Tax Deductions and Charity Giving: How Does it Work?


Make the most of the EOFY season

As the end of the financial year draws near, so does the dreaded tax season. Many of us have started sorting through our receipts, trying to figure out which purchases we can claim as a deduction on our tax return. These include any significant charitable donations made towards an ACNC-registered charity with DGR status, such as Islamic Relief Australia.

However, as Muslims, is it possible for us to claim any donations (Sadaqah, etc.) we make as tax deductions? The short answer? Yes! But to help you further, here are answers to some commonly asked questions on claiming a tax deduction for your donations.

FAQs: Tax Deductions and Charity Giving

How do tax deductions work for Australian charities?

The Australian Taxation Office (ATO) lists “gifts and donations” as eligible for tax deductions. If you’ve made a donation over $2 AUD to a charity that has DGR status (as Islamic Relief Australia does), you can claim the donations you give in charity (i.e. voluntary giving) back as a “deduction”. This means you get a component of what you gave in your end-of-financial-year (EOFY) tax return.

Does claiming donations as a tax deduction affect the intention with which you gave?

No, it doesn’t take away in any way from the initial donation you gave. It has achieved its intention and reached its beneficiary, insha Allah!

Rather, what this means is that you are reclaiming a portion of the money that is rightly owed back to you by Australian tax law. That is then extra money back in your pocket.

If I give what I receive back, is that extra reward?

Yes, insha Allah! It is wealth you could have done something else with, so if you give it back in charity yet again, that is yet another sadaqah for you, insha Allah!

Should I increase my donations at this time of year (at the EOFY)?

You can and should if your situation allows. It means you could claim back more as deductions, and your charity will go further than it may have otherwise.

Where should I donate?

To ANY cause you wish. With Islamic Relief Australia, all your donations are going to be eligible for these tax deductions.

We encourage you to look at all our appeals and giving options, and at this time, Gaza is the most important emergency relief campaign we are running.

May Allah (SWT) reward you for your generosity!

Let Your Generosity Go Further

Make the most of tax season. By giving more before the end of this June, you can increase you impact, supporting more of our brothers and sisters in need.