Draft Taxation Determination

TD 94/D88

Income tax: are gifts to approved funds deductible under subsection 78(4) or subsection 78(5) of the Income Tax Assessment Act 1936 if the donor receives a material benefit in return?

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FOI status:

Preamble

1. No, to be a 'gift' for taxation purposes, the money or property must be given voluntarily and the donor must not receive any material benefit (FC of T v. McPhail (1968) 117 CLR 111). The receipt of something of trifling or insubstantial value, such as a sticker, is not a material benefit.

2. Where a material benefit is received, the payment is not a 'gift' and is therefore not tax deductible.

Examples

(a) Shannon donates $10 to a well-known charity and receives a plastic lapel badge. The payment is a tax deductible gift because no material benefit was received.

(b) Stuart gives $20 to a public benevolent institution and receives a packet of Christmas cards. The payment is not a gift because Stuart has received a material benefit. The result is the same if Stuart had received theatre, ball or dinner tickets, a diary, a bottle of wine, or any other item of value.

(c) At an auction conducted by a public hospital, Desiree makes a successful bid of $100 for a new radio. Desiree wants to claim the difference between the bid price and actual cost of the radio as a 'gift'. No part of the payment is a gift because Desiree has received a material benefit.

Commissioner of Taxation
18 August 1994

This Draft Determination has been withdrawn from 30/08/95

References

ATO references:
NO BRI 0032

Related Rulings/Determinations:

TD 92/110
TD 93/57
IT 2071
IT 2443

Subject References:
gifts
conditional gifts

Legislative References:
ITAA 78(4)
ITAA 78(5)

Case References:
FC of T v. McPhail
(1968) 117 CLR 111