ATO Interpretative Decision

ATO ID 2003/92

Income Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a gift of a mattress to a charity deductible under section 30-15 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. The gift of a mattress to a charity is deductible under section 30-15 of the ITAA 1997.

Facts

The taxpayer placed an order after 1 July 2000 with a company for the manufacture of a cotton mattress for his spouse who suffered from certain allergies. Subsequent specialist medical advice was given against the use of all cotton mattresses. However the ordered mattress was delivered the day after the advice was given.

The taxpayer decided to donate the unused mattress to a charity within 12 months of its purchase.

The charity is registered as a deductible gift recipient.

Reasons for Decision

Section 30-15 of the ITAA 1997 and the accompanying table stipulates how and when a gift may be deducted.

Where the gift is made on or after 1 July 2000, a taxpayer cannot obtain a tax deduction for a gift to a fund, authority or institution covered by the above mentioned table, unless the recipient is endorsed by the Commissioner or is specifically listed by name in the ITAA 1997 or its regulations as a deductible gift recipient (section 30-17 of the ITAA 1997).

Division 30 of the ITAA 1997 provides that a taxpayer will be able to claim a deduction for a gift or contribution made during the year to nominated funds (including prescribed private funds), authorities, institutions or specified persons, subject to the following conditions:

1)

the gift must not be made by will unless it is a gift which qualifies under the Cultural Bequests Program (section 30-230 of the ITAA 1997),

2)

each gift must be of $2 or more either in money or property other than money (for example: land or shares),

3)

if property other than money is given, the property must either have been purchased by the person making the gift during the 12 months before the gift is made or be valued by the Commissioner at more than $5,000, and

4)

the recipient of the gift must be in Australia (including Norfolk, Cocos (Keeling) and Christmas Islands).

A transfer of property will constitute a 'gift' if the property was transferred voluntarily (Cyprus Mines Corporation v. FC of T 78 ATC 4468; 9 ATR 33), and no advantage of a material character was received by the taxpayer in return (FC of T v. McPhail (1968) 41 ALJR 346; 15 ATD 16; 10 AITR 552; Hodges v. FC of T 97 ATC 2158; 37 ATR 1091).

A motive of benefaction on the part of the donor is also an essential element of a gift (Leary v. FC of T 80 ATC 4438; 11 ATR 145) but this does not have to be the sole motive, and the fact that the donor is motivated also by the desire to obtain a tax deduction cannot, of itself, disentitle the donor to the deduction (FC of T v. Coppleson 81 ATC 4550; 12 ATR 358).

In determining the value of the gift of property which is purchased within the previous 12 months, the amount deductible is the lesser of its market value and the amount paid for it (section 30-15 of the ITAA 1997). Where the property was not purchased within the previous 12 months and is valued at more than $5,000, the Commissioner determines the value of the property and thus the amount deductible.

As the taxpayer has donated the unused mattress within 12 months of its purchase to a deductible gift recipient, a deduction is allowable under section 30-15 of the ITAA 1997 for its cost.

Legislative References:
Income Tax Assessment Act 1997
   section 30-5
   section 30-15
   section 30-17
   section 30-230

Case References:
Cyprus Mines Corporation v. FC of T
   78 ATC 4468
   9 ATR 33

Keywords
Keywords
Gifts and donations
Deductions and expenses

Business Line:  Small Business/Individual Taxpayers

Date of publication:  15 March 2003

ISSN: 1445-2782