• Receiving a gift

    Not all payments your donors make to you are gifts. A payment is a gift if it has all the following characteristics:

    • The donor transfers money or property.
    • The donor makes the transfer voluntarily.
    • The transfer arises by way of benefaction.
    • The donor does not materially benefit from the gift.

    If the supporter benefits from the donation, it may still be tax-deductible as a contribution.

    See also:

    Conditions for a tax-deductible contribution

    Property transferred

    There is no deduction for the gift of a service, as no money or property is transferred to you. If the donor transfers property to you as part of providing a service, they may be able to claim a deduction for the property. The property has to be actually transferred to the DGR. Volunteers' expenses in carrying out voluntary work and the value of unpaid work are not deductible as gifts to you.

    Example 1Not a gift – transfer of money or property

    As part of a telethon, Theodora calls to pledge $500 to a DGR. However, she then forgets about it and never actually donates the money to the DGR. Theodora has not donated a gift, as she has not transferred the $500 to the DGR.

    Example 2Gifts made to sick children while volunteering

    Alessandra does volunteer work for a DGR caring for sick children. She buys toys and gives them to the children. Alessandra cannot claim a deduction because she has not donated property to the DGR itself.

    Example 3Donating time and materials

    John offers to repair a timber fence around a DGR’s premises and supply the timber for the job. John’s car expenses to collect the timber are not deductible as a gift. They are part of supplying the service. However, the timber (which becomes the property of the DGR) may be deductible as a gift if it meets the requirements of one of the gift types.

    End of example

    See also:

    Acknowledgment in appreciation of a payment

    Even if you give the donor acknowledgment in appreciation of a payment, the payment may still be a gift.

    For example you may give a donor the following forms of acknowledgment for a gift:

    • a sticker or lapel badge
    • a mention in a newsletter or periodical
    • a plaque, if it is of small cost and prominence.

    Example – Receiving a lapel badge as acknowledgment

    Clare receives a lapel badge for her donation to a DGR. This is not a material benefit so the donation is a gift.

    End of example

    However, if you give larger acknowledgments in the form of commercial advertising it may prevent the payment from being a gift. If your supporter incurs advertising and sponsorship expenses when deriving assessable income they may be able to claim a tax deduction as an expense, rather than as a gift.

    See also:

    How much can supporters claim?

    Multi-purpose appeals

    If you are conducting an appeal for more than one purpose (and not all of the purposes are for the benefit of DGRs), your donor must pledge the extent their gift will be applied to a DGR.

    Your donor can make a pledge on a contribution envelope or a pledge form to the fundraising body, specifying the name of the DGR and the amount or percentage of the total to be applied to the DGR. Your donor can only claim a deduction for the amount of the actual gift donated to the DGR.

    Alternatively, the terms of the appeal may state the proportion to be applied to the DGR. Your donor can claim a deduction for that proportion of the gift.

    Not a gift

    The following are not gifts:

    • buying items at a charity auction
    • purchases of raffle tickets and art union tickets
    • buying chocolates, pens and similar low cost items
    • the cost of attending a fundraising dinner or concert, even if the cost exceeds the value of the dinner
    • membership fees
    • making a payment to a school building fund as an alternative to an increase in school fees
    • providing a service – for example, a volunteer can't claim a deduction for their expenses in carrying out the voluntary work or the value of their unpaid work
    • any payments made if you have an understanding with the donor that the payments will be used to provide a benefit to them.

    Example 1Purchase at an auction

    Sally buys a clock at a charity auction. This is not a gift, even if Sally has paid a lot more than the value of the clock. Sally may be able to claim for a contribution.

    Example 2Tickets and donations

    William attends a Christmas concert. He buys his admission ticket for $10. On the night, he also makes a voluntary donation of $70. The $70 is a gift but the $10 for the ticket is not a gift.

    End of example

    Your donor cannot claim a deduction if they enter into an arrangement for donating a gift and any of the following apply:

    • the value of the gift to the DGR is, or would be expected to be, less than the value of the gift at the time you donated it
    • any other organisation makes, or may reasonably be expected to make, a payment to other people for the gift
    • they or their associate obtains, or would be expecting to obtain, any benefit other than the benefit of a tax saving
    • the DGR or another fund, authority or institution is to acquire property from them or their associate.

    In order for a transfer of property to be a gift, it must be made voluntarily – that is, it must be the act and will of the donor.

    A transfer is not made voluntarily if the payer makes it for consideration or because of a prior obligation is imposed on them by law or by contract. So, the donor cannot claim a deduction if they are offered a choice of making a gift to the DGR as an alternative to discharging or reducing their (or their associate's) contractual obligation to the DGR or an associate of the DGR. However, if they make a transfer under a sense of moral obligation it is still made voluntarily.

    If you fail to obtain immediate and unconditional right of custody and control of the property transferred, you have not received a gift, however, there is an exception for cultural and heritage gifts.

    See also:

    Taxation Ruling TR 2005/13External Link Income tax: tax deductible gifts – what is a gift

    Last modified: 14 Oct 2015QC 46263