Everyone hates tax time, and as it rolls around each year, it's only natural to think about how to minimise the financial blow. Did you know that you can claim a full tax deduction for donations over $2? Being charitable and generous has its benefits! Tax deductible donations will help reduce the amount of tax you owe.
How does it work?
-If you donate money to a charity that is a certified deductible gift recipient (DGR) by the Australian Taxation Office, and get a tax receipt, then when you are filling out your tax forms you can claim that money back.
-Child sponsorship is a perfect example. For a donation to be tax deductible, it has to be considered a true gift, in that the donor gets no direct benefit. Child sponsorship falls into this category. If, for example, you sponsor a child through Action Aid Australia, at the end of the financial year you will receive a tax receipt that can be lodged with your tax papers and deducted from what you owe.
If this sounds good in theory, but you don't trust yourself to reach into your pocket each month, why not try a workplace giving program? Many employers offer their employees this option, which allows them to nominate their preferred charity, and then specify an amount they would like to donate on a monthly basis (or otherwise). This amount will then be deducted from their salary or wages on pay day.
If you don't see the money going or spend it yourself, then you won't miss it! And you'll still be able to claim it back come tax time in the exact same way - and through the exact same process - as if you facilitated the payment yourself. If you're interested in child sponsorship, why not use this system to make the monthly payments for you?
The best thing about tax deductible donations is that the money is all going to a worthy cause and benefitting those in need. Child sponsorship is a valuable donation that helps improve the living conditions and quality of life for thousands of impoverished children. But there are still many more that need help from the Western world.
