• Property purchased during the 12 months before making the gift

    A donor may be able to claim a tax deduction for a gift of property they purchased during the 12 months before making the gift.

    'Property' has a wide meaning. As well as physical things (such as land and objects), it includes rights and interests that can be owned and have a value (such as shares and ownership rights).

    Property is purchased if it is acquired by way of bargain or sale for money or some other valuable consideration. Property that has not been purchased includes prizes won in raffles, property received as a gift and inherited property.

    Example – Donating a raffle winning

    Giulia wins a desk in a raffle. If she donates the desk to a DGR, the gift will not meet the requirements of this gift type (as she did not purchase it). She could check if it was covered by another gift type that applied to the DGR.

    End of example

    Your donors need to consider the following points:

    • To be tax deductible under this gift type, the  
      • donor must have purchased the property during the 12 months before making the gift
      • value of the gift must be $2 or more.
       
    • To be tax deductible, the gift must be made to a DGR.
    • The gift deduction your donor can claim is the lesser amount of either the  
      • market value of the property on the day the gift is donated
      • amount they paid for the property.
       
    • It is up to your donor, not you, to find out the market value of the gift. To find out how the donor gets a valuation, see How supporters get valuations.
    • If your donor is registered for GST (or required to be registered) for gift deduction purposes, the market value is reduced by the amount of GST credit they would have been entitled to if  
      • they had purchased the property at the time they made the gift
      • the purchase had been only for a purpose that GST credits would apply to.
       
    • If your donor is registered for GST (or required to be registered), the reason the amount they paid is reduced by the amount of GST credit is because they effectively receive a refund of the GST paid on purchasing the donated property.
    • If your donor is not registered for GST and is not required to be registered, they do not need to adjust the market value.
    • There are income tax consequences of making a gift to a DGR that they may need to consider, including  
      • record keeping
      • tax losses
      • deductions for jointly-owned property
      • deductions for valuation expenses
      • decline in value for gifts of depreciating assets
      • capital gains tax (CGT) consequences.
       
    • They claim the tax deduction in the income year in which they made the donation.
    • The deduction cannot add to or create a tax loss. However, they can make a written election to spread the tax deduction.

    Example 1Donations that cost more than the market value

    Clarence purchases an item of property for $600 and donates it to a DGR 10 months later. The market value at the time Clarence made the gift is $500.

    Clarence cannot claim $600 because the market value is less than the amount he paid. He can only claim $500 (if the claim does not add to or create a tax loss).

    Example 2Reducing the market value by the amount of GST credit

    Franziska runs a restaurant and is registered for GST. She donates some of the restaurant's kitchenware to a DGR on 7 November 2014. Its market value on that day (including GST) was $2,200.

    If she had purchased the kitchenware for $2,200 on that day for use only in the restaurant, she would have been entitled to a GST credit of 1/11th. Therefore, she would have been able to claim back $200 of GST on the purchase.

    As a result, the market value of the kitchenware for gift deduction purposes would be $2,000 (that is, $2,200 minus $200).

    If Franziska was not registered for GST and was not required to be registered, the market value would be $2,200.

    End of example

    See also:

    Last modified: 14 Oct 2015QC 26065