ATO ID 2003/173: Gifts or contributions of money made by an executor under the terms of a will
Date of decision: 7 March 2003
Year of income: 30 June 2003
Business line: Business and Personal Taxes Centre of Expertise

Issue
Are monetary gifts or contributions made by the executor of a deceased estate, pursuant to a will, allowable deductions under Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
No. Monetary gifts or contributions made by the executor of a deceased estate, pursuant to a will, are not allowable deductions under Division 30 of the ITAA 1997.

Facts
The taxpayer is appointed the trustee and executor of a will. The testator devised and bequeathed a portion of their estate to two institutions. The institutions are not the Australiana Fund, public libraries, museums or art galleries in Australia, or institutions in Australia which are a combination of a public library, museum and/or art gallery. The trustee and executor is empowered to sell, call in and convert into money the whole or any part of the residuary estate at such times, in such manner, at such price and upon such terms as they think appropriate. Various CGT assets were held by the trustee and executor on behalf of the estate. The trustee and executor disposed of the CGT assets. In accordance with the terms of the will, the executor and trustee made distributions to the institutions. The distributions were made from the proceeds of the sale of the CGT assets.

Reasons for decision
Summary: Subsection 30-15(2) of the ITAA 1997 specifically provides that a testamentary gift or contribution is not deductible under section 30-15 of the ITAA 1997. Income tax legislation does not provide a definition of or any specific guidance as to what is meant by the word 'testamentary'. The word therefore bears its ordinary meaning. The Australian Oxford English Dictionary defines 'testamentary' to mean 'of or by or in a will.' The meaning of 'testamentary' was considered by Kekewich J in Re Clemow, Yeo v Clemow [1900] 2 Ch 182. He referred to the Century Dictionary definition of 'testamentary 'as 'relating or appertaining to a will or wills; also relating to administration of the estates of deceased persons.' The term 'will' is defined in the Butterworths Australian Legal Dictionary as: a legal document which a person, the testator, makes provision for an executor to be appointed to administer their estate after their death to discharge liabilities and to distribute property as directed to beneficiaries as specified. A gift made by an executor in accordance with the terms of a will is a testamentary gift or contribution. Consequently, a gift or contribution that is made under will is not deductible under section 30-15 of the ITAA 1997. Accordingly, the taxpayer is not entitled to a deduction under Division 30 of the ITAA 1997 for any monetary gifts or contributions made as executor of a deceased estate.

Legislative references: Income Tax Assessment Act 1997 Division 30 section 30-15 subsection 30-15(2)
Case references: Re Clemow, Yeo v Clemow [1900] 2 Ch 182
Other references: Explanatory Memorandum to the Tax Law Improvement Act 1997 The Australian Oxford English Dictionary Butterworths Australian Legal Dictionary
Subject references: Deductible gift recipients Executors Gifts & donations Wills