Property we value at more than $5,000
If a donor gives a gift of property that we have valued at more than $5,000, they may be able to claim a tax deduction.
'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).
Your donors need to consider the following points:
- To be tax deductible, the gift must be made to a DGR.
- Your donor can donate gifts of property valued by us at more than $5,000 to all types of DGRs (except for gifts to the Australian Government for Artbank).
- There are other income tax consequences of making a gift to a DGR that your donor may need to consider
- record keeping
- tax losses
- deductions for jointly-owned property
- deductions for valuation expenses
- decline in value for gifts of a depreciating asset
- capital gains tax (CGT consequences).
- If the gift is property valued by us at more than $5,000 and the donor
- purchased the property during the 12 months before donating it, they can deduct the lesser amount of either the market value of the property on the day they donated it and the amount they paid for the property. Property is purchased by the donor if it is acquired by way of bargain or sale for money or some other valuable consideration.
- did not purchase the property during the 12 months before donating it, they can claim a tax deduction for the amount we valued the property on the Valuation certificate. Property that has not been purchased by the donor includes a prize won in a raffle, property they received as a gift and property they inherited.
- The deduction cannot add to or create a tax loss. However, the donor can make a written election to spread the tax deduction.
Example 1 – Purchased the property during the 12 months before donating it
Bill purchased a boat for $4,000 and obtained a valuation from the ATO for the boat of $6,000. He promptly donates the boat to a DGR within 12 months of purchasing it. Bill may claim a deduction of $4,000 (that is, the lesser of the two amounts).
Example 2 – Purchased the property more than 12 months before donating it
During 2014, Terry donated a block of land to a DGR. He purchased the land in 1980. He applied to the ATO for a valuation in 2014 and in the Valuation certificate the land was valued at $150,000. Terry can claim a deduction for the amount of the valuation (that is, $150,000).
Example 3 – More than one gift type
Samantha owns an antique book shop. She is considering giving an antique book worth $10,000 kept in her shop to a public museum that is a DGR.
If the requirements of the particular gift type are met, her gift may be covered by one or more of the following gift types:
- trading stock disposed outside of the ordinary course of her business
- property valued by the ATO at more than $5,000
- a cultural gift for inclusion in a collection held by the museum.
If she donates the property, she can claim a deduction under the gift type that is most appropriate. She needs to consider valuation requirements, capital gains and whether the book was trading stock.
End of example
Phone us on 1300 130 248 for more information.
If a donor makes a gift of property that we value at more than $5,000 they may be able to claim a tax deduction.