Can you claim a tax deduction for donating unwanted Christmas presents?
Stuck with unwanted gifts after the silly season and want to offload them to a good cause like the Salvos or Vinnies? It's a generous move but can you claim it as a tax deduction?
The simple answer is no, but there are a couple of minor exceptions.
Unfortunately, the Australian Taxation Office does not allow individuals to claim tax deductions for any material donations (other than property) made to charities, despite how generous they may be.
There are three simple guidelines that must be met for a donation or gift to be allowed as a tax deduction:
- It must be made to a Deductible Gift Recipient Organisation (DGR).
- It must be a gift or donation - meaning that you receive nothing material as a benefit for your gift or donation.
- The gift or donation must be of money or property (this can also include shares).
But the good news is, any donations over $2 that meet the conditions above can be claimed as a deduction on your next tax return. Not only will you have contributed to a worthy cause, but your tax refund will get a boost in the process.
What is a material benefit?
Many people often assume that money spent buying a ticket to win a lottery home or making a donation where you receive something small like a pen or notepad in return means that money can be claimed as a tax deduction. That is where the material benefit comes in.
Material benefits are personal benefits you receive for your donation such as:
- Raffle tickets
- Mugs, keyrings, chocolates etc.
- Fundraising dinner or event tickets
- Membership fees
- Payments where you have an understanding that the payment will provide you with a benefit - i.e. donating to a school building fund for placement on a school waiting list
- Gifts to family or friends
- Salary sacrifice donations
- Donations from a will
However, if you receive a small token for your item, such as a sticker or wrist band, that is not for sale, which is used to promote the DGR then you can still claim a deduction.
How to claim a monetary donation
Like any other tax deduction, you must have a receipt to claim it on your tax return. You must have made the deduction during the financial year that your tax return relates to and the recipient must be a Deductible Gift Recipient Organisation.
Answer yes to the above, and any donations you made can be included at section D9 - Gifts and Donations on your tax return.
If you are unsure of your charitable donations come tax time, it's best to seek help from a registered tax agent like Etax.com.au. They'll make sure you claim everything you're entitled to and help you avoid ATO troubles down the track.