Claiming donation tax credits can make a major difference to your personal tax position, so if you make donations in your own name, below are five key things to consider.
1. Donations must be more than $5 and you must keep valid receipts
A valid receipt should be officially stamped and include several key narrations including the name of the donor, amount, date, signature of an authorised person and a clear statement that the payment is an unconditional donation.
2. Donation tax credits only available for donations to donee organisations
Donee organisations include religious organisations, schools and kindergartens, medical research institutions and approved overseas aid funds. A list of approved donee organisations can be found on Inland Revenue’s website.
3. Personal donations can be claimed for up to four years from the donation date
Forgot to claim a donations tax credit from a previous year? Donation tax credits can be claimed up to four years from the year the donation was made, provided you were a NZ resident at the time.
4. Donation tax credits cannot exceed your own taxable income
The total donation tax credits you claim cannot exceed your taxable income for the year. In other words, individuals can claim the lesser of 33.33% of the total donations made, or 33.33% of their taxable income.
5. Donation tax credits can be shared
If donations are made jointly between spouses or partners, the balance up to the maximum donation amount can be claimed in either income tax return, regardless of whether the receipt is in one person’s name or in their joint names. So, if one individual is unable to claim the full amount of donations, their partner is eligible to claim the remainder, provided it does not exceed their taxable income.
For advice or assistance with getting the most out of your donations, please contact your local BDO adviser.