Private ruling: assessable income and overseas donation
Ruling period: Year ended 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the salary you receive from your employer and donated to an overseas organisation assessable income? | A1: Yes. | Q2: Are you entitled to claim a deduction for a donation made to an overseas organisation? | A2: No.

Relevant facts and circumstances: You are employed You visited a charity organisation in Country A which promotes development in undeveloped areas by building villages. You intend to enter into a 'match us' program with other friends to support this organisation. You intend to have your salary donated to this charitable organisation. You are requesting your employer to match your income dollar for dollar.


Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that if you are an Australian resident, your assessable income includes the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year Subsection 6-5(1) of the ITAA 1997 provides that a taxpayer's assessable income includes income according to ordinary concepts. Examples of receipts that would generally be considered income according to ordinary concepts would include salary and wages for services rendered by an employee, and sales from a business activity. Subsection 6-5(4) of the ITAA 1997 states that in working out whether you have derived an amount of ordinary income, and if so when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct. In your case, you will receive a regular income or salary as an employee. You wish to have this income given to an overseas organisation. Payments of salary and wages are income according to ordinary concepts and are included in assessable income under section 6-5 of the ITAA 1997. Even where you direct your income to another entity, you are still taken to have received and derived the income. Therefore your salary and wages form part of your assessable income. | Detailed Reasoning - Donation: You intend directing your employer to donate your salary to an overseas organisation. A donation you make may be deductible provided the recipient is a deductible gift recipient as acknowledged by the Australian Taxation Office under section 30-227 of the ITAA 1997. Only certain organisations are entitled to receive income tax deductibility gifts. They are called deductible gift recipients (DGRs). DGRs are: · Endorsed by the Australian Taxation Office, or · Listed by name in the tax law. The overseas organisation is not endorsed by the Australian Taxation Office as a DGR nor listed by name as a DGR in the tax law. Therefore, as the overseas organisation is not a DGR, you are not entitled to claim a deduction for any donation made to this organisation.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.