Here's Why Claiming Your Donation Tax Credits is Good News for Charities
Imagine being able to make donations to help your favourite charity with money you didn't know you had!
When you make a donation from as little as $5 to your child's school, your church, or any of the wonderful charities we have in New Zealand, you're entitled to a tax credit from IRD for 33% of the amount you donate. And that's money you could use to make even more donations!
There are some requirements to be met in order to qualify for a donation tax credit, but here's how simple they are:
- You must have a receipt that acknowledges your payment as a 'donation' and not as a ‘fee’
- Your donation receipt must include the name and details of the charity, school, or church
- The charity, school, or church must be a recognised charity or education facility (aka an approved done organisation)
- Your donation was made within the last four tax years
- Your total donations mustn't exceed the income you've earned
How does a donation tax credit work?
Donations you make are considered to be made from your after-tax income, or your 'net' income. When you make a donation, IRD recognises and supports your generosity by basically repaying you some of the income tax you’ve already paid on the money you donated; the money for the tax credit is not taken from the school, church or charity, but from your tax you have already paid to IRD.
How much is the credit? 33% of your total donations in most cases. There are heaps of different tax rates here in NZ and IRD realises that. So to make donation tax credits easier and more accessible for everyone, IRD decided on simple 33% rebate for everyone.
A bit like claiming for a tax refund, you file a claim for your donation tax credits annual at the end of each tax year. That’s because IRD need to assess your DTC claim against your total annual income and tax before they can issue any credits.
The best time to file your DTC claim is when a new tax year kicks off in April each year – the earlier you get your claim in, the earlier it can be processed and you can get paid!
Oh, so the money comes from IRD and not from the charities?
Sure does! Charities (and churches, community organisations, and schools) still keep 100% of the money you’ve donated to them.
Tax credits for donations aren't a new thing, but the way they work has been reviewed and refreshed in recent years. Previously, tax credits for donations were much less – they were capped at $333 per year no matter how much you donated. A big push to change this was driven by some of the country's largest individual donors, and thankfully all Kiwis can now benefit from this change, too.
New Zealand is a country made up of some of the most generous people in the world. We sit closely behind the US in terms of the amount donated as percentage of our GDP. Canada follows closely behind us. And currently less than a third of these generous people claim their donation tax rebate.
If everyone was to claim their donation tax rebate (including the two thirds that don’t already), imagine the difference we could make to our communities!
How do I claim my donation tax credits?
If you have qualifying donations that you could make go even further with a donation tax credit, there are a couple of options to go about it. You can either DIY your DTC directly with IRD, or you can have it handled by the team here at WooHoo.
If you're already a WooHoo customer, just add your donations and supporting receipts to My Donations in your online WooHoo account. Our specialist team will compile all of your donations into one claim and process it on your behalf.
Not a customer yet? Apply now to join us and we'll handle your DTC claims quickly and easily on your behalf.
On average, generous WooHoo customers get over $300 back each year by claiming their DTCs. Making a difference without costing you more money? It's the new way to donate more!
Have a question about donations or donation tax credits? Get in touch.
Giving is easier than ever for everyone thanks to EasyGiving
Are you missing out on donation tax credits because you don’t have your donation receipts? Donate to your favourite charity using EasyGiving and get automatic receipts every time you donate!
EasyGiving gives you the power to make every donation go even further. That’s because all of EasyGiving’s charity partners are Registered Charities and approved donee organisations, and qualify for a 33% donation tax credit to be issued for every donation of $5 or more.
And it's not just donors that EasyGiving looks out for. EasyGiving charity partners benefit from easy, fast, and hassle-free donations because there's no traditional admin involved for them to receive their donations. EasyGiving automatically processes their payments and issues their donation receipts so that charities can dedicate their precious time and resources to what they do best – supporting their causes.
And by enabling generous Kiwis to access their donation tax credits at IRD quickly and easily, EasyGiving charities have the chance to receive even more help from their supporters. It's a win-win!