Diamond Accounting

Most people who donate are under the impression that a donation is always tax deductible.

However, donors can only claim tax deductions for gifts made to eligible gift recipients. Entities entitled to receive tax deductible gifts are called deductible gift recipients (DGRs). For a donor to claim a tax deduction for a gift, a gift must:

• be made to a DGR
• truly be a gift
• be a gift of money or property that is covered by one of the gift types, and
• comply with any relevant gift conditions.

When claiming tax deductions for gifts, a donor needs to know:

• how much to claim, and
• when to claim the deduction.

Examples of payments that are not gifts include:

• purchases of raffle or art union tickets
• purchases of chocolates, pens, etc
• the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner
• membership fees
• payments to school building funds as an alternative to an increase in school fees, and
• payments where the person has an understanding with the recipient that the payments will be used to provide a benefit for the donor.

Tip: Ensure that when you are making a gift or donation that the organisation you are donating to is an eligible gift recipient.  If they are not a DGR, you will not be entitled to the deduction.