Most people one or other time in their lives donates money to a charity o their liking. Did you know that charity donations are tax deductible? If you donate money to a charity close to the financial year end, you will not have to wait very long to get your tax deductions backs. For those making a donation via NAB internet banking, you will also receive all your paperwork required for your tax deduction. Majority of salaries are usually taxed and is taken before it reaches your bank account.
For instance if your tax rate is say 20 percent, then you would have to earn 125 dollars for every 100 dollars that end up in your bank account. And in addition for every 125 dollars, 25 dollars is paid to the ATO. However, by donating money to charity, you are able to claim the back the tax that you paid on your donation, as long as the charity is registered in Australia as a DGR.
Putting in a tax deduction claim, means you are claiming money back from the ATO for expenses. Charity tax deduction reduced your taxable income as well as reduces the amount of tax you pay. Say for instance you donate $100 from your income after tax, you are then entitled to include $100 on your tax return and you can then claim $20 back that was paid on your salary.
No matter how much you donate to a charity, this will not affect your tax deductions. Any monies owing to you from the ATO will be credited or paid directly to you. The charity of your choice gets to keep the full donation, and you can claim it back after the 30th June when the financial year ends. At the end of each and every financial year, employees and company owners are required to prepare the income tax return, of which should include deductions for charity donations.
Whatever donations you have made to charity during the financial year, you need to retain your receipts as proof, along with any other tax return documents. The best way to claim your tax back quickly is to make your donations in June, and then in July claim your tax deductibles back.
The larger the donation, the bigger tax deduction, so make your money work for you before donating it. If you donate to a charity in December, this means you will have to wait around six months before claiming your tax back. If you have a large sum you would like to donate, then rather put it in a savings account and earn interest until June, then make your donation and claim your tax back in July.
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