Charitable donations: What can and can't be claimed on tax

Charities will be ramping up their fundraising efforts this week so that small businesses and individuals can claim the tax benefits associated with their donations as the financial year draws to a close.

Samantha Harris has helped Make A Wish Foundation earn more than 12 thousand dollars with her Aboriginal inspired design. Source: NITV News

Having a charitable conscious is central to Yoobi's business structure.

The stationery company's co-founder Lance Kalish says it helps with company morale.

"One of the amazing things that I think would compel any company to give is the environment and culture it creates for the company's employees. So that has created an absolutely unique company culture that I think has kept our employees not only passionate about coming to work every single day but passionate about the brand when they go out and act as ambassadors of the brand as well."

Yoobi co-founder Lance Kalish and Ido Laffler Source: SBS World News

Mr Kalish's business partner, Ido Laffler says the company donates a product to a charity, for every one sold, and still turns a profit.

"The impact that product has is affecting the community that we've chosen to serve. Today with Yoobi, we've been able to provide free school supplies to over 2.5 million kids in the United States, and we'll be providing free school supplies to over 25,000 kids in Australia and we've just started."

While it is one of a growing number of socially responsible companies, fewer individuals are giving to charity.

The NAB Charitable Giving Index fell one per cent over the year to February.

NAB Charitable Giving Index Source: NAB

Those who are giving, are giving less with the average donation falling by $5 to $352 in the past year.

NAB Chief Economist, Alan Oster says subdued wages and high levels of household debt are curtailing donations.

"What we see is a pretty broad-based reduction in charities. We've been doing this since 2011, this is the first time that charitable giving over the last 12 months is negative."

Mr Oster adds, donations to humanitarian services, like earthquake relief fell the most, followed by medical research, but charitable lotteries, rose.

"People are prepared to give to a charity if they've got a chance of winning something at the other end."

NAB Charitable Giving Index Source: NAB

John Kalachian, Accountant at Fortis Accounting Partners says charitable lotteries are not tax deductible.

"We can't claim anything we receive something in return for such as dinners, raffles, chocolates, whatever it maybe."

Mr Kalachian says many donations above $2 can be used to reduce taxable income, they just need to meet the criteria set out by the tax office.

"The charitable organisation needs to be registered, it also also needs to have a deductible gift recipient status, which means, when we give the donation, we can go ahead and claim the deduction on it."

And remember... hold onto your receipt.