Are You a Tax Time Donor?
5 June 2018 at 7:40 am
Tax time is an opportunity to consider what you have done for others in the last year, writes Sally Cunningham from Frontstream.
If you have seen any commercial TV lately you’ll know it’s close to tax time. Car dealerships are having run-out sales, department stores are slashing prices and charities are asking you to dig deep this winter and give to people in need.
I can’t advise you on a new car or other luxury goods, but I have thought about the benefit of giving to charities and the tax and or other benefits to be had.
The two most common ways to give money to charities as a donor (as opposed to a fundraiser) is a once off gift or as a regular donor. When it comes to your tax statement the way you give won’t make a difference within the financial year so long as you are giving to a registered Deductible Gift Recipient (DGR).
Charities work hard on their campaigns to recruit regular givers because these donors are viewed as highly engaged supporters as well as donors. By becoming a regular donor, charities can somewhat rely on future income as promised by these special supporters.
The trend in monthly giving is something charities have learned from the private sector as phone companies, health insurance providers and everything in between, as a standard, bill users monthly. They know we can’t afford to pay larger sums annually hence to reap greater amounts from working users we all sign up to monthly instalments.
Personally, I am a regular giver to a chosen charity – Greenpeace Australia. I signed up to $35 per month for two years, now this equates to $420 a year which I’ll happily be adding to my tax deductions in July. I’m keen to give and have always wanted to give more but knowing my habits I’m unlikely to give a one-off annual gift of $420 so giving regularly, monthly, is a way that I can commit to and afford to give more at an amount I’m comfortable with.
It’s still not the amount I should give according to “effective altruism” as coined by Peter Singer, whereby we should try to give 10 per cent of our income and place it in the hands of charities who can save the most lives. However, it’s more than I would ordinarily part within a once off donation. I always enjoy listening to Peter Singer and his message, and while I’m usually guilt-ridden for not doing enough, I am encouraged to give more and make more of an effort. My personal regular giving is a start and I appreciate that my homeland has a policy in place that offers tax trade-offs for donors, encouraging the culture of giving to credible organisations.
Should I give at tax time?
The short answer is yes, because we should all try and give what we can and when we can, and the Australian taxation system rewards our gifts in the form of reductions in taxable income.
A quick peruse of the Australian Tax Office website explains what to expect as donors. They specify that deductions for gifts are claimed by the person that makes the gift. For gifts of money, the amount of the gift must be over $2, which is fair enough and the donations we are talking about should be above $100 to impact more than taxable income levels.
A tax deduction for most gifts is claimed in the tax return for the income year in which the gift is made, and while the donation is 100 per cent deductible it’s not a 100 per cent “write off” against income earned. The end deduction varies depending on your income and gift of course, however, no matter how you look at it, it adds value.
Charities don’t mind when you give but they all always ask at Christmas time and tax time, because they know this is when their audience is most likely to make a once off donation.
The question for today is, do you want to give more? Does a once off gift suit you or are you better at regular giving? Either way tax time is an opportunity to consider what you have done for others in the last year, is it enough for your own expectations? For many, it’s a difficult question and the answer is different for all households, however, the culture of giving is commonplace in Australia and every gift counts and can be counted.