    To claim a tax deduction, the minimum you can donate is $2

    Is there a tax-deductible donation limit?

    There is no limit to a tax-deductible donation as long as it is $2 or more. There is only a limit as to how much you can claim in a financial year.

    What are the tax benefits of donating to charity?

    A tax-deductible gift or donation will reduce your taxable income, resulting in a higher refund on tax paid throughout the year or a reduced ATO debt when you complete your tax return.

    Why make a tax-deductible donation to cancer research?

    At ACRF, their mission is to outsmart cancer; this cannot be done without your donations to help fund groundbreaking cancer research.

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    Together we can accelerate significant breakthroughs in cancer prevention, diagnosis and treatment by providing world-class cancer researchers with the tools they need to improve the prevention, diagnosis and treatment of all types of cancer.

    So why not boost your tax return and help them back the brightest minds in cancer research by making a tax-deductible donation today.

    What have your donations helped them achieve?

    Your donations to ACRF help fund research into all types of cancer across research institutes, universities and hospitals all across Australia. These initiatives look for new and improved ways to prevent, detect, and treat all types of cancer.

    Some of their key achievements include:

    • Cervical Cancer Vaccine; Supporters like you contributed to the initial seed funding to Professor Ian Frazer's research into developing a cervical cancer vaccine. The vaccine has now been administered to millions globally.
    • The Pill That Melts Cancer; Your donations contributed to developing a revolutionary treatment that melts away certain advanced forms of Chronic Lymphocytic Leukemia. This treatment is currently being trialled for the improved treatment of lung and prostate cancers.
    • A world without melanoma; Your donations contributed to the ACRF Australian Centre of Excellence in Melanoma Imaging and Diagnosis (ACEMID). The project supporting the vision of a 'world without melanoma' aims to be one of the world's largest melanoma surveillance and early detection programs.
    •  Zero Childhood Cancer; With your contributions, they became one of the founding partners of an initiative to tackle the most difficult infant, childhood, and adolescent cancer cases in Australia. This world-first personalised medicine program already has over 400 children enrolled. The ultimate aim of the program is to see zero deaths from childhood cancer.

    It’s Easy To Keep Track Of Your Tax Deductible Donations To Charities

    Many Australians lose out at tax time simply because they forgot about some deductible donations or lost the receipts. That’s an easy problem to fix!

    1. Just save every donation receipt right into your account. This way, your receipts are right there at tax time. Here’s how to save receipts and deductions.
    2. Start a draft email in your email account called "charity donations". (You'll never send this email – it's just a convenient place to keep a list where you can find it quickly.) Then, every time you donate, open that draft and add a note including a) the charity, b) the date, and c) the amount. Then save it. Done! At tax time, it's easy to add up the donations. And if the ATO or your tax agent asks for details, it's all right there. Only record donations to real, tax-deductible charities.
    3. (With this method, you still need to keep the receipts somewhere – in your email archive is okay as long as you don't delete them.)
    4. Keep a simple list of the names of each charity you donate to. Then, at tax time, send each of them an email asking for a summary of your donations in the past taxation year. (This can mean waiting for replies, so option 1 or 2 may be easier.)
    5. Charities should always provide a receipt for your donation. So whenever you give, watch carefully for that receipt. Then save it in one place that you'll remember at tax time.

    FAQs

    Is My Donation Tax Deductible?

    Looking to donate to charity? Some charity donations can be claimed as tax deductions on your individual tax return each year.

    For a donation to be tax-deductible, it must be made to an organisation endorsed as a Deductible Gift Recipient (DGR) and must be a genuine gift – you cannot receive any benefit from the donation. 

    This means that purchases from a charity that involve raffle tickets, items or food cannot be claimed as tax-deductible gifts.

    To determine if a charity has a DGR endorsement, visit the ACNC Charity Register. When you locate the charity you're interested in, open their Charity Register page, and in the right-hand corner, there will be an icon that asks, "Will my donation be tax-deductible?"

    This link takes you to ABN Lookup, an online service that allows you to check the registration details of any organisation with an Australian Business Number (ABN) – including their tax concessions and whether they are endorsed as a deductible gift recipient.

    When you've opened the record of your charity of choice on ABN Lookup, scroll to the heading 'Deductible Gift Recipient status' to determine if your donation will be tax-deductible.

    Are charity donations tax-deductible?

    A tax-deductible donation is an amount of $2 or more that you donate to an organisation endorsed as a Deductible Gift Recipient (DGR). It must be a genuine gift – meaning you cannot receive any benefit from the donation. 

    Funds that are donated in exchange for benefits such as raffle tickets, fundraising chocolates, or fundraising dinner tickets, however genuine, are not tax-deductible. 

    However, the ATO deemed pins, tokens, wristbands and stickers as having no material value and are used by the DGR as marketing and promotional material.

    Which charity donations can I claim on my tax return?

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

    • made to a deductible gift recipient charity, and
    • $2 or more.

    You must also keep proof (in the form of a receipt or bank statement) of any donation you make as well as the total dollar amount of all donations you make in a tax year.

    On top of that, it’s important to be aware of the following important notes:

    • If you receive something for your donation (e.g. raffle ticket, pen, scarf), you cannot claim that donation on your tax return. The ATO sees this as a transaction where you receive a good/service in return for the money you donate.
    • There are different rules for donating property, shares, and other goods, so please ask if you are unsure how to claim these items.
    • Some charities have special rules that limit the donation amount you can claim; this should be explained to you or referenced on your receipt so that you know how much of your donation is actually a tax-deductible donation.

    Are donations to charity auctions tax deductible?

    Donations to charity auctions are tax-deductible if:

    • There is a transfer of money or property, and the organisation is a DGR.
    • The transfer is made voluntarily.
    • The donor does not expect anything in return for the gift.
    • The donor does not materially benefit from the gift.

    Are overseas charity donations tax-deductible?

    All Australian charities that operate overseas must be registered with the Australian Charities and Not-for-Profit Commission (ACNC). They have set standards that govern how a registered charity must manage its activities and resources outside Australia. 

    This, in addition to the ATO's Overseas Aid Gift Deduction Scheme (OAGDS), enables Australian organisations to issue tax-deductible receipts for donations to their overseas aid activities. 

    These activities must be to support aid activities in countries that are declared as ‘developing’ by the Minister for Foreign Affairs.

    Donations to overseas charities not registered in Australia are not tax-deductible.

    How do I claim donations as tax deductions?

    As long as your donation is $2 or more, and you make it to a deductible gift recipient charity, you can claim the full amount of money that you donated on your tax return

    Section D9 on your tax return (Gifts and Donations) deals specifically with charitable donations, so that’s where you should record your donations.

    Are corporate donations to charity tax-deductible?

    Corporate donations to DGRs are tax-deductible. Businesses can claim the same benefits from donating that individuals do. Just like an individual donation, a corporate donation must be $2 or more in value to be tax-deductible.

    Claim for your donations – if you have made donations of $2 or more to charities during the year you can claim a tax deduction on your return. You don't even need to have kept receipts if you donated into a box or bucket and your donation was less than $10.

    As long as your donation is $2 or more, and you make it to a deductible gift recipient charity, you can claim the full amount of money that you donated on your tax return. Section D9 on your tax return (Gifts and Donations) deals specifically with charitable donations, so that's where you should record your donations.

    What donations are tax exempt? Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government.
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