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I want to make a donation to the Queensland Flood Relief Appeal, is it tax deductable?

I am pleased to hear that you have opened your heart and wallet to this important cause.  It never ceases to amaze me just how powerful Mother Nature is and how helpless we truly are when we are

I am pleased to hear that you have opened your heart and wallet to this important cause.  It never ceases to amaze me just how powerful Mother Nature is and how helpless we truly are when we are exposed to it wrath.

Be it the Australian Tsunami of 2006, the Victorian Bushfires of 2009 or the current misfortune of the Queensland Floods, we are reminded how fragile we are and how things can change so very quickly.

I am also inspired that out of these tragic events we always see the best part of humanity.  Our ability to cope with adversity, overcome misfortune, rebuild, recover and, most importantly, our willingness to help our fellow man.

The Australian Government, like almost every other Government, recognises the importance that donation and charity play in the modern world and as such any contribution to an Australian registered charity is a allowed as a tax deduction against your Australian income tax in the financial year that the payment is made.

This is a sign of recognition of the importance of the act as well as a manner of appreciation for the jesture.

You should note however that in order to claim a donation you need to have a taxable income in order to offset it against.

For many Australians living overseas, it is unlikely that you will in fact have any taxable income as your offshore salary is not taxed in Australia.

If you have an Australian rental property with a sensible level of finance on it, then you may also find that you are in a tax loss position each year with no tax payable in Australia and some tax benefit carrying forward into the future.

If this is the case then making a donation to any charity will not improve your Australian tax position as donations can not increase any tax loss position and therefor are essentially ignored once you have an income less than zero in your tax year.

If you have Australian rental property that is generating more income than the ownership expenses, including interest and depreciation, then the donation would be able to be used to reduce your net rental income and lower your annual tax liability.

To claim the deduction in the current financial year, the donation needs to be paid and cleared by the 30th June, Australia’s financial year end, and a receipt should be obtained and kept as proof of payment.

Regardless of your position, either being able to claim the deduction or not, the decision to make the donation should not be one based upon the ability to offset tax, rather it should be on the importance of the contribution.

Many of us living overseas are fortunate to experience more favourable circumstances than we expected, so it is seems fair to lend a helping hand to those less fortunate, especially when their position has come about from events that were totally out of their control.

I would hope we can all dig a bit deeper to help those that need it the most.

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