Crowdfunding donations this Christmas season

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12 Dec

Last reviewed December 2022

Crowdfunding platforms have, in recent years, become more popular amongst individuals around the world wishing to help each other out. Australia is no different and, as a result, various crowdfunding websites have evolved and become a reliable source of gifts and donations across the country.

Coming up to the Christmas season, you may be thinking about donating to a charity via a crowdfunding website. The tax consequences may differ depending on the way you choose to donate through crowdfunding, and the following is designed to help you navigate this process.

Donating money

Some charities do use crowdfunding websites to raise funds for specific drives and benefits. For an amount to be tax deductible, the recipient must be registered by ACNC and endorsed by the Commissioner of Taxation as a deductible gift recipient (DGR).

Even if you have paid an amount to a DGR via a crowdfunding website, it does not automatically make the payment tax deductible. Sometimes, the crowdfunding pages state that the contribution is being made to general funds of the recipient for disbursement, which would make it a tax-deductible donation. However, in certain circumstances, a specific drive or benefit may not have received specific DGR status.

Usually, the charity will tell you before you make the donation. However, as crowdfunding websites are not necessarily regulated, particularly overseas websites, it may be a lie. To be assured that you are making a legitimate donation, review the DGR lookup website. The search function on that website gives you the ability to find the charity you are donating to.

Making a pledge

Making a pledge does not necessarily mean that you have made a deductible donation. Many crowdfunding pages are contingent on hitting a set figure before your pledge turns into a donation. In this case, you may not actually be donating at all; even if your credit card has had a charge "reserved" from the crowdfunding website.

Also, as pledgers in certain circumstances may be able to get a refund or cancel their pledge, any amount will not be considered a donation until such time as you are notified as such.

If you require any further verification of the items listed above before you make a Christmas donation, please do not hesitate to contact us.

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