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Edited version of private ruling

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Ruling

Subject: Gifts/Donations

Are you entitled to claim a deduction for gift vouchers donated to a charity for the benefit of a sponsored child?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You sponsored a child through a charity.

You have donated gift vouchers to this charity.

You have purchased the vouchers and donated them via this charity specifically for the sponsored child.

The vouchers are to go to the child's mother to purchase clothing and educational items.

Relevant legislative provision

Income Tax Assessment Act 1997 Section 30-15.

Reasons for decision

Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997) outlines the guidelines for the deductibility of gifts and donations. Section 30-15 of the ITAA 1997 provides that a gift to any funds or institutions listed is allowable as a deduction in the income year in which the gift is made, provided the gift meets the various conditions of the relevant subsections.

To be able to claim a tax deduction for a gift, it must:

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. The charity has been endorsed by the Commissioner as a deductible gift recipient.

Section 30-15 of the ITAA 1997 requires that a gift of property valued at less than $5,000 be purchased by the taxpayer during the 12 months before making the gift. Property has a wide meaning. As well as physical things, it includes rights and interests that are capable of ownership and have a value. We consider that the gift vouchers you have donated meet this definition of property.

Taxation Ruling TR 2005/13 explains what constitutes a gift. The term gift is not defined in the ITAA 1997 and so for the purposes of Division 30, it has its ordinary meaning. The courts have described a gift as having the following characteristics and features:

In your case, you purchased gift vouchers and voluntarily donated them to a DGR for the sponsored child .There was no obligation on you to make the donation and you will not receive any material benefit in return. The charity was advantaged by receiving the gift without any material detriment.

As the gift of property satisfies the requirements of section 30-15 of the ITAA 1997, the donation of gift vouchers to the DGR for the benefit of the sponsored child, is an allowable deduction.

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