One that a number of us do as we go about or lives is occasionally give a helping hand to people in need. This may come in the form of manpower or it may be a monetary contribution to aid a specific cause.
One person gives freely, yet gains even more; another withholds unduly, but comes to poverty. – Proverbs 11:24
Being a Christian, one thing that I do on a regular basis is tithe. Admittedly so, it may not be at 10% but a certain percentage of what I earn does go towards the Kingdom.
If it’s a monetary contribution that you make towards an organistion such as a church or non profit such as UNICEF to help devastated populations such as Vanuatu in the the aftermath of Cyclone Pam, you can claim a tax credit on your donations.
Charitable organisations such as the couple mentioned above operate in such a way that they receive tax exemptions and how exactly that works for them, I am not 100% sure of. However, one thing that I am sure of as someone who makes donations of $5 or more to such organisations is the entitlement to a tax credit. At present as per Inland Revenue’s (IRD) website, you can claim the lesser of:
- 33.3333% of the total donations you’ve made, or
- 33.3333% of your taxable income.
How to claim a tax credit
The process of claiming a tax credit is pretty simple and straight forward. The first and most important thing that you need is a receipt from the donee organisation (that meets Inland Revenue’s minimum requirements) and a completed Tax credit claim form (IR526) where you will need to provide basic information such as your IRD number and bank account details.
In a number of instances, the more established donee organisations will provide you with a receipt in April to cover all donations made in the previous financial year. If you are making a one off donation and would like a receipt there and then, there is no harm in asking for it.
For more information on donations tax credit claims and to download the form, visit: https://www.ird.govt.nz/income-tax-individual/tax-credits/
Bonus: Did you know that voluntary school fees are tax deductible and you are entitled to claim back 1/3 of those donations?