Private ruling: Gift receipt
Date of advice: 9 November 2015
Published: January 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Pursuant to subsection 30-228(1) of the Income Tax Assessment Act 1997 can the Foundation issue a gift receipt? | A1: Yes

Relevant facts and circumstances: The Foundation is endorsed as a deductible gift recipient. The Foundation owns shares in a company (the Company). Donor A paid money to the Company on behalf of the Foundation.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 30-228.

Reasons for decision: Summary: Subsection 30-228(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that if a deductible gift recipient (DGR) issues a receipt for a gift, the receipt must state: (a) the name of the fund, authority or institution; (b) the ABN (if any) of the deductible gift recipient; and (c) the fact that the receipt is for a gift. A DGR must not issue a receipt for a gift, if the money or property received by the DGR is not a gift. The term 'gift' is not defined in the ITAA 1997. For the purposes of Division 30 of the ITAA 1997 the term 'gift' has its ordinary meaning. The Commissioner's view on the meaning of 'gift', in the context of Division 30, is stated in Taxation Ruling TR 2005/13 Income Tax: tax deductible gifts - what is a gift , which relevantly provides the following: 13. 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. 15. In determining whether a transfer is a gift it is necessary to consider the whole set of circumstances surrounding the transfer and this may include consideration of parties other than the giver and the DGR. It is the substance and reality of the transfer that has to be ascertained. It is therefore necessary to take account of those acts, transactions, arrangements and circumstances that provide the context and the explanation for the transfer. | Detailed Reasoning - Transfer of beneficial interest in property: … 1 8. For there to be a transfer, the property which belonged to the giver must become the property of the DGR. A gift is effectual only where the giver has done everything that is necessary, in accordance with the relevant laws governing the transfer of that kind of property, to transfer ownership to the DGR… | Detailed Reasoning - Transfer made voluntarily: 23. In order for a transfer of property to be a gift, it must be made voluntarily, that is, it must be the act and will of the giver, and there must be nothing to interfere with or control the exercise of that will. However, a transfer made under a sense of moral obligation is still made voluntarily. 24. A transfer is not made voluntarily if it is made for consideration or because of a prior obligation imposed on the giver by statute or by contract. Nonetheless, a transfer which has the other attributes of a gift will not fail to be considered a voluntary transfer merely because the means used to give effect to the benefaction have contractual or similar features. … | Detailed Reasoning - Arises by way of benefaction: 27. An essential attribute of a gift is that benefaction is intended, and in fact conferred on the recipient. Conferring benefaction means that the DGR is advantaged in a material sense, to the extent of the property transferred to them, without any countervailing detriment arising from the terms of the transfer. 28. Where the giver is aware that the transfer of property will result in detriments, disadvantages, obligations, liabilities or limitations to the recipient, the attribute of benefaction may be missing... 29. However, detriments, disadvantages, obligations, liabilities, or limitations borne by the recipient which are not within the knowledge and intention of the giver at the time of the transfer, and which do not arise from the terms of the transfer of property by the giver, do not necessarily preclude a finding that the conferral of benefaction was associated with the transfer. … | Detailed Reasoning - No material benefit or advantage: 37. In order to constitute a gift, the giver must not receive a benefit or an advantage of a material nature by way of return. It does not matter whether the material benefit or advantage comes from the DGR or another party. … 41. Only advantages or benefits that are material will disqualify a transfer of property from being regarded as a gift. This excludes advantages or benefits of a de minimis nature. Based on the facts, the money paid by Donor A for the Foundation has the characteristics of a gift; • beneficial interest in the money passed from Donor A to the Foundation • Donor A paid the money as the Foundation had insufficient cash to make the payment. There is no evidence that the payment was made other than voluntarily • There is no evidence of any detriment or obligation to the Foundation associated with the payment. Benefaction has been conferred. • Donor A has not received a material benefit from making the gift. As such, the Foundation can issue a gift receipt to Donor A for the payment to the Company, in accordance with subsection 30-228(1) of the ITAA 1997.