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Ruling

Subject: gifts and donations

Question 1

Are you entitled to claim a deduction for a donation of money made to a fund which is a deductible gift recipient (DGR) in the 2010-11 financial year?

Answer

Yes.

Question 2

If the fund is endorsed as a DGR in the 2011-12 financial year, are you entitled to claim a deduction for a donation of money made in the 2011-12 financial year?

Answer

Yes.

This ruling applies for the following periods

Year ended 30 June 2011

Year ending 30 June 2012

The scheme commences on

1 July 2010

Relevant facts and circumstances

During the 2010-11 financial year you made a donation of money in excess of $2 to a fund.

You have been provided with a receipt for the donation of money.

You intend to make a further donation of money in the 2011-12 financial year.

The fund is endorsed as a deductible gift recipient (DGR).

You have stated that the amounts are given voluntarily and they are not part of a subscription or membership.

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 financial year ended 30 June 2011. 

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 a benefaction. You have also stated that the transfer is voluntary and no advantage is received in return.

Conclusion

In your case, you have given a donation of money greater then $2 to a fund, which is endorsed as a DGR. You are therefore entitled to claim a deduction in the 2010-11 financial year.

2011-12 financial year

DGR status of an organisation may change from year to year. Therefore, before completing your tax return for the financial year ended 30 June 2012 you will need to confirm the DGR status of the fund.

This can be checked through the Australian Business Register website www.abn.business.gov.au.