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Edited version of private ruling
Authorisation Number: 1011761797505
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Ruling
Subject: deductibility of donation
Questions:
1. Are you entitled to claim a deduction for the full amount of the gift you made?
Answer: No
2. Are you entitled to claim a deduction for the portion of the gift amount which was receipted by the charitable fund (the fund), which is endorsed as a deductible gift recipient (DGR)?
Answer: Yes
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
In the 200X-XX income year, you and your spouse made a donation to the fund.
The fund is endorsed as a DGR.
You have been told by the fund entity that a portion of the money donated would go to the fund and the remaining portion will go to another fund that is not a DGR.
The receipts issued for the portion of the amount paid indicate that only the amount paid to the DGR will be deductible for taxation purposes.
You informed the fund entity that you wanted the entire donation paid to the DGR and are seeking advice on whether you will be entitled to a deduction for the full amount regardless of how the amount is receipted.
You have made no other donations to the DGR during this income year.
You have stated that the donation is voluntary and you receive no benefits in return.
You have also stated that there would be no adverse ramifications if you did not make any donation at all.
Relevant legislative provisions
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 be:
· made to a DGR
· a gift of money or property that is covered by a gift type, and
· truly a gift.
Deductible Gift Recipient (DGR)
Only gifts made to a DGR are tax deductible. 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 DGR funds.
In your case, the fund is a DGR.
Be a gift of money or property that is covered by the gift type
To obtain an allowable tax deduction for a gift of money under Division 30, the value of the gift must be more than $2, and made to a deductible gift recipient, according to section 30-15 of ITAA 1997.
In your case, you have met this condition as your gift of money is in excess of $2 for the income year ending 30 June 20XX.
A true gift
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:
(a) there is a transfer of money or property
(b) the transfer is made voluntarily
(c) the transfer arises by way of benefaction, and
(d) no material benefit or advantage is received by the giver by way of return.
In your case, there is a transfer of money to the DGR and the transfer arises by way of benefaction. You have also stated that the transfer is voluntary and no advantage is received in return.
Conclusion
In your case, while 100% of your donations were in excess of $2 and meet the definition of a gift, only a portion was paid to a DGR. Therefore, only this portion of the amount donated is deductible under section 30-15 of the ITAA 1997. This is the case even though you wanted the full amount to go to the fund; you have stated that you were informed by the fund entity that only a portion of the donations would be deductible and that you would only be receipted for this amount by the fund.