The Cultural Gifts Program has no special rules for gifts of trading stock. Therefore, the general rule applies (subject to the exceptions) to gifts of trading stock you donate under the program.
If you donate your trading stock outside the ordinary course of your business, the stock's market value at the time of the gift will normally be included in your assessable income.
Example
Cynthia donates some of her trading stock, which she has had in her showroom for 18 months, to a DGR under the Cultural Gifts Program. The average of the valuations from the approved valuers is $4,000, which fairly represents market value.
Assuming she is not registered for GST (or required to be registered), Cynthia will be able to claim a tax deduction of $4,000 (if the deduction would not add to or create a tax loss).
Cynthia will also include $4,000 in her assessable income as the market value of trading stock disposed of outside the ordinary course of her business.
If property is removed from trading stock but continues to be held (for example, in a private collection or for personal use), the amount included in your assessable income is the cost of the property (not its market value). The amount is assessable in the year the property stops being held as trading stock.
If the property is later donated under the program, the general valuation rule will apply (subject to the exceptions) if the property is donated one year or more after it stops being held as trading stock.
Example
Instead of donating the item of trading stock, Cynthia removes it from her trading stock and uses it privately in her home for 14 months before donating it under the Cultural Gifts Program. She had purchased the item for $1,500.
The average of the valuations from the approved valuers is $4,000, which fairly represents market value. Cynthia will be able to claim a tax deduction of $4,000.
Cynthia will also include $1,500 in her assessable income for the income year she stopped holding the item as trading stock.
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Last Modified: Wednesday, 13 June 2012