ATO Interpretative Decision
ATO ID 2001/374
Income Tax
Gifts - advantage of a material characterFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can the taxpayer claim a deduction under section 30-15 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred in purchasing an air conditioner for their home unit which will be given to the retirement village in which they reside when they vacate the unit?
Decision
No, the taxpayer cannot claim a deduction under section 30-15 of the ITAA 1997 for expenses incurred in purchasing an air conditioner for their home unit which will be given to the retirement village in which they reside when they vacate the unit.
Facts
The taxpayer purchased an air conditioner for their home unit which is located in a retirement village.
The taxpayer intends to leave the air conditioner in the home unit as a gift to the retirement village when they vacate the unit.
Reasons for Decision
Section 30-15 of the ITAA 1997 allows a deduction for gifts in certain situations.
The question of what constitutes a gift was considered by Owen J in FCT v. McPhail (1968) 117 CLR 111. His honour said at 116, that to constitute a 'gift':
'it must appear that the property transferred was transferred voluntarily and not as the result of a contractual obligation to transfer it and no advantage of a material character was received by the transferor by way of return'.
The taxpayer received an advantage of a material character as they have retained the personal use of the air conditioner until they vacate their home unit. The expense incurred is therefore not a 'gift' for the purposes of section 30-15 of the ITAA 1997 as an advantage of a material character was received.
Date of decision: 13 June 2001
Legislative References:
Income Tax Assessment Act 1997
30-15
Case References:
FCT v. McPhail
(1968) 117 CLR 111
Related Public Rulings (including Determinations)
IT 2263
IT 2443
TD 92/110
ATO ID 2001/377
Keywords
Gifts & donations
Gifts to organisations
Deductions & expenses
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 13 June 2001 | Original statement |
| 14 December 2007 | Archived |