Private ruling: Election to spread gift deductions over five years
Published: November 2014
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2014

Ruling: Q1: If you make a tax deductible gift in a particular financial year, can you spread the tax deduction over that financial year and subsequent years, pursuant to section 30-248 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Where you have made an election to spread a gift deduction over five years pursuant to section 30-248 of the ITAA 1997, and you pass away before the five years have transpired, is the executor of your estate able to claim the balance in the estate return? | A2: No. | Q3: Where you have made an election to spread a gift deduction over five years pursuant to section 30-248 of the ITAA 1997, and you pass away before the five years have transpired, is the executor of your estate able to vary the election so that the balance of the gift that remains undeducted may be claimed in your date of death taxation return? | A3: Yes.

Relevant facts and circumstances: You wish to make a tax deductible gift in the year ending 30 June 20XX. You are enquiring whether you can spread the tax deduction for the gift over a number of taxation years, namely five years. You also request advice on whether your estate can claim the balance of the tax deduction if you pass away before the end of the taxation period in which the tax deduction is spread.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 4-5, | Income Tax Assessment Act 1997 Section 30-15, | Income Tax Assessment Act 1997 Subsection 30-247(1), | Income Tax Assessment Act 1997 Paragraph 30-247(1)(a), | Income Tax Assessment Act 1997 Paragraph 30-248(1)(a), | Income Tax Assessment Act 1997 Subsection 30-248(2), | Income Tax Assessment Act 1997 Subsection 30-248(4), | Income Tax Assessment Act 1997 Subsection 960-100(2) and | Income Tax Assessment Act 1997 Division 30.

Reasons for decision: Summary: Pursuant to section 30-248 of the Income Tax Assessment Act (ITAA1997), you may make a written election to spread a gift covered by section 30-247 of the ITAA 1997 over the current year and up to 4 of the immediate following years. | Detailed Reasoning - Detailed reasoning: Division 30 of the ITAA 1997 deals with deductions for gifts or contributions that you make. Pursuant to paragraph 30-248(1)(a) of the ITAA 1997, if you can deduct an amount under Division 30 of the ITAA 1997 for a gift covered by subsection 30-247(1) of the ITAA 1997, you may make a written election to spread that deduction over the current income year and up to four of the immediately following income years. Pursuant to paragraph 30-247(1)(a) of the ITAA 1997, an election may be made for a gift made on or after 1 July 2003 that is a gift of money, or property valued 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 of the ITAA 1997. In the election, you must specify the percentage (if any) of the deduction that you will deduct in each of the income years as per the requirements of subsection 30-248(2) of the ITAA 1997. You must make the election before you lodge your income tax return for the income year in which you made the gift pursuant to subsection 30-248(3) of the ITAA 1997. You may vary the election at any time. However, the variation can only change the percentage that you will deduct in respect to income years for which you have not yet lodged an income tax return pursuant to subsection 30-248(4) of the ITAA 1997. In each of the income years you specified in the election, you can deduct the amount corresponding to the percentage you specified for that year pursuant to subsection 30-249(1) of the ITAA 1997. You cannot deduct the amount that you otherwise would have been able to deduct for the gift in the income year in which you made the gift pursuant to subsection 249(2) of the ITAA 1997. | Summary: If you pass away, your estate cannot claim a deduction for the balance of the donation. However, the estate is able to vary the election so that the balance of the gift that remains undeducted may be claimed in your date of death tax return. | Detailed Reasoning - Detailed reasoning: Section 4-5 of the ITAA 1997 states that if a provision of the ITAA 1997 uses the expression you , it applies to entities generally, unless its application is expressly limited. Therefore, 'you' can refer to an entity other than an individual taxpayer. However, by common usage it must refer, within the context of a particular provision of the ITAA 1997, to the same entity rather than different entities. Under subsection 960-100(2) of the ITAA 1997, the trustee of a trust is taken to be an entity consisting of the person who is the trustee, or the persons who are the trustees, at any given time. In circumstances where the person who made an election under section 30-248 has become deceased, the use of the term you in section 30-248 of the ITAA 1997 refers to the deceased taxpayer who may vary an election and not any other taxpayer. At the date of a taxpayer's death in these circumstances, a deceased estate comes into existence from the date of death. The deceased estate is a different entity to the deceased individual taxpayer. The deceased estate does not come within the meaning of you for the purposes of section 30-248 of the ITAA 1997. Therefore, the deceased estate cannot claim the balance in the estate return based on your original election. However, it is considered that under subsection 30-248(4) of the ITAA 1997, the executor of your estate can vary the election that was previously made by you. As such the balance of any gift outstanding can be claimed in your date of death return. The requirements of subsection 30-248(4) of the ITAA 1997 must be met before the executor claims the balance of the gift as a deduction in your date of death taxation return. That is, the variation can only change the percentage that the estate will deduct in respect to income years for which you have not yet lodged. The income tax legislation does not provide for the transfer of any remaining deductible gift amount to the deceased estate.