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Ruling
Subject: Spreading of a deduction
Question 1
Can the taxpayer spread a monetary gift over two years pursuant to section 30-247 of the Income Tax Assessment Act 1997?
Answer
Yes
This ruling applies for the following periods:
Income year ended 30 June 2012
Income year ended 30 June 2013
The scheme commences on:
1 July 2011
Relevant facts and circumstances
The taxpayer requested a ruling on whether a monetary gift could be spread over two years.
The taxpayer submitted a signed declaration which stated:
1. The donation and transfer of money was made voluntarily.
2. The donation and transfer was by way of benefaction.
3. There is no material benefit or advantage received as a result of this transfer.
A receipt issued by the donee was submitted with the application.
Relevant legislative provisions
Section 30-247 of the Income Tax Assessment Act 1997
Section 30-248 of the Income Tax Assessment Act 1997
Reasons for decision
Summary
The taxpayer is entitled to spread a monetary gift over two years pursuant to section 30-247 of the Income Tax Assessment Act 1997.
Detailed reasoning
Subdivision 30-DB of the Income Tax Assessment Act 1997 (ITAA 1997) allows you to elect to spread deductions for certain gifts and covenants over up to 5 income years.
Subsection 30-247(1) of the ITAA 1997 states:
An election under this Subdivision may be made for a gift, made on or after 1 July 2003, that is:
(a) a gift of:
(i) money; or
(ii) property valued by the Commissioner at more than $5,000;
made to a fund, authority or institution covered by item 1 or 2 of the table in section 30-15; or
(b) a gift that is covered by item 4, 5 or 6 of the table in section 30-15.
The first issue to be addressed is whether the sum of money is considered to be a 'gift'. Paragraph 13 of Taxation Ruling TR 2005/13 Income tax: tax deductible gifts - what is a gift states that the courts have described a gift as having the following characteristics and features:
1. the transfer is made voluntarily;
2. the transfer arises by way of benefaction; and
3. no material benefit or advantage is received by the giver by way of return
4. there is a transfer of the beneficial interest in property.
The taxpayer submitted a statement which declares that the first three criteria are satisfied. In relation to the forth criterion, the taxpayer submitted a receipt that was issued by the donee which states a monetary donation was made. The gift was also made after 1 July 2003.
Paragraph 30-247(1)(a) of the ITAA 1997 states that a gift must be made to a fund, authority or institution covered by item 1 or 2 of the table in section 30-15. As stated on the Australian Business Register, the donee is endorsed as a deductible gift recipient from 1 July 2000 and is covered by items 1 & 4 of the table in section 30-15 of the ITAA 1997.
Therefore all of the conditions under subsection 30-247(1) of the ITAA 1997 have been satisfied.
Subsection 30-248(1) of the ITAA 1997 states:
If you can deduct an amount:
(a) under this Division for a gift covered by subsection 30-247(1); or
(b) under Division 31 for entering into a conservation covenant covered by subsection 30-247(2);
you may make a written election to spread that deduction over the current income year and up to 4 of the immediately following income years.
The taxpayer advised that they wish to spread the monetary gift over a two year period. Therefore they may make a written election to spread that deduction over the current income year and the following income year.
Conclusion
The taxpayer is entitled to spread a monetary gift over two years pursuant to section 30-247 of the Income Tax Assessment Act 1997.