The tax system encourages charitable giving by offering tax benefits for both individual and corporate giving.

Individual charitable donations – including those made through payroll giving – are eligible for tax credits.

Corporate donations are eligible for tax deductions.

In both cases, the donations must be made to an approved donee.

Individual donations

Individuals can claim a 33.33% tax credit for all donations over $5 they make to an approved donee. A tax credit reduces the amount of tax you have to pay.

The maximum tax credits an individual can claim is capped at:

·    33.33% of your total donations

·    33.33% of your taxable income.

Most approved donees are registered as charities by Charities Services.

Some overseas aid organisations are also approved as donees. You can check the donee status of an organisation on the IRD website.

To claim your tax credit you need to complete an IR526 and send it to the Inland Revenue Department with your donation receipt within four years of making the donation.

You cannot claim credits for donations that exceed your total annual taxable income. Find out more here.

There are also services that support you to receive your tax credit and then regift it to a charity of your choosing. These include Supergenerous and TaxGift.

Payroll giving

Donations made through Payroll Giving are also eligible for tax credits of 33.33%. You do not need to claim these credits yourself – your employer will do this for you. Find out more here.

Corporate giving

Companies can claim tax deductions for all donations made to an approved done providing their claim does not exceed their total annual net income.

A tax deduction reducesthe amount of taxable income. Companies can claim this deduction using the IR4 form.

You can check the donee status of an organisation in the IRD website.   Find out more

Sponsorship

Businesses may be eligible for a sponsorship tax deduction providing they can show that the sponsorship is likely to increase their taxable income. This could be through options such as naming rights, increased recognition or advertising.

A business does not have to sponsor a registered charity or donee organisation in order to be eligible for a tax deduction.