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Edited version of your private ruling
Authorisation Number: 1011955794165
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Ruling
Subject: Donations as a work related expenses
Question
Are you entitled to a deduction as a work related expense for donations made to members of the community?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2007
Relevant facts
Part of the philosophy espoused in your occupation is that of generosity.
You make many gifts and donations to members of the community, including feeding the homeless, paying for medical expenses for members of the community and paying for living expenses for those living in financial hardship.
Your generosity may lead to more community members becoming members of your organisation and satisfaction of your employer.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income or are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income, or a provision of the ITAA 1997 prevents it.
A number of significant court decisions have determined that for an expense to be an allowable deduction:
· it must have the essential character of an outgoing incurred in gaining
assessable income or, in other words, of an income-producing expense
(Lunney v. FC of T; (1958) 100 CLR 478),
· there must be a nexus between the outgoing and the assessable income so
that the outgoing is incidental and relevant to the gaining of assessable
income (Ronpibon Tin NL v. FC of T, (1949) 78 CLR 47), and
· it is necessary to determine the connection between the particular outgoing
and the operations or activities by which the taxpayer most directly gains or
produces his or her assessable income (Charles Moore Co (WA) Pty Ltd v.
FC of T, (1956) 95 CLR 344; FC of T v. Hatchett, 71 ATC 4184).
While we accept that generosity for a person in your profession is part of the philosophy, the relevant nexus between the gifts or donations and your assessable income are not present. The donations are a personal gift from you to the recipient and as such, a deduction is not allowable under section 8-1 of the ITAA 1997 as they are considered to be private.