Most taxpayers know that both donations of $2.00 and greater, and donations of around $10 to “bucket drops” for emergency relief funds, are deductible. To be able to claim a tax deduction for a donation or gift, the recipient must be a “deductible gift recipient” (DGR). To check if they are refer to ABN Lookup
Being a registered DGR is not the only condition that the ATO considers when deciding whether a donation is tax deductible. Other relevant factors are the nature of the donation and that it is a VOLUNTARY transfer of assets from the donor to recipient.
If the taxpayer receives something in exchange for their gift or donation (e.g. pens, stationery, bandanas) they cannot claim a tax deduction for their donation. This is the case even if the recipient is a DGR.
It is important to remember that to qualify the gift must be voluntary and that there is no “material benefit” to the donor. Some of the relevant material benefits and advantages detailed by the ATO are as follows:
- Chocolates, pens, etc
- Art union and raffle tickets
- Attendance costs for a fundraising dinner, even if the ticket price exceeds the value of the meal provided
- Membership fees
- Payments to school building funds where they are compulsory or, are made as an alterative to an increase in school fees
- Payments where there is an agreement that the recipient will provide a benefit to the giver
A deduction for a gift or donation cannot add or create a tax loss, however, the tax deduction for the donation can be spread over a period of five financial years by using the “Election to Spread Gift Deduction”.
Refer to the following link or contact our office for further information.
Gift or Donations on ATO Website
Election to spread gift deduction form
