Tax Benefits for Donating Your Business Equipment to Charity
By donating business equipment to charity you get the opportunity to kill two birds with the same stone. Firstly, you get the opportunity to give to a worth cause – which can be a source of fulfillment to you as a business owner or manager, (and which you can also quote as part of your corporate social responsibility), and secondly, you also get access to some tax benefits on account of your having donated business equipment to charity.
The business equipment you donate to charity need not be anything fancy. If you can afford to give a used business van to charity, well and good. But if all you can afford to donate to charity is a computer, a printer or a scanner, then that too will usually be appreciated (the charity can always sell gifts it can’t directly use) and whatever the gift, you will still usually be in a position to ask for a tax deduction on its account.
Governments, in a bid to encourage people to donate more to charity award considerable tax deductions to businesses that donate to charity. This the governments do out of an appreciation of the fact that the activities which the charities are engaged in are activities that the governments would be forced to undertake in the absence of the same charities. In this way, charities are seen as partners with the government in the provision of the services which they provide- which could be anything from care of orphaned children, to running soup kitchens where the destitute can get something to eat to running home for the aged and shelters for the homeless. All these are activities which the governments (ideally) should be providing in every society, but the reality is that the needs tend to be so overwhelming to the governments, to the extent that some individuals or organizations (the charities) have to chip in to provide these often desperately needed services.
In many countries, the tax advantages of donating business equipment to charity are calculated in a graduated basis, such that for the first so many dollars, you are given a certain tax deduction (usually quoted as a percentage of the value of whatever you have given to the charity) with the tax deduction progressively going up with the gift you give to a charity, up to a certain level from where it is constant.
The tax advantages that accrue out of donating business equipment to charity are usually not automatic, and you normally have to request for them in your tax returns, because the government has no way of knowing that you gave to such and such a charity (and how much you gave to the charity) unless you alert the government to the fact.
The tax advantages that accrue out of donating business equipment to charity are open to abuse, and in view of this governments usually require some form of audit to crosscheck the facts. This audit should not be off-putting though, because the governments try to keep it light and nice to avoid a situation where they dissuade people from giving to charity.
Tags: business, business equipment, charities, charity, corporate social responsibility, s, tax deduction