Edited version of your written advice

Authorisation Number: 1051414738409

Date of advice: 13 August 2018

Ruling

Subject: Deduction for expenses incurred in organising a fund raising event for a not-for-profit deductible gift recipient

Question

Will X be entitled to claim deduction under section 30-15 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred in organising a fund raising function for Y?

Answer

No.

This ruling applies for the following period:

Income year ending 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

X is a trustee of a discretionary trust. It proposes to organise a fund raising event for Y.

Y is an Australian charity registered with Australian Charities and Not-for-profit Commission (ACNC). It is registered with the Australian Taxation Office (ATO) as a Public Benevolent Institution (PBI) eligible to claim a number of tax concessions. It is also registered as a deductible gift recipient (DGR) with the ATO under table item 1 in section 30-15 of the ITAA 1997.

X will not receive any benefits in return for its contribution. All its assistance will be private.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 30-15

Income Tax Assessment Act 1997 section 30-17

Unless otherwise stated, all legislative references are to the Income Tax Assessment Act 1997.

Reasons for decision

Division 30 sets out the rules for working out deductions for certain gifts or contributions.

Section 30-15 provides that a taxpayer is entitled to a deduction for a gift or contribution that they make in certain situations and the conditions on that deductibility.

Subsection 30-228(1) states that if a Deductible Gift Recipient (DGR) issues a receipt for a gift, the receipt must state the name and ABN of the DGR and the fact that the receipt is for a gift.

Paragraph 6 of the Taxation Ruling TR 2005/13 Income tax: tax deductible gifts – what is a gift (TR 2005/13) explains what a gift is for the purposes of the gift deduction provisions and states that:

Division 30 of the ITAA 1997 provides that the types of non-testamentary gifts (to the value of $2 or more) to a DGR that can be deductible include:

● money;

● property (including trading stock) purchased during the 12 months before the gift was made;

● property valued by the Commissioner at more than $5,000;

● an item of trading stock disposed of outside the ordinary course of business;

● property under the Cultural Gifts Program; or

● gifts of places listed in the Register of the National Estate.

Paragraph 12 of TR 2005/13 advises that the term ‘gift’ is not defined in the ITAA 1997 and for the purposes of Division 30 of the ITAA 1997 the work ‘gift’ has its ordinary meaning.

Paragraph 13 of TR 2005/13 lists the characteristics and features of a gift as described by the courts, it states:

Rather than attempting a definition of gift, the courts have described a gift as having the following characteristics and features:

● there is a transfer of the beneficial interest in property;

● the transfer is made voluntarily;

● the transfer arises by way of benefaction; and

● no material benefit or advantage is received by the giver by way of return.

The characteristics and features of a gift are cumulative, i.e. if one characteristic is not satisfied then it is not necessary to continue to test the remaining characteristics.

Paragraph 21 of TR 2005/13 states:

The provision of services to a DGR by a volunteer does not constitute a gift, as the ordinary meaning of property does not include services. Any expenditure incurred by the volunteer in the course of providing the unpaid services does not constitute a gift. Nor is it deductible under section 8-1 of the ITAA 1997 as a loss or outgoing incurred in gaining or producing assessable income.

In this case X will be incurring expenses in organising the fund raising event for Y including the venue where the event will take place. Organising an event will constitute services.

The services provided to Y by X are not considered gifts. In relation to the services there has been no transfer of beneficial interest in property. Services do not fall within the table in section 30-15 as they are neither money nor property. Accordingly the service to Y is not a gift and therefor X is not entitled to claim any deduction under section 30-15 for any expenses incurred in organising a fund raising event for Y.