TAX NEWS - June 2010

Australia Tax: Tax deductible donations - Give and receive before June 30

There's still time to make a charitable donation that will help a good cause, not to mention your tax return.

When Sugar, a dog so emaciated her hair was falling out, arrived at the RSPCA in Victoria, she weighed half what she weighs now. She's since been adopted and even sleeps in her owner's bed. And she's become one of the stars of the RSPCA's tax-time fund-raising plea.

The fund-raising manager for RSPCA Victoria, Yvonne Steiner, says there's a spike in donations at this time of the year. "As we know that people generally give to charities in the lead-up to the end of the financial year, our fund-raising appeal during this time is our biggest and allows our supporters to make a tax deductible donation," she says.

With only 3 per cent of funding coming from the state government, RSPCA Victoria relies on the support of the community to be able to continue to provide its animal welfare services, including providing veterinary, education and adoption services.

The RSPCA is not alone.

Charities all over Australia know that now is the time to target people who are getting ready to finalise their books for the end of the tax year on June 30.

The managing director of ARW Chartered Accountants, Adrian Raftery, says about 4.5 million people made a tax deduction claim in the 2007-08 financial year for donations.

"Charities enjoy a big influx of funds at the end of June each year," Raftery says. "The reason being is that people can lodge their tax return in July and get back their refund quickly. Make a donation on July 1 and you have to wait 12 months before you get the benefit back."

He warns, though, that it's a common mistake to think people get a dollar for dollar refund on donations.

"Unfortunately you get the tax deduction back at your marginal tax rate," Raftery says. "The majority of the population are in the 31.5 per cent tax bracket, so if they donated $100 then they get back $31.50 in tax at the end of the year."

He says some people feel bad claiming a deduction. "I remind them that it is a legitimate deduction and that they should claim back the tax and donate some more money to their preferred charity," Raftery says. "The net outlay after tax is the same to them but the charity wins out with more funds."

The ATO website says there is no limit to any cash contribution to a charity - the most common donations were amounts between $251 and $5000.

People who donate should keep receipts and check their chosen charity is an approved deductible gift recipient in order to claim a deduction, the ATO website recommends. A complete list can be downloaded from the deductible gift recipients page at abn.business.gov.au.

However, the chief executive of Philanthropy Australia, Gina Anderson, says that even though this time of year is one of two during which spikes in giving occurs (the other is Christmas), most people don't donate because they get a tax break out of it. They give because they're focused on their finances as they make their tax returns.

Most people, she says, donate to a cause that has affected them.

"It might be that the council has cut down a tree so they become active in the environmental space, or someone whose family member has had a disease or they have had a great opportunity themselves and want to give other people that same chance," she says.

She urges anyone thinking of donating at this time of year to choose a charity they care about.

For more information on the RSPCA's current appeal, see second-chance.com.au.



Year to October 2009

52,775 eligible charities — up 2.1 per cent
26,549 gift recipients — up 5 per cent
2007-08 tax year, $2346 million claimed — up 24.5 per cent