Donations & Gifts - When They’re Deductible (and When Not)

Every year, thousands of Australians generously donate to charities, community causes, or political organizations. While the intention behind giving is noble, many people assume that every donation or gift automatically leads to a tax deduction.

Unfortunately, that’s not always the case. The Australian Taxation Office (ATO) has strict rules about what qualifies as a deductible donation & gift. Misunderstanding these rules could mean missing out on legitimate deductions, or accidentally claiming something you shouldn’t.

In this blog, we’ll break down when donations and gifts are deductible, when they aren’t, and the common pitfalls to avoid.

When Donations & Gifts Are Deductible

To claim a deduction, your donation must meet the following criteria:

1. Given to a Deductible Gift Recipient (DGR): Only donations made to organizations that have official DGR status are tax-deductible. Examples include registered charities, certain health organizations, environmental groups, and educational foundations. You can check the ATO’s DGR register to confirm if the organization qualifies.

   
   

2. It Must Truly Be a Donation: A deductible donation is a voluntary transfer of money or property where you receive nothing material in return. For example, donating $100 to a registered charity with no benefit back to you is deductible.

   
   

3. Minimum Threshold: The donation must be $2 or more. Smaller contributions unfortunately don’t qualify.

   
   

4. Evidence Is Required: Always keep receipts for your donations. The ATO may ask for proof when you lodge your return.

When Donations & Gifts Aren’t Deductible

Not all generous acts qualify as deductions. Some common examples include:

• Raffle tickets or fundraising merchandise: If you buy a ticket in a charity raffle, or purchase chocolates, pens, or other merchandise, you’ve received a benefit—so it’s not deductible.

• GoFundMe or personal crowdfunding campaigns: Unless the campaign is run by a DGR-registered organization, donations to individuals are not deductible.

• Political party donations (with limits): Donations to political parties and independent candidates can be deductible, but strict limits and rules apply.

• Gifts to family and friends: Helping out loved ones financially doesn’t count as a deductible gift.

Common Mistakes People Make

1. Confusing generosity with deductibility: Just because you gave money doesn’t mean it qualifies.

2. Forgetting workplace giving: Many employers allow donations to be made directly from your salary to DGR organizations. This can simplify your record keeping and increase the tax benefit.

3. Not keeping receipts: Without proof, you may miss out on claiming legitimate deductions.

Donating is about making a difference, not just about the tax break. But when your giving does qualify, it’s worth claiming correctly.

👉 Unsure whether your donation is deductible? Precent can help you review your claims and ensure you’re getting it right, while maximizing your refund.