Question

In context of Australia ; Please answer in detail and do not copy paste for any other source

1)A client has receipts for $50.00 from donations provided to door to door charity collectors. Can the client claim a tax deduction for this amount? Why? 40–50 words

2) A client wants to claim $300 for work-related expenses and says they might not have spent that amount but because it does not need to be substantiated they will still make the claim. What advice would you provide? 80–100 word

Answer 1

As per ATO , The client having receipts for $50 from donation provided door to door can claim tax deduction for this amount provided the related collections are associated to an organisation entitled to receive tax deductible gifts which are known deductible gift recipients' (DGRs). You can only claim a tax deduction for gifts or donations to organisations that have DGR status. The person that makes the donations is the person that can claim a deduction

To claim a tax deduction for a gift or donation, it must meet the following conditions :

a)The donation or gift must be made to a DGR.

b) It must truly be a gift or donation without receiving, or expecting to receive, any material benefit or advantage in return.

c) The gift or donation must be of money or property.

d) The gift or donation must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting types of deductible gifts they can receive.

Note: For Door knock appeals an extra permission is required from the local council of the area in which the door knock is to be conducted.

2) The work related expenses of $300 has not been spent by the client and therefore it cannot be claimed as a deduction. The work related expenses rules have been stated by the ATO (Australian Taxation Office).

A limit of $300 has been provided for requirement of a written evidence. If the total claims does not exceed $300 , a written evidence need not be furnished. However, it is still not advisable to claim such deduction as the authority still has the right to question the client as to how the claim was worked out and also an explanation in regard to proving the reasonability of the claim made.

For claimimg work related expenses as a deduction The following conditions must be satisfied :

a) The money shall be spent by the person who is willing to claim deductions

b) The expenses must be directly related to earning income.

c) They must have a record to substantiate the expenses.

A limit of $300 has been provided for requirement of a written evidence. If the total claims does not exceed $300 , a written evidence need not be furnished. However, it is still not advisable to claim such deduction as the authority still has the right to question the client as to how the claim was worked out and also an explanation in regard to proving the reasonability of the claim made.