Claiming Donation Tax Credits in NZ

As a self-employed professional or sole trader in New Zealand, you have the opportunity to claim donation tax credits for donations made to approved organisations. This guide will walk you through claiming donation tax credits; the eligibility criteria, the claiming process, and tips to maximise your benefits.

Skip to a section of this guide:

• What are donation tax credits?
• Who can claim donation tax credits?
• What donations qualify?
• How to claim your donation tax credit
• Tips for maximising your tax credit

What Are Donation Tax Credits?

In New Zealand, individuals can claim a tax credit of 33.33% for each dollar donated to an approved donee organisation, provided the donation is $5 or more. This means that for a $150 donation, you could receive a $50 tax credit. These credits are refunded directly to you and are separate from your income tax return.

Who Can Claim Donation Tax Credits?

To qualify for claiming donation tax credits, you must:

• Be an Individual Taxpayer: Claims can only be made by individuals, not by companies, trusts, or partnerships.
• Be a New Zealand Tax Resident: You must have been a tax resident at any time during the tax year in which the donation was made.
• Have Taxable Income: You need to have earned taxable income during the tax year you’re claiming for. This could be self-employed income, rental property income or income from salary or wages.
• Donate to Approved Organisations: The donation must be made to an organisation approved by Inland Revenue. You can check the list of approved donee organisations on the IRD website.
• Have Valid Receipts: You must possess receipts that meet IRD requirements, including:
  • the full name of the person who donated (or their partner’s name)
  • the amount of money donated (donations of property, including crypto assets, do not qualify)
  • the date of the donation or tax year the donation was made (for example, 31 March XXXX)
  • a clear statement that it was a donation
  • the organisation’s name
  • the organisation’s IRD number
  • the Charities Services registration number (if they have one)
  • official letterhead or official stamp with the name of the donee organisation
  • the full name, designation, and signature of an authorised person from the organisation
  • a receipt number that’s different for each receipt (if applicable).

What Donations Qualify?

Eligible donations include:

• Monetary Donations: Cash donations of $5 or more to approved donee organisations.
• School Donations: Voluntary donations to schools or parent-teacher associations, provided they are not payments for goods or services .
• Religious and Other Charitable Contributions: Donations to religious organisations and other registered charities.

Note: Donations where you receive a direct benefit (e.g. goods, services, or event tickets) are not eligible.

How to Claim Your Donation Tax Credit

1. Using myIR (Online Method)

The most efficient way to claim your donation tax credit is through the IRD’s online portal, myIR:

1. Register or Log In: Access your myIR account. If you don’t have one, you can register on the IRD website.
2. Add Donation Tax Credit Account: If ‘Donation tax credit’ isn’t visible on your dashboard, go to ‘I want to…’ > ‘Register for donation tax credit’ and submit the registration. ‘Donation tax credit’ will then be visible on your myIR dashboard.
3. Enter Receipt Details: Navigate to ‘Enter donation tax credit receipts’ on your dashboard and input the necessary details from your donation receipt.
   
4. Attach Receipts: Upload a PDF, photo, or scanned copy of your donation receipt.
5. Submit: Review the information and submit your claim.

You can submit receipts throughout the year or after the tax year ends on 31 March.

2. Using the IR526 Form (Paper Method)

If you prefer or are unable to use the online method:

• Download the Form: Obtain the Tax credit claim form – IR526 from the IRD website.
• Complete the Form: Fill in your details and the donation information.
• Attach Receipts: Include all relevant donation receipts.
• Mail to IRD: Send the completed form and receipts to:

Inland Revenue
PO Box 39090
Wellington Mail Centre
Lower Hutt 5045

Ensure that all receipts are for donations made within the past four years, as claims can be made for donations up to four years prior .

Tips for Maximising Your Tax Credit

• Keep Accurate Records: Maintain organised records of all donation receipts to streamline the claiming process.
• Submit Receipts Promptly: Uploading receipts as you receive them can prevent last-minute hassles.
• Share Credits with a Partner: If your donations exceed your taxable income, you can share the credit with your spouse or partner, provided they also meet the eligibility criteria .
• Consider Regifting: Some organisations offer the option to donate your tax credit back to them, amplifying your contribution’s impact.

By understanding and claiming donation tax credits, you not only support causes you care about but also benefit financially. Ensure you meet the eligibility criteria, keep thorough records, and choose the claiming method that suits you best.

How Solo Can Help

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