One of the quickest and easiest ways to reduce your tax is by making donations to a charity. Donations are an ideal way to help a charity in need and are also a great way of lowering your tax bill. Every donation made to an approved charity that is over $2 is tax deductible. However, one cannot create a tax loss but making a large donation. Charitable donations are a great way to dispose of excess earnings towards the end of a financial year, as this not only reduces tax liability but also generates good will. As good as this sounds, one should have a sound understanding of the ATO rules for charity donations. Giving to charity always makes people feel good; however, if your tax claim is turned down, you may not feel so good about making donations.

There are rules that apply when donating money to an approved charity. For example, you may not claim a tax deduction if you receive an item when you donate to charity in Australia. Say for instance you purchase a ticket to a charity function or you receive a chocolate for your donation; you will not be able to make a tax deduction claim. The ATO will not deem the purchase of raffle tickets or donations for school renovations as deductible gifts. When you donate to charity in Australia, be sure to keep all your receipts, no matter how small the donation is. Bear in mind, if you donate regularly, this adds up and you can claim a substantial amount financial year end.

The way of ensuring that your donations are tax deductible, is to make sure that the charity is authentic and is registered with the ATO as a charity organization. Also be aware, that when making a donation to a charity that collects donations from door to door, or over the internet, not all of the money will be paid to the charity as some will be used as commission and put into advertising. Where possible make a donation directly to the organization by credit card or bank deposit. There are thousands of charities that compete for donations, so before donating, make sure the money is being used properly and is benefiting the cause you are supporting. Also check to see if the charity you are donating to, is actually receiving the donation.

There are some factors to take into consideration before making a donation, such as choosing worthy charity, checking if the charity is legitimate, check to see if your donation is tax deductible, find the best way to donate to the charity and if you find that there is a problem, then you need to lodge a complaint.