- March 23, 2020
- Posted by: wsme_admin
- Category: Income Tax, Tax Credit
A tax credit is able to be claimed on donations made to organisations and charities that are registered on Inland Revenue’s (IRD) list of Donee Organisations.
The amount of the credit is one third of the amount of the donation, and is limited to the amount of a person’s taxable income. The claims process is straightforward; donation receipts can be uploaded to a person’s online ‘MyIR’ account, and they are processed by IRD at the end of the tax year. However, as with many tax rules, there can be complexity.
The Income Tax Act 2007 requires a donation to be a “…gift of money of $5 or more…”, but there is little guidance on the meaning of the phrase. It is generally understood to require the gift to be of money and not goods or services. However, confusion arises because monetary gifts can take various forms. A dispute on the issue has been making its way through the Courts.