Nothing brings out the warm feelings of goodwill like making a donation or gift to a deserving charity. It doesn’t hurt that these donations also help your hip pocket come tax time.

Every person and entity, whether an individual, trustee of a trust, partnership or company, is entitled to deduct donations and gifts of money or property of $2 or more made during the year.

To claim the donation or gift, the recipient must normally be in Australia and have Deductible Gift Recipient (DGR) status.

A DGR is an organisation or fund that registers to receive deductible gifts. It is important to note that not all charities are DGRs, so check the organisation’s status, particularly if the gift is of significant amount.  ABN Lookup acts as a register of DGRs.

It may sound obvious, but a gift must be given without anything in return. If you get something in return, then it is not able to be classified as a gift.

You can also gift property but with certain conditions, such as having held the property for at least 12 months and its value being greater than $5000.

Gifts to registered political parties, independent candidates and members are also deductible, up to a limit of $1500 per year. This also includes political party membership subscriptions.

While you can claim most donations and gifts, there is a limit. You won’t be able to claim certain items such as art union tickets, attending fundraiser and dinners, payments to school building funds, gifts to family or friends or any donations made under a will, to name just a few.

You also can’t have these deductions lead you to a tax loss. However, your accountant can spread these deductions out in instalments, chosen by the taxpayer, over a period of five years, so the deduction is not lost.

And as for that $2 you tossed into the bucket? You can deduct what is classified as bucket donations without substantiation up to a total of $10 per year.


Karen Peall is the Executive Manager of Lyons Judge Bundaberg and has more than 20 years’ experience in accounts and taxation.