Non-Profit News Service No. 0010 - Workplace planned-giving programs

Employers can now reduce the amount required to be withheld from an employee's pay where the employee donates to deductible gift recipients (DGRs) via regular payroll deductions.

The Tax Office has recently issued a PAYG variation applying to payments for work and services where:

• part of an employee's pay is paid, or is to be paid, as a donation to a DGR
• the donation is paid by the employer at the direction of the employee
• the donation is made under a regular planned giving arrangement, and
• the employee has not advised the employer that they do not want the variation to apply.

When working out the PAYG amount required to be withheld from such payments, employers may now disregard that part of an employee's pay that the employer pays to a DGR on behalf of the employee.

This means the employees will get the benefit of the reduced tax for their donation to a DGR immediately in their pay.

Employees will need to claim the donations as tax deductions when they lodge their annual income tax returns. If the employee does not have a receipt from the DGR, the Tax Office will accept confirmation from the employer that the gift has been made.

For the full text of the variation, refer to Special Gazette 251 issued 2 July 2002.

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