Income Tax - Payments made by parents to private schools and the donation tax credits

Can a parent’s payment to their child’s private school be eligible for a donation tax credit?

QB 22/08 delves into the issue and concludes that payments can be used toward donation credits if certain criteria are met. The criteria are that the school is a donee organisation, the payment exceeds the value of $5, the payment is voluntary and has been made for the benefit of the school and the parent or child gains no benefit or advantage as a result of the payment.

While the payment can be intended for a particular purpose e.g., to fund the construction of a new swimming pool or gymnasium. The payment cannot result in material advantage to the parent making the payment or their child. 

If the above conditions set by IRD have been met, the payment can qualify as a donation tax credit.

What is a donation tax credit?

A donation tax credit is a refundable credit available for gifts and donations an individual makes that benefit a donee organisation. This amount gifted can be claimed if sufficient supporting documents can be provided by the donee organisation.

If the payment meets the conditions mentioned above, it will qualify as a donation tax credit. For further advice, contact us through the form below 

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