Author Archives: experttaxadmin

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Gifts and donations

You can only claim a tax deduction for gifts or donations to organisations that have the status of deductible gift recipients (DGRs).

 

The person that makes the gift (the donor) is the person that can claim a deduction.

 

What is a DGR?

 

A deductible gift recipient (DGR) is an organisation or fund that registers to receive tax deductible gifts.

 

Not all charities are DGRs. For example, in recent times crowdfunding campaigns have become a popular way to raise money for charitable causes. However, many of these crowdfunding websites are not run by DGRs. Donations to these campaigns and platforms are not deductible. 

A deductible gift recipient (DGR) is an organisation or fund that registers to receive tax deductible gifts.

 

Not all charities are DGRs. For example, in recent times crowdfunding campaigns have become a popular way to raise money for charitable causes. However, many of these crowdfunding websites are not run by DGRs. Donations to these campaigns and platforms are not deductible.

 

When a gift or donation is deductible

 

To claim a tax deduction for a gift or donation you make, it must meet the following four conditions. The gift or donation:

 

  • must be made to a DGR
  • must truly be a gift or donation – that is, you are voluntarily transferring money or property without receiving, or expecting to receive, any material benefit or advantage in return. A material benefit is an item that has a monetary value
  • must be of money or property – this can include financial assets such as shares
  • must comply with any relevant gift conditions – for some DGRs, the income tax law adds extra conditions affecting types of deductible gifts they can receive.

To claim a deduction, you must have a record of your donation such as a receipt.

 

If you receive a token item for your donation you can still claim a deduction. Token items are things of no material value that are used to promote the DGR, such as lapel pins, wristbands and stickers.

 

You can claim the deduction for your gift for the income year in which the gift was given.

 

Bucket donations

 

If you made donations of $2 or more to bucket collections – for example, to collections conducted by an approved organisation for natural disaster victims – you can claim a tax deduction for gifts up to $10 without a receipt. To claim contributions of more than $10, you need a receipt.

 

What you can’t claim

 

You can’t claim gifts or donations that provide you with a personal benefit, such as:

 

  • raffle or art union tickets – for example, an RSL Art Union prize home
  • items such as chocolates, mugs, keyrings, hats or toys that have an advertised price
  • the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner. You may be eligible to claim a deduction as a contribution if the cost of the event was more than the minor benefit supplied as part of the event.
  • club membership fees
  • payments to school building funds made in return for a benefit or advantage – for example, as an alternative to an increase in school fees or placement on a waiting list
  • payments where you have an understanding with the recipient that the payments will be used to provide a benefit to you
  • gifts to family and friends, regardless of the reason

 

You can’t claim a tax deduction for donations made to social media or crowdfunding platforms unless they are a registered DGR.

 

Example – material benefits where a deduction can’t be claimed

 

John is an office worker. Each year his workplace gets involved in the Daffodil day appeal to raise money and awareness for the Cancer Council. John buys a teddy bear toy on Daffodil Day at a cost of $30.

 

John can’t claim a deduction for the cost of the toy as he has received a material benefit in return for his contribution to the Cancer Council.

 

Contact Expert Tax on 0449 952 855 or 1300 869 829 for assistance with lodgement of your tax return.

 

 

Popular Cryptocurrency Related Tax Time Questions

 

Are cryptocurrencies taxed in Australia?

 

Yes, the Australian Tax Agency (ATO) has issued official guidance confirming that cryptocurrency is taxed as a capital gains asset which means you have to pay tax every time you trade, sell or use crypto to pay for goods/items.

 

Do I need to file taxes even if i made a loss?

 

Yes. It doesn’t matter if you only made losses, you still have to report it on your annual tax return. Any losses you report will reduce your crypto taxes in the future, therefore it is beneficial to declare losses.

 

How are capital gains calculated for crypto trades?

 

You must use Fist In First Out (FIFO) for calculating your crypto taxes. This means the coins you buy first are also the first ones to be sold.

 

Are crypto to crypto trades taxed?

 

Yes. Any exchange of cryptocurrencies is also a taxable event. For ex. if you exchange Ethereum for Cardano, the Australian Taxation Office (ATO) will treat this as a sale of Ethereum at the market price of the Cardano you received.

 

Do I have to pay tax if I transfer crypto from one wallet to another?

 

As long as you own both wallets there’s no tax to pay on transfers. However, you still must keep track of the original cost of the transferred coins and have sufficient proof of it for future reporting.

 

Expert Tax can help in reporting Crypto Capital Gains on your tax returns. Contact us on 0449 952 855 or 1300 869 829 for further assistance.

 

 

 

 

Taxable payments annual report (TPAR)

If your business makes payments to contractors or subcontractors, you may need to lodge a Taxable payments annual report (TPAR) by 28 August each year.

 

The taxable payments reporting system aims to create a level playing field – to prevent dishonest operators from gaining an unfair advantage over the majority. The information we collect in the TPAR allows us to identify contractors who are not meeting their tax obligations.

 

You need to know about TPAR if your business provides any of the following services, even if it’s just part of the services you provide each year:

 

  • building and construction services – this category is very broad; it includes plumbing, architectural, electrical, plastering, carpentry, engineering, and a wide range of other activities (for full list, see Examples of building and construction services)
  • cleaning services – this includes interior and exterior cleaning of structures, vehicles, machinery and cleaning for events.
  • courier services or road freight services – this includes delivery of items or goods (such as parcels, packages, letters and food) by motor vehicle, bicycle or on foot, the transportation of freight by road, truck hire with driver, and road vehicle towing services.
  • information technology (IT) services – this includes writing, modifying, testing, or supporting software to meet a client’s needs, whether on site or remotely through the internet
  • security, investigation, or surveillance services – this includes patrolling and guarding people, premises or property; watching or observing an area and monitoring security systems; and investigation specifically related to security and surveillance, not just information gathering.

The TPAR details payments made to contractors for providing services.

 

Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships, or trusts.

 

The details you need to report about each contractor are generally found on the invoice you should have received from them. This includes:

 

  • their Australian business number (ABN), if known
  • their name and address
  • gross amount you paid to them for the financial year (including any GST).

 

ATO may impose penalties for late or non-lodgement of TPAR.

 

Contact Expert Tax on 0449 952 855 or 1300 869 829 for lodgement of TPAR for your business.

 

 

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