Private ruling: Income tax: tax deductible gifts
Date of advice: 15 March 2018
Published: June 2018
Ruling period: 1 July 2017 to 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Can XXX treat the amounts received (in exchange for pins allocated to particular dollar value donations) as gifts under section 30-15 of the Income Tax Assessment Act of 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: ● XXX is registered by the Australian and Not-for-profits Commission (ACNC) ● XXX is endorsed as a Deductible Gift Recipient (DGR) ● XXX received charity tax concession status ● XXX proposes to conduct fundraising for an event ● XXX will use the ABC as their fundraising agent. ABC will not be conducting their own fundraising. Their volunteer network will fundraise for XXX ● All fundraising monies will be deposited directly to their account by ABC ● Collections will be undertaken by having manned stalls, as well as counter-top collection boxes and collection buckets ● Manned stalls will display information about XXX, while collection boxes and collection buckets will display the XXX logo ● The ABC logo will not be displayed during XXX fundraising ● In return for a set donation a donor will receive a token directly correlating to the size of their donation. Donors will not be permitted to select which token they receive on making a donation – the tokens will be given by collectors in accordance to the amount given ● The tokens will be supplied by ABC ● The tokens will not display a logo, they will feature an image ● The cost of manufacture of the token is small ● A pre-printed card (noting the amount received) will be provided to the donor on receipt of any amount for which a token is given. This receipt is given in order to comply with state legislation. It is not intended to be a tax receipt ● If the ruling is favourable and XXX can issue a tax receipt for the donation, they will issue a tax receipt to a donor on request, by the donor completing a tax receipt request form at the time of making the donation. The tax receipt will be emailed to the donor in due course

Relevant legislative provisions: Section 30-15 of the Income Tax Assessment Act of 1997 | Section 30-228(1) of the Income Tax Assessment Act of 1997

Reasons for decision: Summary: 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 Detailed reasoning | Detailed Reasoning - Tax deductible gifts: 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. 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 nature in return. 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. Paragraph 41 of TR 2005/13 states only benefits or advantages that are material will disqualify a donation from being regarded as a gift. 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. Paragraph 156 of TR 2005/13 states only advantages or benefits that are material will affect whether a transfer is a gift and the requirement of materiality will exclude items of a de minimis (trivial or insignificant) nature. Considerations relevant to deciding whether a benefit or advantage received is material are discussed in paragraphs 156 to 173 of TR 2005/13. As part of the proposed fundraising campaign, donors (on making a donation) will receive a token. The token will feature an image. The token given will directly correlate to the size of the donation, beginning at a set amount and increasing incrementally. Donors will not be permitted to select which token they receive on making their donation – the token will be given by collectors in accordance to the amount given. Promotional material will be displayed at manned collection points while the XXX logo will be displayed at unmanned sites. 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. The cost of manufacture of the tokens ranges from Y cents to $Z each – a $* dollar donation receives a pin costing Y cents while a $# donation receives a pin costing $Z. The value of the token is insignificant and is considered to be de minimis in nature. Information provided by XXX about its activities indicates that the benefit received by donors is not considered a material benefit. | Detailed Reasoning - Issuing of receipts for donations: 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. ABC are acting as agents for XXX, providing the manpower and resources for the fundraising event. ABC are not displaying their logo and are depositing fundraising monies directly into XXX’s account. Therefore, XXX can issue a tax invoice to a donor for funds deposited directly into their account by their agent, ABC, stating their name, ABN and that the donation is a gift. | 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, XXX can issue receipts pursuant to subsection 30-228(1) of the ITAA 1997 for the donations received as part of the proposed fundraising campaign.