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Edited version of private advice
Authorisation Number: 1012651677288
Ruling
Subject: Gifts
Question 1
Can the Fund issue tax deductible receipts for equipment donated to it?
Answer
Yes, if all of the conditions are met.
Question 2
Can the Fund issue tax deductible receipts for services that have been donated to it?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commences on
26 May 2014
Relevant facts and circumstances
The Foundation operates the Fund which is endorsed as a deductible gift recipient.
The Foundation is looking at receiving various goods and services as gifts to assist it.
The donors who provide items will not receive anything in return for the donated goods or services including sponsorship, advertising and tickets.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 30,
Income Tax Assessment Act 1997 Section 30-15 and
Income Tax Assessment Act 1997 Subsection 30-228(1).
Reasons for decision
Issue 1
Gifts
Subsection 30-228(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that if a Deductible Gift Recipient (DGR) issues a receipt for a gift, the receipt must state the name and ABN of the DGR and the fact that the receipt is for a gift.
Division 30 of the ITAA 1997 sets out the rules for working out deductions for certain gifts or contributions.
Taxation Ruling TR 2005/13 Income tax: tax deductible gifts - what is a gift (TR 2005/13) explains what a gift is for the purposes of the gift deduction provisions and states at paragraph six:
6. Division 30 of the ITAA 1997 provides that the types of non-testamentary gifts (to the value of $2 or more) to a DGR that can 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;
• an item of trading stock disposed of outside the ordinary course of business;
• property under the Cultural Gifts Program; or
• gifts of places listed in the Register of the National Estate.
Paragraph thirteen of TR 2005/13 lists the characteristics and features of a gift as described by the courts:
13. Rather than attempting a definition of gift, the courts have described a gift as having the following characteristics and features:
• there is a transfer of the beneficial interest in property;
• the transfer is made voluntarily;
• the transfer arises by way of benefaction; and
• no material benefit or advantage is received by the giver by way of return.
The characteristics and features of a gift are cumulative, i.e. if one characteristic is not satisfied then it is not necessary to continue to test the remaining characteristics.
Transfer of beneficial interest in property
Paragraph 61 of TR 2005/13 states:
61. The making of a gift to a DGR involves the transfer of money or property to that DGR: section 30-15 of the ITAA 1997. In the simplest cases this involves the delivery of money (cash, cheque or electronic transfer of funds) or goods to the DGR.
Paragraph 62 of TR 2005/13 states, in part:
62. In each case it is necessary to ascertain whether a transfer has occurred, what property has been transferred, and when the transfer took place. This is to ensure that ownership of identifiable property has been divested and has been transferred to the DGR
Question 1
The equipment donated to the Fund is considered a gift of property and will meet the gift requirements if:
• there is a transfer of the beneficial interest in property;
• the transfer is made voluntarily;
• the transfer arises by way of benefaction; and
• no material benefit or advantage is received by the giver by way of return.
The equipment donated would be required to be:
• property (including trading stock) purchased during the 12 months before the gift was made;
• property valued by the Commissioner at more than $5,000;
• an item of trading stock disposed of outside the ordinary course of business;
If the above conditions are satisfied the Fund could issue a tax deductible receipt to the donor.
Question 2
The services provided to the Fund are not considered gifts. In relation to the services there has been no transfer of beneficial interest in property. Services do not fall within the table in section 30-15 of the ITAA 1997 as it is neither money nor property.
Accordingly the donation of services to the Fund is not a gift.
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