Donation receipt – do I need one?
It’s been a tragic week with the NSW bushfires. Therefore, I thought it was a rather appropriate week to talk about donations, and the do’s and don’ts when it comes to claiming them in your tax return and whether you need a donation receipt.
Firstly for a donation to be tax deductible it must:
1. Really be a gift. The main thing to remember here, is that you can’t receive something for your money. Raffle tickets, pens, chocolates, the cost of attending fund-raising dinners and membership fees are all examples of situations where the ATO would class you as receiving something for your money, and therefore the donation would not be tax deductible. The only thing you can receive for your money is a sticker or a badge.
2. Be either a gift of money of more than $2, or an eligible gift of shares or property. The nuts and bolts of this point are – if you’re going to throw change in the donation tin, make sure it’s not less than $2 or you won’t be able to claim a tax deduction.
3. Comply with any relevant gift conditions. For example, some organisations only have Deductible Gift Recipient status for a certain time period. If your donation is not made in this time then it is not tax deductible. Disaster relief appeals are normally subject to these type of time restrictions.
4. Be a deductible gift recipient (DGR)
A deductible gift recipient (DGR) is an organisation that is entitled to receive tax deductible gifts. DGR’s are:
- Listed by name in the tax law, or
- Endorsed by the Tax Office.
To check whether an organisation is a deductible gift recipient (DGR) visit the Australian Taxation Office here:
“Do I need to keep a receipt?”
Times are tough at the moment, people are doing it hard, and not-for-profit organisations are not getting the funds they need to help others. Throw natural disasters in the mix, and it is no wonder we are seeing not-for-profit organisations everywhere taking to the streets with the donation tins desperately trying to raise money.
In response to this, the tax office now has special rules when it comes to keeping receipts for donations made to natural disaster appeals. They allow the following:
“If you have made one or more donations of $2 or more to bucket collections conducted by an approved organisation for an approved bucket appeal, you can claim a tax deduction equal to your donation without a receipt if your donation is $10 or less.”
The ATO has a list of approved organisations on their website.
As for any other types of donations, unfortunately you will need a receipt.
Some people seem to believe that they can claim up to a certain limit of small donations without receipts. Trust me, this is a fairy tale or story that someone has made up, and it’s not true! You must have a receipt.
If you were unable to obtain a receipt then I suggest you do the following:
– Record the entry in a diary with the date, the place that you gave the donation, the amount, and who you gave the donation to.
– If you made the donation via EFT or Visa then keep any relevant bank statements or visa statements that have details of the donation. In most cases, if you made the donation directly from your bank account, bank statements should be sufficient evidence if you write on the bank statements what the donation was for.
– Keep any other information that you were given at the time of making the donation such as a sticker or badge that will help prove you made the donation.
– Document clearly why you were unable to obtain a receipt.
If you were unable to obtain a receipt, I suggest you read Australian Taxation Office Practice Statement – Substantiation of Deductions. This will give you guidance on what type of argument you will need in case of an audit where you’re missing receipts.
Lastly, you will often hear me say that the decisions we make in life should not always guided by the monetary benefit we will receive in return. Nothing rings truer than donations for sudden disasters such as fire and flood. Who cares if you don’t get a tax deduction for a $20 donation. If it helps give one family who has lost everything a bed to sleep in or food on the table, then in my eyes it is absolutely worth it!
Did you like this article? Why not download our free book!
Online Tax Returns
This tax book includes information on:
- the top mistakes taxpayers make when lodging their own tax online through e-tax and other online return providers
- get tips on avoiding an audit
- get tips on how to maximise your tax refund
This information, facts, insights and ideas (“Content”) are for general informational purposes only and nothing contained in it is or is intended to be, construed as advice. It does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon or treated as a substitute for specific or professional advice. You should, before you act or use any of this Content, consider the appropriateness of this information having regard to your own personal objectives, financial situation and needs. It should not be your only source of information but should be treated as a guide only. You should obtain your own independent professional advice before making any decision based on this information.
In no event will we be liable for any loss or damage including and without limitation, indirect or consequential loss or damage, or any loss or damage howsoever arising from, out of, or in connection with the use of this Content.