Private ruling: Income Tax - tax deductible gifts
Published: December 2014
Ruling period: Income year ended 30 June 20BB | Income year ended 30 June 20CC | Income year ended 30 June 20DD | Income year ended 30 June 20EE | Income year ended 30 June 20FF
Date scheme commenced: 1 July 20AA

Ruling: Q1: Can you issue receipts pursuant to subsection 30-228(1) of the Income Tax Assessment Act 1997 (ITAA 1997) for all donations received as part of a fundraising campaign where donors will receive an acknowledgment item outlining the cause or activity within your organisation that they have donated to and containing conservation messages? | A1: Yes. | Q2: If the answer to question 1 is 'No', is there a minimum donation value for which receipts can be issued pursuant to subsection 30-228(1) of the ITAA 1997? | A2: This has not been considered as the answer to question 1 is 'Yes'.

Relevant facts and circumstances: You are a registered charity and a deductible gift recipient. You are considering a new fundraising campaign. The campaign involves inviting donors to contribute to a range of charitable causes and activities within the organisation of varying set values. Donors will receive an acknowledgement item, similar to a greeting item. The item will reference the specific cause they have donated to and communicate important conservation messages. Donations will begin at a set amount and increase incrementally. The items will be created and produced at a minimal cost of approximately 50c; the retail value of similar items are approximately $X each.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 30 | Income Tax Assessment Act 1997 section 30-15 | Income Tax Assessment Act 1997 subsection 30-15(2) | Income Tax Assessment Act 1997 subsection 30-228(1)

Reasons for decision: Summary: The acknowledgment items that donors will receive upon making a donation are not sufficiently significant in comparison to the value of the donations to be considered material. Accordingly, the amounts donated will be gifts for the purposes of Division 30 of the ITAA 1997 and you can issue receipts pursuant to subsection 30-228(1) of the ITAA 1997 for the donations received as part of the proposed fundraising campaign. | Detailed Reasoning - Detailed reasoning: Division 30 of the ITAA 1997 sets out the rules governing deductions for certain gifts. Under Item 1 of the table in subsection 30-15(2) of the ITAA 1997, a gift of $2 or more made to a fund, authority or an institution in Australia that is endorsed as a deductible gift recipient (DGR) will be deductible. DGRs are not obliged to issue a receipt for gifts received however subsection 30-228(1) of the ITAA 1997 states that if a DGR does issue a receipt for a gift described in the relevant item of the table in section 30-15 of the ITAA 1997, the receipt must state the name and ABN of the DGR and the fact that the receipt is for a gift. The word 'gift' is not defined in the ITAA 1997 and for the purposes of Division 30 of the ITAA 1997 the word 'gift' has its ordinary meaning. An explanation of what is a gift for the purposes of Division 30 of the ITAA 1997 is provided in Taxation Ruling TR 2005/13 Income tax: tax deductible gifts - what is a gift (TR 2005/13). Paragraph 13 of TR 2005/13 lists the attributes of a gift as identified by the courts. In accordance with this, for a transfer to amount to a gift the donor must not receive a benefit or advantage of a material character in return. A benefit or advantage is something of value. Even where the value of the benefit or advantage to the giver is less than the value of the transfer, the giver may still be regarded as having received a material benefit or advantage. Whether a benefit or advantage is considered material is a question of fact. A benefit or advantage can be material if there is a link between the benefit and the transfer, and the benefit is sufficiently significant in relation to the value of the transfer. The considerations relevant to deciding whether a benefit or advantage received is material are discussed in paragraphs 156 to 173 of TR 2005/13. In accordance with this discussion the requirement of materiality will exclude the following: • matters of a de minimis nature; • benefits of value where there is no link between the benefit received and the amount given; • benefits of value where there is a considerable disproportion between the value of the transfer and the benefit received; and • benefits of value that lack any utility and value to the giver and are only of promotional value to the DGR. Information received about the DGR and its activities is unlikely to be a material benefit. As part of the proposed fundraising campaign, donors will receive an acknowledgement item upon making a donation. The item will outline the activity they have donated to and contain conservation messages. The donations will begin at a set amount and increase incrementally. The items will be created and produced at a minimal cost of approximately 50c; the retail value of similar items is approximately $X each. The acknowledgment item is something of value and will be a benefit or advantage received by the donor. As donors will receive the acknowledgment item upon donating there is a link between the benefit or advantage and the transfer. The benefit or advantage in this case will only be material if it is also concluded that it is sufficiently significant in comparison to the value of the donation. Having regard to the proposed donation amounts and to the cost of producing the items and the retail value of similar items, there is a disproportion between the value of the donations and the benefits or advantages received. The issue in this case is however that while the disproportion for the larger donations is considerable, it is not as considerable for the smaller donations. This may lead to a conclusion the benefit may be material in the case of the smaller donations. However, this is not the only consideration relevant to a decision about whether a benefit or advantage received is material. In this case the donors will only receive the items as an acknowledgment of a donation and the items will reference the specific cause they have donated to. The items will also communicate important conservation messages. Given this, it is considered that the items lack utility and only serve to account for the use of the funds. Additionally, as the information contained in the item is about the DGR and its activities, they are only of promotional value to the DGR and it cannot be said that they provide a material benefit. Accordingly, it is considered that the benefits are not sufficiently significant in comparison to the value of the donations. | Detailed Reasoning - Conclusion: Based on the facts provided, it is considered that any benefit the donors receive is not material and the donations received as part of the proposed fundraising campaign will be considered to be gifts for the purposes of Division 30 of the ITAA 1997. Accordingly, you can issue receipts pursuant to subsection 30-228(1) of the ITAA 1997 for the donations received as part of the proposed fundraising campaign. | Summary: This question has not been considered. | Detailed Reasoning - Detailed reasoning: The question about whether there is a minimum donation value for which receipts can be issued pursuant to subsection 30-228(1) of the ITAA 1997 has not been considered as the answer to question 1 is 'Yes'.