Charitable donations are a great way to support causes you care about, and in New Zealand, they also come with the benefit of tax credits. Here’s everything you need to know to claim these credits.
What You Can Claim
In New Zealand, you can claim 33.33 cents for every dollar you donate to approved charities and organisations. However, there are a few conditions:
Minimum Donation Amount: The donation must be at least $5, and you must keep valid receipts.
Eligible Organisations: Only donations to approved donee organisations qualify. These include religious organisations, schools, kindergartens, medical research institutions, and approved overseas aid funds. You can find a comprehensive list on Inland Revenue’s website.
Eligibility Criteria
To claim donation tax credits, the following must apply:
Personal Claims Only: You must be claiming as an individual, not on behalf of a company, trust, or partnership.
Taxable Income: You must have earned taxable income during the tax year in which you’re claiming the donation.
Tax Residency: You must have been a New Zealand tax resident at any point during the tax year.
How Much Can You Claim?
The total amount you can claim in a tax year is the lesser of:
33.33% of Your Total Donations: This is the standard rate.
33.33% of Your Taxable Income: Your claim cannot exceed your taxable income for the year.
If your donations exceed your taxable income, you can share the tax credit with your spouse or partner. For example, if your total donations are higher than your income, you can claim up to your taxable income amount, and generally your spouse or partner can claim the remainder.
Donations to Schools
Donations made to most schools and parent-teacher associations are eligible. However, you cannot claim for:
Tuition or Private School Fees: These are not considered donations.
Exam Fees and Attendance Dues: Costs directly related to educational services, such as exam fees or attendance dues, are also excluded.
Materials and Voluntary Activities: If you paid for materials your child used for a project they brought home, or for costs associated with voluntary activities not part of the school curriculum, these payments are not claimable.
For more details on payments to private schools, refer to the IRD’s fact sheets.
Splitting Donations with Your Spouse or Partner
If you and your spouse or partner made joint donations, you can split the tax credit. Even if the receipt is in only one name, the credit can be divided. Make sure to communicate this to your DC&A account manager.
4-Year Limit for Claiming
You have up to four years to claim a tax credit on donations. This period starts from 1 April following the end of the tax year in which the donation was made. Ensure that you submit all relevant receipts within this time frame to secure your credit.
Receipt Requirements
To claim a donation tax credit, you need a valid receipt for each donation. The receipt must include:
Be in your name, or your spouse or partner's name.
Show the amount and date of the donation.
Clearly state that it's for a donation.
Be signed by an authorised person.
Be on the organisation's letterhead or show its name and official stamp.
Show the organisation's IRD number or registration number with Charities Services.
Show the word 'copy' or 'replacement' if it's a replacement receipt.
For donations of $5 or more made over the phone, you need a receipt from the approved organisation. A copy of your phone bill is not sufficient.
Claiming charitable donations can significantly benefit your tax position while helping causes that matter to you. Always ensure your donations are to approved organisations, keep detailed records, and submit your claims within the allowed timeframe to maximise your benefits. For more details, visit the Inland Revenue’s guide.
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