In recent years there have been significant changes in Australian tax law which has impacted the way organisations who provide charitable services overseas operate.
Asian Aid is an approved Deductible Gift Recipient (DGR) under the Australian Tax Office’s Overseas Aid Gift Deduction Scheme (OADGS). This means we are able to issue tax deductible receipts for activities which comply with the OADG guidelines.
Changes to tax deductions
Changes to the guidelines have led to the categorisation of overseas aid activities into tax-deductible and non-tax-deductible.
Under the OADG guidelines, tax deductible projects must not include welfare, evangelism and political activities.
Programs supporting schools and orphanages through the payment of school fees, provision of textbooks, uniforms, food and building improvements are generally considered welfare activities and therefore are non-tax-deductible.
To meet the guidelines, projects must encourage local community participation; improve the well-being of those in need, without discrimination by race, religion, culture or political persuasion; and produce sustainable benefits that will continue after development assistance has ceased.
Programs such as improving community education, water, sanitation, agriculture, job creation, social enterprise, microfinance, and emergency programs, are tax-deductible.
What does this mean?
Asian Aid is required to comply with the law. We will therefore no longer be able to offer tax deductible receipts for the direct sponsorship of children in special homes and schools. This includes sponsorship of one or more of your children under the “direct child sponsorship” model.
This change will come into effect from 30 June 2018.
However, this does not mean we are ceasing to support these children.
Asian Aid is committed to supporting them until completion of their studies, with your help. We encourage you to continue on this journey with us by sponsoring your child/children for the duration.
At the same time, we will be ramping up our child-focused development projects which are eligible for tax deductibility and bring us in line with best practice within the sector. Sponsorship of children within our new “child focused development”, launched last year, will not be impacted.
What if I require a tax deductible receipt?
If it is important to receive a tax deductible receipt for your sponsorship, we are able to connect you with another child within one of our child-focused development programs. These projects meet the requirements for tax deductibility because they support children within their own communities.