TaxGift founder and managing director Hannah Andrews.
Startup TaxGift has partnered with crowdfunding platform Givealittle for a new service that stretches donations further.
TaxGift founder Hannah Andrews says few people take advantage of the option to claim tax back on donations.
Andrews - a former senior associate with MinterEllison - says TaxGift simplifies the process for Givealittle donors, and can be used to boost a donation.
She gives the following example:
• A donor gives $100 to a charity via a Givealittle page.
• The available tax credit is up to $33.33, received as a cash refund.
• The $33.33 is donated to the same charity when the donor's tax position for the year is finalised. This results in a further tax credit of $11.11.
• $11.11 becomes an additional gift actioned in the following tax year, resulting in a further tax credit of $3.70 – an amount which is below the $5 minimum threshold to trigger another tax credit, so the benefit of the re-gift choice ends.
• What this means – over three years, from an original donation of $100, the donor's total gift to the charity is $148.14, at no additional cost.
The option went live on Givealittle in early September and 370 donors opted in the first week, Andrews says.
Those donors had contributed a collective $26,000 in donations to charities on Givealittle in the same timeframe, meaning those donations may be amplified by 33 per cent in the next 12 months and up to 48 per cent in the next three years, as the donations and tax credits continue to cycle through.
With a significant amount of annual eligible tax credits going unclaimed from the Inland Revenue, both Givealittle and TaxGift say the partnership will make it easy for donors to re-gift their tax credits and widen the revenue stream for charities, Andrews says.
Are there any catches?
You do have to appoint TaxGift as your tax agent - but the company does not have to become your sole tax agent.
And while re-gifting a tax credit doesn't cost the donor anything, it does mean the donor will forego their tax benefit.
Due to the volume and nature of the work required to administer, track and apply funds on behalf of many donors, a combined TaxGift/Givealittle fee of 14.2 per cent (12.35 per cent + GST) is charged on the total of the tax credit received and charged to the charity beneficiary, who can also claim back the GST component, Andrews says.
Kiwis donated $5 million to charities via Givealittle alone in the past year, which means that approximately $1.67m of that is now able to be re-gifted.
In January, Spark's Spark Foundation sold Givealittle to four-day week champion Andrew Barnes, who took on its 12 staff.
New York Times: Trump's best-known backer has a series of requests.