Edited version of private advice

Authorisation number: 1052492269486

Date of advice: 13 January 2026

Ruling

Subject: Donation deductions

Question

Does the Commissioner have the discretion to allow the transfer of undeducted donations made by the deceased to the estate's income tax return under section 8-1 of the Income Tax Assessment Act 1997 (ITAA1997)?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Taxpayer passed on DDMMYY.

Taxpayer made donations totalling $XX.XX to Women's Community Shelters on DDMMYY and DDMMYY.

Taxpayers' personal income tax returns have yet to be lodged for the years ending DDMMYY, DDMMYY and DDMMYY.

The Trustee A has outstanding income tax returns for years ending DDMMYY, DDMMYY, DDMMYY and DDMMYY.

Executor will prepare the Election to Spread Gift Deductions (NAT 73763) for a period of five (5) years including years ended DDMMYY and DDMMYY prior to lodgement of outstanding returns.

All remaining distributions by the Estate are being donated to registered charities and other educational institutions.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Subsection 260-142(3) of the Taxation Administration Act 1953 provides that the trustee of the deceased estate must provide any returns and other information that the deceased person was liable to provide or would have been liable to provide if he or she were still alive.

PCG 2018/4 Income tax - liability of a legal personal representative of a deceased person provides further information on this topic.

For the Commissioner to utilise discretion, the law must first provide it. There is no discretion within Part 2-5 of the ITAA 1997 to carry forward the deductions made when the individual was alive into the deceased estate, as the estate is a separate legal entity.

This is also detailed in Taxation Determination TD 95/47 Income tax: capital gains: how is a net capital loss treated if it is unrecouped by a taxpayer at the date of his or her death?

Reference to paragraph 2:

This (unrecouped) net capital loss cannot be:

a.            offset against any other income in the final income return of the deceased; or

b.            carried forward into the first income tax return of the trust estate to be offset against future capital gains made by the trust estate; or

c.            used by the beneficiaries of the deceased estate to be offset against their own capital gains.

We reference section 30-248 of the ITAA 1997 Making an election. For a gift deduction to be spread over 5yrs the election has to be made prior to lodging the return in the year the donations were made by the individual who made the donation. There is no discretion to allow longer, only changes to the percentage can be made, and most importantly only the individual who made the election can make any change to percentage.

The undeducted amounts aren't available to the trust therefore even if the deceased had made the election in their lifetime the estate wouldn't be able to access those deductible amounts.

Please refer to our website at ato.gov.au and search QC 40481 Doing a final tax return for the deceased person.

Income and deductions

Include:

•                     income earned and deductible expenses incurred by the deceased person in the income year up to the day they died

•                     costs of preparing the return, such as tax agent fees and similar expenses incurred by the executor or administrator, even if they were incurred after the deceased's death.

Income and deductions incurred by the estate after the deceased's death are reported in a trust tax return.

Application of circumstances

In this case, the donations were made by the taxpayer prior to their passing and there is no discretion allowable within Part 2-5 of the ITAA 1997 for the unclaimed deductions to be transferred to the deceased estate.

In respect of section 30-248 of the ITAA 1997 Making an election. The request is only able to be made by the entity who made the donation, being the deceased and it is only regarding changes to the percentage over the 5-year period.