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Edited version of your private ruling
Authorisation Number: 1012567854137
Ruling
Subject: Donations
Question
Are you entitled to a deduction for cost of materials used to make cakes for registered charities?
Answer
No
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts
You make items for registered charities for them to sell.
You do this voluntarily.
You have incurred expenses in purchasing materials used to make these items.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 30
Reasons for decision
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of gifts or contributions.
Division 30 of the ITAA 1997 provides that the types of gifts to a deductible gift recipient (DGR) that may be deductible include:
· money
· property (including trading stock) purchased during the 12 months before the gift was made
· property valued by the Commissioner at more than $5,000
Taxation Ruling TR 2005/13 states at paragraph 83:
Services that are provided to a DGR by volunteers are not tax deductible as there is no transfer of property involved. Likewise any expenses that may be borne by the volunteer in the course of providing the services to the DGR are not deductible as gifts as there is no transfer of property to the DGR.
In Case S43 85 ATC 343; (1985) 28 CTBR (NS) Case 49 , the Board of Review affirmed the decision of the Commissioner to deny deductions for motor vehicle, postage and telephone expenses totalling $675 incurred by the taxpayer in the course of undertaking voluntary work for a DGR. The Board held that the taxpayer did not make a gift of money or property to the DGR. What the taxpayer gave was simply his services.
In your case you have incurred expenses for the purchase of materials to make items for a charity. These materials are not considered a gift as there is no transfer of money or property.
Therefore you are not entitled to a deduction for the purchase of materials as a donation.
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