Supporting a women’s led charity as an accounting firm is not just about giving back; it’s about encouraging empowerment and inclusivity in our local community. By backing Impact 100, it’s about getting involved and making a real difference in our community.
Here at Moore Markhams we would love to share our expertise on how to understand charitable giving and tax credits because often, this can become confusing on what is claimable or not. Getting this right, can result in positive tax benefits.
What qualifies as a donation, what sort of tax credits are you eligible for and how to claim:
In New Zealand a donations is; $5 or more made under your individual name to any approved charity, organisation or school* provided the payment did not deliver any direct benefit to you or your family and was not bequeathed by will. Donations made are eligible to receive tax credits of 33.33%.
So, when you donate $1,000 to Impact 100, you are entitled to receive a tax refund of $333.30.
Donations are only claimable to the extent of your taxable income or lessor during the relevant tax year.
You can submit donation receipts within four years of making the payment, but remember, any tax credits apply to the year of the donation, not the year you submit the receipt.
To claim a donation rebate, this can be done via logging into your MyIR account.
Otherwise, if you have a registered tax agent, they can claim it on your behalf.
You must have the original receipt for every donation you want to claim.
To qualify as a valid receipt, the receipt must be in your name, your spouse or partners name. It should display the amount and date, signed by an authorised person and on the organisation’s letterhead or with its name and official stamp. Additionally, it needs to include the organisation’s IRD number or the registration number with charities services.
* Only payments deemed donations to schools and PTAs qualify as donation and will be subject to tax credits. Payments for tuition, extra curricular activities and boarding are not donations. For clarity contact your school directly.
Is it better to donate via a company rather than personal for tax benefits?
Companies can make donations however they are accounted for under the ordinary deduction rules limited to taxable income. That means donations made by a company are recorded as expenses which reduce the taxable income thereby lowering the overall tax liability. Companies are not eligible to claim a tax credit.
If you donate under your personal name, you will receive a cash refund straight away upon filing your annual tax return. If you donate through a company, your total tax to pay will be less.
Moore Markhams Otago:
Moore Markhams Otago have a team of expert advisors that are well-equipped with the knowledge to tackle charitable giving and tax credits claims.
If you have any questions regarding donations contact your tax agent or get in touch with Prasheila or Heath.
