To encourage people to donate cultural items to public art galleries, museums, libraries and archives in Australia, the Cultural Gifts Program offers tax incentives to donors.
Donors can be an individual, company, trust or other type of taxpayer.
The Cultural Gifts Program has no special rules for gifts of trading stock. This program is administered by the Department of Communication and the Arts.
You can donate property, other than an estate, interest in land or interest in a building or part of a building. Examples of tax deductible gifts which qualify under the Cultural Gifts Program include:
- Indigenous arts
- cultural artefacts
- natural and scientific materials
- film and social history pieces
Under the Cultural Gifts Program you can donate property to:
- the Australiana Fund
- a public library in Australia
- a public museum in Australia
- a public art gallery in Australia
- an institution in Australia consisting of a public library, a public museum and a public art gallery or of any two of them
- the Australian Government for Artbank.
With the exception of the Australiana Fund and Artbank, the recipient of the gift must be a DGR.
The DGR must ensure the gift is included in a collection it is maintaining or establishing.
You will need to get a valuation of the property you are donating.
The general rule is that the amount you 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:
- acquired for the purpose of donating it
- acquired subject to an arrangement that it would be donated, or
- 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 you paid for the property
- average of the written valuations.
Different arrangements also apply if no amount is included in your assessable income for the gift, and an amount would have been included if the property had been sold rather than donated.
In this circumstance, a written valuation is not required.
One example is 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.
Your tax deduction will be reduced, by a reasonable amount, if you donate property to a DGR without the DGR actually receiving:
- immediate custody and control
- unconditional right to retain custody and control in perpetuity
- unencumbered legal and equitable title.
Your tax deduction may also be reduced if you place any conditions on donation of the property.
If you are registered for GST (or required to be registered) these amounts may need to be adjusted.
Property donated under the program is exempt from capital gains tax (CGT).If a donor gives a culturally significant item to a public art gallery, museum or library they may be entitled to a tax deduction for the market value of the gift. Also, property donated under the program is exempt from capital gains tax (CGT).