Private ruling: Spreading of a deduction
Published: January 2012
Ruling period: Income year ended 30 June 2012 | Income year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Can the taxpayer spread a monetary gift over two years pursuant to section 30-247 of the Income Tax Assessment Act 1997 ? | A1: Yes

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 - 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. | Detailed Reasoning - 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 .

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