Pittwater Life June 2023 Issue

contributions, or simply
donates out of profits? Many
shareholders and shareholder
associations would argue the
most ethical approach is for
the company to return those
funds to shareholders as a
dividend and the shareholders
can choose to make whatever
donations they wish.
The charities themselves are
under enormous pressure to
evolve. For many years they
were notoriously low payers
of salaries and wages to the
extent that the FBT system still
has a carve out for benefits
paid to employees of some
charities and benevolent
institutions. Because of benefits
such as these and their DGR
status there is a need for
greater scrutiny of governance
which means more complex
reporting and administration.
Charities themselves have
also evolved their corporate
structures: CEOs, marketing
managers, fundraising
executives are a part of many
organisations. They are likely to
reach out to potential donors
very early on, even looking to
be written into wills. We have
seen charity representatives
attend funerals and agitate
after probate is granted for
benefits to be paid over.
Complex arrangements
around fundraising are now
normal. Those overly friendly
people you see when walking
into Woolies who are seeking
donations on behalf of some
good cause are usually
contractors that are primarily
focussed on getting you to
sign up to a monthly program
of giving for which they will
receive a healthy commission.
It’s no wonder that people
hesitate to give or give larger
amounts to charity when they
struggle to determine what
actual percentage of their
contribution makes it to the
cause. The regulator is of little
help in this regard. I looked at
one charity that claimed 100
per cent of funds raised were
paid to eligible charities, but
its accounts with the regulator
show that in 2021 it donated
18 per cent of donations
revenue raised in that year to
charities and in 2022 it donated
16 per cent of donations
raised to charities. A greater
percentage of donations were
spent on fundraising and
travel expenses. I don’t quite
The Local Voice Since 1991
understand how you can claim
to donate 100 per cent when
you have operating expenses
at all.
The problem with donating
cash is its fungibility; basically
it can be used for anything and
once you hand it over you lose
control.
For most of us, donating a
few dollars to the Salvos or Red
Cross in their times of need will
continue to be the norm. For
others who are looking to
make a more substantial
donation there are a few other
options. For example, you may
be able to donate property
to a DGR within 12 months
of purchase – items such as a
piece of medical equipment or
a motor vehicle or other nonphysical
items such as shares
and ownership rights.
If the item is more than 12
months old but over $5,000 it
may also be claimable through
a valuation process with the
ATO. This pathway can also be
used for prizes won in raffles
that people may wish to donate
as they don’t fit the definition
of being ‘purchased’.
There is a cultural gift
program for art, artefacts,
film paintings, manuscripts,
photographs and the like.
Again, these need to be valued
and the recipient must be a
DGR unless you are donating
to the Australiana Fund or
Australian Government for
Artbank.
The rules for this type of
giving can be complex as can
be the tax consequences and
it would be sensible to seek
advice. It is important to keep in
mind that donations cannot add
to or create a tax loss so there
are provisions in place to elect
to claim your deductions over a
period of up to five years.
Brian Hrnjak B Bus CPA (FPS) is
a Director of GHR Accounting
Group Pty Ltd, Certified
Practising Accountants. Offices
at: Suite 12, Ground Floor,
20 Bungan Street Mona Vale
NSW 2103 and Shop 8, 9 – 15
Central Ave Manly NSW 2095,
Telephone: 02 9979-4300,
Webs: www.ghr.com.au and
www.altre.com.au Email:
brian@ghr.com.au
These comments are of a
general nature only and are
not intended as a substitute
for professional advice.
JUNE 2023 49
Business Life