A tax deduction is something you claim in your tax return that reduces your assessable income, meaning you pay less income tax and therefore get a bigger tax refund (or reduce your tax bill).

For a donation to be tax deductible, it must be for $2 or more and made to an organisation that is ‘endorsed’ by the Australian Tax Office (ATO) as a Deductible Gift Recipient (DGR). It must also be a genuine gift, you cannot receive any benefit from the donation. If you receive something in exchange for the donation (e.g. a raffle ticket, items, entertainment or food) then it doesn’t qualify as a tax deduction. The Tax Office defines this as a transaction where you receive a good or service in return for the money donated.

Organisations have to apply to the ATO to get DGR status, and there are a majority of registered charities that don’t have DGR endorsement. Not being able to offer a tax deduction for a donation as a DGR is not an indication that the charity is illegitimate or that its cause isn’t valuable. DGR endorsement is just a tax concession that some charities have applied for and are entitled to.

For some people, being able to claim the donation back on their personal tax return is important in making a decision to donate, but for others it isn’t. To determine if a charity has DGR status, you can visit the ACNC Charity Register.

Author: Natasha Woodvine

Email: natasha@faj.com.au