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Edited version of your written advice
Authorisation Number: 1051382910531
Date of advice: 7 June 2018
Ruling
Subject: Charities – deductible gift recipient – tax deductible gifts
Question
Is a payment to an organisation a tax deductible gift in accordance with Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997) if the organisation reimburses an individual for travel expenses, and that individual subsequently gives the organisation a voluntary donation of money that is of similar, or equal value, to the reimbursement amount?
Answer
Yes
This ruling applies for the following periods:
Year ending 30 June 2018
Year ending 30 June 2019
Year ending 30 June 2020
Year ending 30 June 2021
Year ending 30 June 2022
The scheme commences on:
1 July 2013
Relevant facts and circumstances
The Applicant has previously applied for a ruling for years ending 30 June 2014 to 30 June 2017, which was issued in 2014.
There have been no changes to the facts as provided in the previous ruling request.
Relevant legislative provisions
Division 30 of the Income Tax Assessment Act 1997
Reasons for decision
Summary
A reimbursement to an individual for travel expenses from a deductible gift recipient (DGR) registered charity, and who subsequently provides the DGR with a voluntary donation of money of similar or equal value to the reimbursement amount, the payment to the DGR is a tax deductible gift.
Detailed reasoning
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 in Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997).
Paragraphs 88 to 90 of TR 2005/13 provide examples that are applicable to your circumstances:
Example 17
G travels to a remote area to work for a DGR without remuneration. He pays for his own airfares. The expenditure is not a tax deductible gift to the DGR.
Where there is in fact a transfer of property to a DGR, the giver, though a volunteer, is entitled to a tax deduction in respect of the transfer.
Example 18
N is a telephone counsellor for a DGR. She provides a dedicated telephone at her home for this purpose. She pays all the costs associated with the provision of this telephone line ($300), and then seeks reimbursement from the DGR. After it reimburses her for these costs, she voluntarily gives the $300 to the DGR. The payment to the DGR is a tax deductible gift.
In accordance with paragraph 92 of TR 2005/13, the case authorities make it clear that for a transfer of property to be a “gift” it must be made voluntarily. A transfer will be voluntary if it is ‘the act and will of the disponor and there was nothing to interfere with or control the exercise of that will’ (Cyprus Mines Corporation v. Federal Commissioner of Taxation 78 ATC 4468 at 4481; (1978) 9 ATR 33 at 48).
As the examples above explain, individuals who receive reimbursement, and voluntarily give a monetary donation to a DGR, are entitled to a deductible gift receipt. Therefore, based on your facts, it would be acceptable for your organisation to provide a tax deductible receipt when an individual gives your organisation a monetary gift equal to, or of a similar amount, to the sum that you have reimbursed them for travel expenses.
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