On 6 December 2010, we released Taxpayer Alert TA 2010/08 - Gift deductions for donation of pharmaceuticals to charities operating overseas. We also issued a media release warning non-profit organisations to be wary of entering into similar arrangements.
The Taxpayer Alert warns taxpayers to be cautious about offers of a generous tax deduction for gifts of pharmaceutical and other items to charities for use overseas. In these offers, taxpayers are told they can claim a tax deduction for their donation that is higher than the amount they actually donated for the goods.
Organisations promoting the arrangements may not be non-profit organisations themselves. The promoter organisations may approach deductible gift recipients (DGRs) to be involved in the arrangements.
If you operate a non-profit organisation that is a DGR, you should avoid these types of arrangements, as involvement may:
- affect your entitlement to DGR status
- have a serious impact on your reputation as well as the reputation of the non-profit sector
- contravene the promoter penalty laws in more serious cases.
While non-profit organisations do important work in Australia and overseas, if even a small number of non-profits become involved in these arrangements it could damage the reputation of the sector.
If you are unsure about your circumstances, contact us before becoming involved in any arrangements that include financing for donations or potentially over-valued gifts of property.
We will assist you if you voluntarily disclose your involvement in this type of arrangement. To make a voluntary disclosure or report being offered a similar arrangement, phone us on 1800 177 006.
Taxpayer alerts are an early warning of our concerns about significant and emerging potential aggressive tax planning issues or arrangements that we have under risk assessment.
Information about how we administer the promoter penalty laws is available on our website, including Law Administration Practice Statement PS LA 2008/7, which sets how we apply these laws.
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Last Modified: Thursday, 9 December 2010