• How much can be claimed?

    The amount that supporters can claim as a tax deduction will depend on the type of gift or contribution made, and the circumstances of that gift or contribution.

    Gifts

    For gifts of money, the amount donors can claim is the amount of the gift but it must be $2 or more. For gifts of property, there are various valuation rules.

    A deduction for a gift cannot add to or create a tax loss for the donor. The deduction can reduce a donor's assessable income to nil in the tax year in which the gift is made, but any excess cannot be claimed in that year. However donors can elect to spread deductions for certain gifts over a period of up to five years. If the donation is jointly-owned property, the owners work out the share based on each owner’s interest in the property.

    Example – Donating joint property

    John and Miranda donate property to a DGR that is a public museum. The property value is $100,000. John owns 25% of the property and Miranda owns 75%. John can claim a deduction of $25,000 and Miranda $75,000 (or less if the claim adds to or creates a tax loss).

    End of example

    If an employee makes a donation under salary sacrifice arrangements, the employee is not entitled to claim a tax deduction for the donation on their own tax return. However, if they are part of a workplace giving program they can. See Workplace giving programs and salary sacrifice arrangements for information about the two arrangements.

    If the donor gifts property and they have claimed a deduction for its decline in value (previously called 'depreciation'), they may need to make a balancing adjustment for income tax. This balancing adjustment may either increase or decrease the donor's taxable income.

    See also:

    Guide to depreciating assets

    Contributions

    The deduction for a contribution is limited to the part of the contribution that exceeds the minor benefit received by the contributor.

    Example 1 – Deduction in excess of the minor benefit received

    Brian pays $300 to attend a play hosted by a DGR, which is open to the public and costs $30 a ticket on the open market, Brian can claim a deduction of $270 ($300 - $30).

    Example 2 – Deduction in excess of the minor benefit received

    Marion successfully bids $2,000 for a T-shirt at a DGR fundraising auction. The T-shirt has a market value of $50. Marion can claim a deduction of $1,950 ($2,000 - $50).

    End of example

    It is up to the contributor to find out the value of the contribution – see Valuing the contribution.

    The DGR is responsible for determining the value of the minor benefit – see Valuing the minor benefit.

    An individual may claim a deduction for both a right to participate at a fundraising event (for example, a fundraising dinner auction) and the purchase of goods and services at a fundraising auction.

    An individual attending a fundraising event may claim a maximum of two contributions in relation to attending a fundraising event – for example, the purchase of a ticket for the individual and one for the individual's partner or associate.

    There is no limit to the number of deductions that may be claimed for the purchase of goods and services by way of successful bids at a fundraising auction.

    Example – Different types of deductible contributions

    Rebecca pays $260 to attend a charity auction conducted by a DGR. The ticket to the auction has a market value of $20. At the auction, Rebecca successfully bids $2,000 for a chair with a market value of $90. She also bids $1,000 for a painting with a market value of $100. Rebecca can claim three separate deductions – one of $240 for her contribution for the right to attend the auction; one of $1,910 for the purchase of the chair at auction; and a further $900 for the purchase of the painting.

    End of example

    A deduction for a contribution cannot add to or create a tax loss for the contributor. The deduction can reduce a contributor's assessable income to nil in the tax year in which the contribution is made, but any excess cannot be claimed in that year or carried forward to a later year as a tax loss.

    Where an individual can, or has, claimed a deduction in relation to a contribution, and they receive an amount as a refund or reimbursement of that contribution from a DGR or another person, the individual must include the refund or reimbursement in their assessable income.

    Advertising and sponsorship expenses

    Advertising and sponsorship expenses that are not tax-deductible gifts or contributions may be tax deductible if incurred in deriving assessable income.

    If the donor or contributor is running a business, they should consider whether to claim their donation or contribution as a gift or as a business expense.

    Example – Paying a DGR for business promotion

    A company makes payments to a DGR to place its advertisements on the DGR’s premises.

    The payments are not gifts. However, if they are incurred to promote the company’s business, they may be tax deductible.

    End of example

    See also:

    Income and deductions for business

    Amount claimed for cultural gifts program

    Except for gifts to Artbank, the property donated must have a value of $2 or more.

    There is a general rule for working out the deduction amount the donor can claim but there are also exceptions to the rule.

    The general rule is the amount the donor can claim as a deduction is the average of two or more written valuations made by valuers approved by the Arts Secretary. The valuations must:

    • be by different approved valuers
    • state the GST-inclusive market value of the property on either the day  
      • the property was donated
      • of its valuation.
       

    If the valuation gives a value for the day of the valuation, not the day the property was donated, the valuation must be made within 90 days before or after the property was donated. Only the ATO can allow a longer period for the valuation.

    Exceptions to the general rule include circumstances where:

    • the donor does not need to obtain written valuations
    • valuations do not fairly represent the GST-inclusive market value
    • other factors need to be considered.

    The donor doesn't need to obtain written valuations if no amount is included in their assessable income for the gift, and an amount would have been included if the property had been sold rather than donated.

    If valuations are not required, the deduction they can claim (unless it adds to or creates a tax loss) is either:

    • the amount the donor paid for the property
    • if the property had been manufactured or created, the amount allowable as a tax deduction if it had been sold by the donor.

    An example could be property the donor purchased with the intention to make a profit that they later disposed of as a gift. In this case, no amount is assessable because the property was not sold. They could claim the cost of purchase or manufacture of the property they donated.

    If the average of the written valuations does not fairly represent the GST-inclusive market value of the property, the deduction the donor can claim is adjusted to the GST-inclusive market value on the day they donated it. This allows us to make appropriate adjustments, for example, if a valuation or valuations have been made on an unsound basis and do not fairly represent the true market value of the property donated.

    There are other factors that need to be considered. The amount of the gift the donor can deduct is the amount the donor paid for the property or the average of the written valuations (whichever is less) if the property was one of the following:

    • acquired for the purpose of donating it
    • acquired subject to an arrangement that it would be donated
    • acquired (except by inheritance) less than one year before donating it.

    Amount claimed for a heritage gift

    The general rule is that the amount the donor can claim as a deduction is the average of two or more written valuations made by valuers approved by the Arts Secretary.

    However, different arrangements apply if the property was one of the following:

    • acquired for the purpose of donating it
    • acquired subject to an arrangement that it would be donated
    • acquired (except by inheritance) less than one year before donating it.

    In these circumstances, the valuation of the gift is the lesser of the:

    • amount the donor paid for the property
    • average of the written valuations.

    If the written valuations for the property do not fairly represent the GST-inclusive market value of the property, the deduction is adjusted to the GST-inclusive market value on the day the property was donated.

    The donor does not need to obtain written valuations if no amount is included their assessable income for the gift, and an amount would have been included if the property had been sold rather than donated.

    An example could be property purchased with the intention to make a profit that the donor later disposed of as a gift. The valuation of the gift is either:

    • the amount paid for the property
    • if the property had been manufactured or created, the amount allowable as a tax deduction if it had been sold by the donor.

    If the donor is registered for GST (or required to be registered) these amounts may need to be adjusted.

    Last modified: 14 Oct 2015QC 46278