Taxation Ruling

IT 293

Gifts to eligible overseas aid agencies

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FACTS

Amendments to section 78 of the Income Tax Assessment Act give effect to the 1980-81 Budget Speech announcement of the Government's decision to provide a new income tax concession for gifts of $2 or more made to public funds established by certain eligible overseas aid agencies for the relief of persons in developing countries.

2. In addition to ensuring the deductibility of gifts to funds maintained by the 22 organisations originally announced as eligible for the concession in the Treasurer's joint statement on 18 September 1980 with the then Minister for Foreign Affairs, those amendments, which were contained in the Income Tax Laws Amendment Act 1981, sanction procedures for future extensions of the scheme to additional overseas aid bodies that seek and obtain the necessary ministerial approval.

3. Under the concession, gifts made to a public fund established by an organisation that is approved for the purposes of the scheme by the Minister for Foreign Affairs will qualify for deduction where the Treasurer is satisfied that the fund is one exclusively for the relief of persons in countries that, at that time, are under certification by the Minister for Foreign Affairs as developing countries and where the Treasurer has, by notice published in the Gazette, declared the fund to be an eligible fund for purposes of the scheme.

4. Generally, gifts to a fund that become eligible under these procedures will be deductible from the date specified in the Gazette in which the fund is declared to be an eligible fund, not being a date earlier than the date of the Gazette. Transitional provisions were, however, built into the scheme to apply to gifts to a fund maintained by one of the 22 named organisations. The transitional arrangements allow such gifts to qualify for deduction where made after 18 September 1980.

5. The public funds established by the 22 organisations nominated in the 18 September ministerial statement were formally declared by the Treasurer to be eligible funds for the purposes of the concession in Special Gazette No.S129 of 30 June 1981 and their approval was announced in a statement issued by the Treasurer on the same date; Press Release No.120 of 1981.

6. The effect of the gazettal is that gifts of $2 or more made on or after 19 September 1980 to the declared funds are eligible for deduction. However, because of the delay in finalising both the administrative and legislative arrangements for the concession a number of the approved organisations had, on the strength of the ministerial announcement, acted to solicit gifts for eligible overseas aid purposes prior to the formal establishment of the required fund. There is no intention that gifts should fail to qualify for deduction on those grounds.

7. This raises the practical problem of identifying eligible gifts in circumstances where receipts may have been issued in a name that does not coincide with the name of the eligible fund as finally established and approved. In the majority of such cases it is probable that receipts will have been issued in the name of the approved organisation itself, although it is known that in some instances gifts have been solicited as part of an approved organisations annual appeal for general gifts for overseas aid. It is recognised that not all gifts made in these circumstances will have been made and applied for eligible overseas aid purposes and some may have been made prior to 19 September 1980. On the other hand it is a reasonable prima facie assumption that a taxpayer making a claim for a gift to one of the nominated organisations or, where appropriate, its appeal was acting on the basis of the announced concession and on the basis that it had been made for eligible purposes.

RULING

8. In the particular circumstances that have occurred on the introduction of the concession, and given the impracticability of querying all claims made, deductions sought for gifts of $2 or more to the nominated organisations or, where appropriate, their appeals should be allowed. This direction is, or course, subject to any evidence in the return otherwise that makes it clear that a gift was not made for eligible purposes or was made prior to 19 September 1980 and subject also to ordinary assessing procedures relating to query action.

9. The procedures authorised by this ruling are to apply for assessments of income for the year ended 30 June 1981 only. In respect of future years the scheme will have settled down so that the general rule will be to allow deductions only where they are claimed as paid in the name of particular gazetted funds.

10. The attached Schedule lists the original 22 approved organisations and their respective funds as well as the names of a further twelve organisations and their eligible funds, details of which were released in Press Statements No. 176 of 1982 and No. 8 of 1983. The Schedule also sets out the effective dates of the relevant Gazette notices.

COMMISSIONER OF TAXATION
Replaced by TR 95/2

References

ATO references:
NO L80/46 P2 F94

Date original memo issued:
24.07.81

Subject References:
GIFTS
OVERSEAS AID AGENCIES

Legislative References:
78(1)(a)(lxii)
78(8)