Edwina has donated to a drought assistance charity at the supermarket but doesn’t know the name of the charity. Can she still claim a deduction?
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Q. Edwina
I was going through my receipts in preparation for filling out my tax return this year and had a receipt from a supermarket where I made a donation to a drought assistance charity on top of paying for my groceries. When I looked at the receipt it had the date and amount of the donation but did not contain the name of the charity. Am I still able to claim a tax deduction for this?
A. Thanks Edwina. Your question serves as an important reminder for people to check that they have a record of any donation they are claiming on their tax return.
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Last year nearly two-thirds of the charitable claims that were adjusted by the Australian Taxation Office (ATO) were because the taxpayer could not prove they had made the donation.
That said, I don’t think you are going to have a problem in your situation.
If you look at your supermarket receipt, the description should read ‘GIFTDGR’ followed by some numbers.
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The DGR part explains that it is a deductible gift recipient, endorsed by the ATO. The numbers are the charity’s Australian Business Number, which you can enter into ABN Lookup to confirm the DGR status of the charity.
As long as your receipt contains this information, you will be able to use the receipt as evidence for your claim of a deduction.
Assistant tax commissioner Tim Loh said that around 4.2 million Australians claimed deductions for more than $3.9 billion in gifts and donations to charities in 2018-19.
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“Australians are a generous bunch, but not all gifts and donations are tax deductible,” Mr Loh said. “There are four main reasons your donation or gift may not be tax deductible.
“The first is giving to an organisation that is not endorsed by the ATO as a deductible gift recipient (DGR).
“The growth in online crowdfunding is proving that Australians are looking to be charitable online. Unfortunately, unless your donation or gift is made to an endorsed DGR it will not be tax deductible.
“We also see people donating directly to foreign charities and not-for-profits. Unless the organisation is a registered Australian DGR, then those donations are not tax deductible,” Mr Loh said.
“The second reason your donation may not be tax deductible is where you receive or expect to receive a monetary or personal benefit or advantage in return. We know Australians love raffles, and fundraising chocolate. Sadly, if you buy chocolate, a raffle ticket or an item from an op shop, this isn’t considered a tax-deductible gift.
“Thirdly, taxpayers must keep good records. Most organisations will usually issue you with a receipt, but they don’t have to. We will accept third-party receipts as evidence of a gift to a DGR, if the receipt identifies the DGR and states the fact that the amount is a donation to the DGR. However, if you made one or more donations of $2 or more to bucket collections conducted by an approved organisation for natural disasters, you can claim a tax deduction of up to $10 for the total of those contributions without a receipt.
“Charities and not-for-profits do good work all over Australia, so we want to make it easier for you to support the DGR of your choice. If you used the myDeductions tool in the ATO app to store photos of receipts throughout the year, you can simply upload your donation information to myTax or send them through to your agent. Otherwise, you can enter your donation information directly into myTax.”
Finally, some people incorrectly claim tax deductions for donations they intend to make in their will or claim for workplace giving that has already reduced the amount of tax paid in each pay period.
“While including a donation in your will is a great legacy to leave, testamentary gifts are generally not tax deductible,” Mr Loh said.
Do you regularly donate to charities throughout the year? Do you make sure to keep all your receipts so that you can claim a tax deduction? Why not share your thoughts in the comments section below?
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