In these turbulent and uncertain times, wouldn’t it be great to help yourself whilst helping others? You can do this by collecting tax credit on donations. Tax credit is a value that you can subtract from any income tax that you owe. When you donate $5 or more to an IRD approved organisation, you are one step closer to claiming your tax credit.
Any eligible person can claim a credit worth 33.33 percent of their total donations or 33.33 percent of their taxable income, whichever is of lesser value. You are able to split your donations with a partner or spouse if it totals to more than your taxable income. This would mean, you would claim the credit on donations up to your taxable income, and your partner would collect the remaining (up to their taxable income).
Who’s Eligible?
Credit can only be claimed by an individual and if you were a New Zealand tax resident during the tax year (April 1st to the 31st of March). You are also required to earn a taxable income within the year. You cannot claim a tax credit for donations on behalf of a company, partnership, or trust.
Donations suitable for the tax credit include:
Donations for state or integrated schools
Donations for tertiary education institutions
Donations to eligible community housing organisations
Donations to charities or organisations on the approved donee list.
Donations cannot be:
Directed to be made under a will
Made as debt forgiveness.
Directly benefit you or your family.
Where to donate
It’s crucial that the money you donate is used effectively to aid and uplift communities in need. ReliefAid is a local IRD approved organisation that you are able to donate to and claim credit for.
ReliefAid strives to assist those grievously affected by armed conflict and natural disasters. The organisation is completely independent and relies exclusively on donations. Established in 2015, they’ve been able to provide extensive aid to 250,000 people in Syria and Afghanistan. As the Ukraine conflict increases in severity with each passing day, ReliefAid has set up an emergency response aid for Ukrainians that have fled from their homes in search of safety. ReliefAid is working on the ground to provide shelter, cooking sets, and educational support for children.
You can support ReliefAid by donating on their website.
How to claim tax credit
Once you’ve donated, what’s the next step? Applying for a tax credit is a simple procedure if you have a valid receipt. A receipt for applications requires:
Your name or your spouse or partner's name
The amount and date of the donation
A clear statement that it's for a donation
Signature by an authorised person
The organisation's letterhead or its name and official stamp
The word 'copy' or 'replacement' if it's a replacement receipt.
If available, include the organisation's IRD number or registration number with Charities Services.
If you have a standard or early balance date a claim for credit should be made within four years following the end of the tax year in which the donation was made. In the circumstance of a late balance date, the claim for credit should be made within four years of the day after the end of your income year in correspondence with the tax year in which the donation was made.
Once you’ve gathered the necessary information simply register for a tax credit account on myIR. From there, attach your donation tax credit receipt with the required information and you are ready to submit.
At the end of the financial year, which is on the 31st of March, your tax credit will be calculated. The credit will either go towards your debt or straight into your bank account. The gift of giving has never seemed better!