Donate to Charity = Lower Tax Bill and Help Your Favourite Cause

Looking for a quick and easy way to reduce your tax bill?

Australian tax payers can reduce the amount of tax they owe by giving a gift of more than $2 to an approved charity (deductible gift recipient). There is no upper limit on the amount of donations you can claim a tax deduction for – but you can’t use a large donation to create a tax loss.

Give Money to Charity
credit: VertaSource LLC & neal_mcquaid

Charitable donations have to be received by the charity by the end of June 30th to be counted in that years Tax Return so don’t leave your donation until July or August! Also make sure you comply with the ATO rules for charitable giving

Studies regularly show that people who donate money to charity feel much better about giving it away than if they had bought something for themselves with the same amount of money.

Giving Money to Charity

You can claim a full tax deduction for gifts of money $2 and over to approved deductible gift recipient charities – there is no upper limit.

If you donate money and receive goods or services in return, you can’t claim a tax deduction. For example if you get a chocolate bar, ticket to a charity dinner etc.

Do make sure you get an official receipt for your donation. It may not seem worth asking the Red Cross volunteer collector for a receipt for $5 but small frequent donations add up.

Giving Shares or Property to Charity

Shares valued at $5000 or less and bought at least 12 months before the gift was made, and property bought in the 12 months before donation can also be donated to charity.

Make Sure Your Money Isn’t Wasted & You’re Giving to a Real Charity

You may not be aware of this but if you give money to someone collecting for charity on the side walk, in a shopping mall stall or after clicking on an internet advertisement then most of your donated money could be paid to an advertising agency or commercial profit motived fund raising company as a commission.

The best way to ensure that all your money goes straight to the charity is to donate to them by credit card by calling their phone number or directly typing their website address into your internet browser and paying by credit card online.

Know where your money is going. Make sure your money is going right to the charity, and not through a middle man. Reputable charities have an expense breakdown, so you see how money is divided within the organisation. A good charity should spend at least 70-80% of donations on charitable activities and the rest on staff, expenses and advertising.

Choose the Charity you Donate to Wisely

I think that it’s better to give all your charitable donation money to one charity and make a big impact rather than giving small amounts to many different charities.

Pick one charity and give to it each year. Thousands of charities are out there. Are you passionate about fighting breast cancer? Look for a local cancer charity. Want to help the homeless? Give to a soup kitchen. Pick a cause that means something to you and stick with donating to that cause.

Check credentials. It’s easy to donate to big well known charities like the Red Cross or UNICEF and be confident that your money is going where it should.

However if you choose to donate to a smaller charity make sure it’s a registered deductible gift recipient Australian charity by going to Enter the charity’s Australian business number (ABN) or Charity Name in the search box. Scroll down to “Deductible Gift Recipient”. If the organisation is a DGR it will be displayed on screen.

My Chosen Charity

I choose to make my yearly charitable donation to the conservation charity Bush Heritage Australia: protecting land, water and wildlife as well as cultural heritage, for the future of all Australians.

Watch the video below from “Generous donation saves Australian bushland” a TV News story on ABC1’s 7:30 Report.

View the Australian Tax Office website fact sheet about Making tax deductible donations, call the personal tax enquiries hotline on 13 28 61 or speak to your accountant for more details and personalised advice about donating to charity.


17 responses to “Donate to Charity = Lower Tax Bill and Help Your Favourite Cause”

  1. I donate to several charities but not to reduce my tax bill. My favourite one is World Vision, where I have sponsored 2 kids for years. Another favourite is the Epilepsy association because my son suffered seizures when he was a baby.

    The problem with charity donations is that so many different ones exist and you simply cannot donate to all of them so it is best to choose a few that you like for some reason and support them.

    EDITOR: Don’t get me wrong, I don’t donate to charity for the tax benefits – that’s merely a bonus.

    I also do regular volunteer work for charities and non-profit associations which would have far more value than a $ contribution.

  2. I wasn’t implying that at all. I wish my tax bill was large enough and that I had excess profits that I could donate to charity to offset the tax bill but unfortunately I simply do not make enough. Maybe one day I will be in that boat and I will be able to pump more into charity.

  3. Charity begins at home, so start from today to donate for the noble causes, instead of doing unwanted lavish things

  4. Wonderful post. I think giving to others — no matter how much or how little — is always a great thing!

  5. My charity of choice is St. Jude Children’s Research Hospital in the U.S. I keep track of my monetary donations to them or anyone else, but I really need to start keeping track of other donations I make (clothing, appliances, etc). It probably won’t make much of a difference in my taxes, but every little bit helps. Even if there wasn’t a tax benefit, I would still donate money, items, and my time.

  6. I think charitable giving is a great option for businesses as well as individuals– but again, as Sire mentioned, it’s a really big problem trying to figure out which cause you want to give to when there’s so many charities out there!

    Which makes me think, does anyone know what the deal is with charity auctions? Do the companies who donate the goods get a tax benefit? What about businesses who purchase goods at a charity auctions? Seems like a good way of giving to multiple causes as a business…

    I seem to remember Crazy John mobile phones bought one of the units off that TV show, The Block a while back…

  7. I like how you can get a tax break for any donations that you make, but I think that it would be a lot betetr if people just donated without looking at the tax break. People should be donating all the time to help those in need. But thanks for sharing about yours. It is a good cause no matter how you donate.

  8. Excellent post. Donation’s should reflect something personal and important to the donor. It’s a good way of setting a good example for others and also getting the chance to meet and help others who can relate to what’s important to you.

  9. Hi, I am an Aussie living in China, we are running a fundraising event to help the Victorian Bush Fire Victims. hopefully we will raise a good amount of money. My conceren is who to donate it to, as so much money does not reach the victims that it is intended for, some keep 50-60-70%. There is a good US site that reviews and gives charities ratings depending on how much money they keep for administration purposes & how much gets to the intended people, research or animals etc. Does anybody know where I can find ont who are “the Best” charities in Australia & specifically for the bush fire victims in this case. Keep on donating CK

  10. […] Make sure you prepay membership fees for unions & professional associations and make any charitable donations just before the end of the financial year (June 30) so you can claim a…. […]

  11. I, for one, think that this is a great idea. The world really would be a better place for all of us if we’d all chip in to the charities that are most meaningful for us.

  12. These are the agendas adopted by celebreties and rich people to protect themself and their money going to tax department. This is the smart way to save money. I was reading in newspaaper that one celebraty annonced to donate 100,000 in charity, but end up in donating 15000. That was only for publicity.

  13. How much do you get back from tax?
    What is the percentage that you get returned ?

  14. Every dollar you give can be claimed back as a donation when you put your return in. You will get back every dollar that you give. If you have paid enough income tax you will get a refund including the amount of donation money you have given. So give your refund to charity!!! If you have not paid enough, the donation deductions go towards the outstanding debt to the government. This is why the rich and famous do it, they don’t have employee’s paying as they earn. I donate 20% of my income regardless, but alas I’m not rich and famous!

  15. Sadly, it’s untrue that every dollar you give you get back. I wish that was the case. But in Australia when you give say a $50 donation you claim it in your tax return so the real cost to you after tax is…

    If you are in the 30% tax bracket it costs you $35 after tax
    If you are in the 37% tax bracket it costs you $31.50 after tax
    If you are in the 45% tax bracket it costs you $27.50 after tax

    EDITOR: advertising links and promotion for Ash’s business were removed from this comment

  16. I am in a situation where if I dont donate, I will have to pay extra tax to Canberra. So rather than my extra taxes being used for purposes by politicians whom I dont trust, I love donating to a wide range of wildlife and social justice charities. Taxpayers have so little that they can claim back these days, so that tax-deductible donations are a great way to help others and at the same time, oneself!lol

  17. I am in the same situation, but I’m confused by Ash’s comment… The example on this page towards the bottom suggests that the gift is fully claimable? as per the ato site….

    “Example: Dominic’s assessable income in his tax return for 2006-07 is $15,000. He has donated $20,000 to a DGR during that year. He has no other income or deductions in his tax return.

    The tax deduction he can claim for his gift is limited to $15,000. This is because a deductible gift cannot add to or create a tax loss.

    Dominic’s taxable income therefore becomes nil and the excess $5,000 from his gift cannot be carried forward to a later tax return as a tax loss”

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles