Key Highlights

  • The $2 minimum threshold for donation deductions has been scrapped.
  • The change is backdated to gifts made from 1 July 2024.
  • Donations still do not reduce the new $1,000 standard deduction for work expenses.
  • The ATO expects records to support any claim.

Coins in a collection tin, a 50-cent round-up at the checkout, a $1.50 tap at a charity stall: for decades none of it could be claimed. The ATO now says the $2 minimum for deductible gifts has been removed, and the change is backdated to gifts made on or after 1 July 2024. With many people still finalising returns after the 2 November deadline, it matters for this tax time and potentially last year's.

The saving on any single small gift is tiny. But for frequent small givers, through round-up apps, workplace programs or donation buckets, totals can add up.

What has changed

The ATO's gifts and donations guidance says the minimum $2 threshold for claiming a deduction has been removed from 1 July 2026, and the change is backdated. For gifts made on or after 1 July 2024, the ATO says "you can claim a deduction for all amounts you donate – even amounts below $2".

Its "What's new for individuals" page for the 2025–26 tax return puts it this way: you can claim gifts to eligible deductible gift recipients "regardless of the amount donated".

The ATO's legislation tracker lists the change, "Removing the condition that a gift to a deductible gift recipient be valued at $2 or more", as part of the government's push to double philanthropic giving by 2030. It says "This measure is now law."

This is enacted law, not a proposal or draft guidance.

According to the Parliamentary Library's Bills Digest on the Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026, the threshold was set at $2 in 1966. Inflation has since eroded much of its real value.

The Digest notes the Productivity Commission recommended removing it in its May 2024 report, Future foundations for giving. The government says the change will encourage small donations, including round-up giving.

The Digest also records a concern from some charities, including the Sydney Children's Hospital Foundation, that the cost of issuing receipts could exceed the value of very small donations. It notes charities are not legally required to issue receipts.

What still doesn't count

Removing the $2 floor doesn't change the other rules. The ATO says the organisation must have deductible gift recipient (DGR) status at the time you give. Not every charity or fundraiser is a DGR.

The gift must also be genuine. If you get a material benefit in return, the ATO treats the payment as a contribution, and different rules apply.

The ATO lists examples that generally can't be claimed as gifts:

  • Raffle or art union tickets
  • Items with an advertised price, such as chocolates, mugs, keyrings, hats or toys

In Melbourne Cup week, that is worth remembering. A charity raffle ticket or a fundraising lunch where you get something back is not the same as a straight donation.

Political donations sit under their own rules and are excluded from the change, the ATO says. Some gifts of property also have special rules.

To check whether an organisation can receive deductible gifts, the ATO points to ABN Lookup. It says if a body shows as "endorsed" or "listed" as a DGR at the time of the gift, you can claim.

Hypothetical example: what round-ups are worth

Hypothetical example: Mia earns $70,000 a year. In 2025–26 she makes 150 round-up donations to a registered charity with DGR status, averaging 50 cents each. That's $75 in total.

Under the old rule, none of those gifts was $2 or more, so none could be claimed.

Now the full $75 can be claimed, provided she has records. On a $70,000 income in 2025–26, her marginal tax rate is 30%. Add the 2% Medicare levy and each dollar of deduction saves her 32 cents.

  • $75 × 32% = $24 less tax

If she also dropped $1.50 into donation buckets on six occasions, that is another $9 of gifts, worth about $2.88 at the same rate.

Someone on a lower income gets less back. At the 16% rate plus the Medicare levy, $75 of gifts saves $13.50. As reports have noted, deductions such as donations often return "only a small fraction of their value".

Records: what the ATO accepts

The ATO asks you to keep records for all deductible gifts. That can be a receipt from the charity, but where there isn't one it accepts other evidence:

  • A web receipt or Credit card statement for gifts made online or by phone
  • Bank or retail receipts for gifts made through third parties
  • Your income statement or payment summary for workplace giving

For bucket donations, the ATO says you can claim up to $10 in an income year without a receipt. Anything above that needs one.

Round-up services can be harder to track, because gifts may pass through an app or platform.

Lodging or amending

If you haven't yet lodged your 2025–26 return, including through a tax agent, small gifts made in that year can go in with your other donations.

Because the change reaches back to gifts made from 1 July 2024, sub-$2 gifts made in 2024–25 are also covered. The ATO generally allows individuals to amend a return within a set period, often two years for people with simple affairs. Whether an amendment is worth the effort for a few dollars is a personal judgement.

Donations also don't reduce the new $1,000 standard deduction for work expenses that starts in 2026–27, according to the ATO's draft ruling LCR 2026/D5. So from next year, gifts can be claimed on top of it.

What to watch

  • Now: returns lodged through tax agents for 2025–26 can include all eligible gifts, whatever the size.
  • 2024–25: sub-$2 gifts made from 1 July 2024 are also covered by the backdated change.
  • 2026–27: donations sit outside the $1,000 standard deduction, so they can still be claimed separately, according to the draft ruling.
  • Charity receipting: watch whether DGRs change how they report small and round-up gifts to donors.
  • Ancillary funds: a separate proposal to lift the minimum distribution rate for public and private giving funds to 6% is not yet law, the ATO says.