Class Ruling CR 2023/5

What this ruling is about: 1. This Ruling sets out the income tax treatment of fees collected on behalf of ear, nose and throat surgeons (ENT surgeons) by the Royal Institute for Deaf and Blind Children (RIDBC) and donated to the RIDBC under the arrangements described in this scheme. 2. Details of this scheme are set out in paragraphs 9 to 21 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. Note: By issuing this Ruling, the ATO is not endorsing these arrangements. Potential participants must form their own view about the arrangements. Who this Ruling applies to 4. This Ruling applies to you if you are an ENT surgeon who performs medical services for patients under arrangements with the RIDBC (referred to in this Ruling as 'RIDBC linked services') and: 5. This Ruling does not apply to anyone who is subject to the taxation of financial arrangements rules in Division 230 in relation to the scheme outlined in paragraphs 9 to 22 of this Ruling. Note: Division 230 will not apply to individuals unless they have made an election for it to apply. When this Ruling applies 6. This Ruling applies from 15 February 2023 to 30 June 2028. Assessability of the Medicare benefits assigned to ear, nose and throat surgeons and collected on their behalf by the Royal Institute for Deaf and Blind Children 7. The Medicare benefits paid in respect of the RIDBC linked services that are assigned by patients to the ENT surgeon and collected on the surgeon's behalf by the RIDBC is income according to ordinary concepts and is assessable income of the ENT surgeon under section 6-5. Deductibility of amounts donated to the Royal Institute for Deaf and Blind Children 8. ENT surgeons are entitled to claim a deduction under section 30-15 for the donation of amounts they instruct the RIDBC to retain as a donation out of the Medicare benefits that are collected and held on their behalf by the RDIBC in respect of the RIDBC linked services. 9. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. Background 10. The RIDBC is incorporated under the Royal Institute for Deaf and Blind Children Act 1998 No 6 (NSW) (RIDBC Act) as an Australian charity whose primary object is '... the advancement in life, to the greatest extent practicable, of deaf and blind children', as stated in section 6 of the RIDBC Act. 11. The RIDBC is a registered public benevolent institution (PBI) and endorsed as a deductible gift recipient (DGR). 12. In accordance with its primary object, the RIDBC offers a broad range of services to people with hearing and vision loss, including cochlear implant (CI) services. 13. CI services are provided to patients by the RIDBC under the supervision of ENT surgeons as part of a shared-care model. 14. The RIDBC CI Program is a comprehensive service (or program) offered by the RIDBC that involves the following: 15. Generally, the following steps occur as part of the RIDBC CI Program: 16. The administration of the RIDBC CI Program is as follows: 17. The RIDBC issues periodic statements to the ENT surgeon informing them of the funds received from Medicare in respect of the RIDBC linked services that are being held on their behalf. 18. The ENT surgeon then instructs the RIDBC on how to apply the funds held on their behalf. This could include making a donation to the RIDBC or otherwise applying the funds in accordance with the ENT surgeon's instructions. There is no obligation, contractual or otherwise, on the ENT surgeon to make a donation to the RIDBC. 19. Where an ENT surgeon has elected to make a donation to the RIDBC of some or all of the funds held by the RIDBC on their behalf, a deductible gift receipt is provided to the ENT surgeon each year acknowledging the donations which have been made within the income year. 20. There are no incentives, gifts, marketing, referrals, recognition or any other rights, privileges, benefits or advantages afforded to ENT surgeons who participate in the RIDBC CI Program or make donations to the RIDBC. 21. Where donations are made to the RIDBC, they are made wholly at the discretion of the ENT surgeon in order to support the mission and objectives of the RIDBC. Commissioner of Taxation 15 February 2023 Assessability of the Medicare benefits assigned by patients to ear, nose and throat surgeons and collected on their behalf by the Royal Institute for Deaf and Blind Children 22. Subsection 6-5(1) provides that the assessable income of a taxpayer includes income according to ordinary concepts, which is called 'ordinary income' and includes amounts received in respect of providing personal services or from carrying on a business. 23. Subsection 6-5(2) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. 24. Subsection 6-5(4) provides that in working out whether a taxpayer has derived an amount of ordinary income, and (if so) when it has been derived, the taxpayer is taken to have received the amount as soon as it is applied or dealt with at the direction of the taxpayer. 25. ENT surgeons receive the Medicare benefits as payment for the services rendered in the RIDBC CI assessment process. The patient has assigned their right to the Medicare benefits to the ENT surgeon as payment for services rendered. The services are provided in the course of the ENT surgeon's private practice business and the payment is included in their assessable income under subsection 6-5(2). 26. The RIDBC makes the claim with Medicare on the ENT surgeon's behalf. The ENT surgeon nominates for the Medicare benefits payable to be paid into the RIDBC's bank account. Accordingly, Medicare is dealing with or applying the income as directed by the ENT surgeon and the income is taken to have been received by the ENT surgeon at the time it is paid into the RIDBC's bank account, pursuant to subsection 6-5(4). Donation of fees by ear, nose and throat surgeons to the Royal Institute for Deaf and Blind Children 27. Relevantly, Division 30 deals with the deductibility of gifts and contributions. Section 30-15 provides that you can deduct a gift that you make in the situations set out in the tables contained in that section. 28. The meaning of gift for the purposes of Division 30 is dealt with in Taxation Ruling TR 2005/13 Income tax: tax deductible gifts - what is a gift. 29. The word 'gift' is not defined in the Income Tax Assessment Act 1997. For the purposes of Division 30, the word 'gift' has its ordinary meaning. 30. As stated in paragraph 13 of TR 2005/13, the Courts have described a gift as having the following characteristics and features: 31. These characteristics are not absolute and may involve a matter of degree. In determining whether a transfer is a gift, it is necessary to consider the whole set of circumstances surrounding the transfer that provide the context and explanation for the transfer. Transfer of money or property 32. The making of a gift involves the transfer of a beneficial interest in property to the recipient of the gift. 33. In each case, it is necessary to ascertain whether a transfer has occurred, what property has been transferred and when the transfer took place. This is to ensure that ownership of identifiable property has been divested and transferred to the recipient. 34. The giver must have proprietary rights in the property just prior to its transfer. When money or property is transferred to the recipient, the recipient must receive full title, custody and control of the property so that the recipient is entitled to deal with the property in its own right. 35. Under the arrangements, ENT surgeons direct the RIDBC to retain the donation from the funds comprising Medicare benefits held by the RIDBC on their behalf. Following that direction, ownership of the money transfers to the RIDBC. 36. The donation is made when the direction is made to the RIDBC and it no longer holds those funds on the ENT surgeon's behalf but acquires full ownership of those funds. Transfer made voluntarily 37. A transfer must be made voluntarily in order for it to be a gift. 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. 38. 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 that has the other attributes of a gift will not fail to be considered a voluntary transfer merely because the means to give effect to the benefaction have contractual or similar features. 39. ENT surgeons are under no obligation to make the donations. There is nothing that interferes with the exercise of the ENT surgeon's free will. 40. Therefore, a payment under the arrangements is entirely voluntary. Arises by way of benefaction 41. A gift should confer benefaction on the recipient. Conferring benefaction means that the recipient is advantaged materially without any detriment arising from the terms of the transfer. 42. Where the giver is aware that the transfer will result in detriments, disadvantages, obligations, liabilities or limitations to the recipient, benefaction may be missing. 43. A gift ordinarily proceeds from detached and disinterested generosity. There may be a variety of reasons and motivations behind the giver making a gift. However, the fact that the giver has a personal motive for making the gift (such as a strong interest or emotional involvement in the work of the recipient) will not disqualify a transfer from being a gift. 44. In cases where the giver gives a gift for self-interested commercial or fiscal reasons rather than conferring a benefaction on the recipient, the transfer does not proceed from detached and disinterested generosity. However, a motive of seeking a tax deduction does not, by itself, disqualify a transfer from being a gift. 45. There is no commercial benefit for the ENT surgeon as a result of making the donation to the RIDBC. The ENT surgeon can provide services to patients in conjunction with the RIDBC irrespective of whether donations are made under the arrangements. 46. It is accepted that donations made by ENT surgeons under the arrangements confer benefaction on the RIDBC. No material benefit or advantage 47. To constitute a gift, the giver or an associate of the giver must not receive a material benefit or advantage from the transfer. It does not matter whether the material benefit or advantage comes from the recipient or another party. 48. It is a question of fact in each case whether any benefit or advantage is considered material. 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. 49. There are no incentives, gifts, marketing, referrals, recognition or any other rights, privileges, benefits or advantages afforded to ENT surgeons who participate in the RIDBC CI Program or make donations to the RIDBC under the arrangements. 50. ENT surgeons who participate in the RIDBC CI Program receive the Medicare benefits irrespective of whether donations are made under the arrangements. The donations are made by the ENT surgeon in order to support the mission and objectives of the RIDBC. 51. It is accepted that ENT surgeons do not receive any material benefit or advantage as a result of, or in connection with, the donation. Donation amounts are gifts 52. The donation amounts are gifts for the purposes of Division 30. Tax deduction on donation amounts 53. A donor can claim a tax deduction for a gift if the requirements in section 30-15 are satisfied. The table in subsection 30-15(2) sets out the categories of recipients of deductible gifts and contributions, the types of deductible gifts or contributions that can be made to each category of recipients, and how much can be deducted. Gift recipient 54. Table item 1 of subsection 30-15(2) states that deductible gifts and contributions can be made to a fund, authority or institution covered by any item in any of the tables in Subdivision 30-B. 55. Subdivision 30-B includes section 30-45. Table item 4.1.1 of subsection 30-45(1) includes recipients who are 'a registered public benevolent institution' (registered PBI). 56. Deductible gifts and contributions can therefore be made to a recipient that is a registered PBI. 57. A registered PBI is defined in subsection 995-1(1) as: 58. Gifts to a registered PBI will only be deductible if the registered PBI is also endorsed as a DGR under Subdivision 30-BA or is named in Subdivision 30-B (table item 1 of subsection 30-15(2) and section 30-17). 59. The RIDBC is a registered PBI that is endorsed as a DGR. Therefore, RIDBC can receive tax-deductible gifts and contributions. Type of gift 60. Table item 1 of subsection 30-15(2) provides that the deductible gifts and contributions that can be made to a table item 1 recipient includes gifts of money. Money can be paid in various ways, including by cash, cheque, credit card or electronically. 61. Under the arrangements, ENT surgeons direct the RIDBC to retain an amount of money for their own benefit from the funds held on behalf of the ENT surgeon. That is a gift of money to an endorsed DGR and a tax-deductible gift under Division 30. Amount of gift that can be deducted 62. Table item 1 of subsection 30-15(2) states that the amount that can be deducted for a gift of money is the amount that is given. 63. The value of the gift must be $2 or more (special conditions for table item 1 of subsection 30-15(2)). A donor can add together a series of gifts in an income year to work out whether the gift is $2 or more. 64. A deduction for a gift cannot add to or create a tax loss for the donor. Subsection 26-55(1) states there is a limit on the total amount you can deduct for the income year under Division 30. The limit is calculated pursuant to subsection 26-55(2) and, in effect, means the deduction can reduce the donor's assessable income to nil in the income year in which the gift is made, but cannot contribute to a tax loss of the donor for the income year. 65. While a deduction for a gift cannot contribute to a tax loss for the donor, Subdivision 30-DB allows donors to elect to spread a tax deduction for a gift of money of $2 or more, over and up to 5 years. 66. If the donor chooses to spread a deduction, the election must: 67. A contributing ENT surgeon can claim a deduction for amounts of $2 or more, provided the deduction does not contribute to a tax loss. Gift receipts 68. Tax law does not require a DGR to issue a receipt for tax-deductible gifts it received. However, where a DGR does issue a receipt, subsection 30-228(1) sets out the information that must be included in the receipt: 69. The RIDBC will issue a receipt to each contributing ENT surgeon each year acknowledging the donations which have been made by them within the income year. The contents of each receipt must include the name and Australian business number of the RIDBC and the fact that the receipt is for a gift. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Class of entities or scheme: 9. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. | Background: 10. The RIDBC is incorporated under the Royal Institute for Deaf and Blind Children Act 1998 No 6 (NSW) (RIDBC Act) as an Australian charity whose primary object is '... the advancement in life, to the greatest extent practicable, of deaf and blind children', as stated in section 6 of the RIDBC Act. 11. The RIDBC is a registered public benevolent institution (PBI) and endorsed as a deductible gift recipient (DGR). 12. In accordance with its primary object, the RIDBC offers a broad range of services to people with hearing and vision loss, including cochlear implant (CI) services. 13. CI services are provided to patients by the RIDBC under the supervision of ENT surgeons as part of a shared-care model. 14. The RIDBC CI Program is a comprehensive service (or program) offered by the RIDBC that involves the following: 15. Generally, the following steps occur as part of the RIDBC CI Program: 16. The administration of the RIDBC CI Program is as follows: 17. The RIDBC issues periodic statements to the ENT surgeon informing them of the funds received from Medicare in respect of the RIDBC linked services that are being held on their behalf. 18. The ENT surgeon then instructs the RIDBC on how to apply the funds held on their behalf. This could include making a donation to the RIDBC or otherwise applying the funds in accordance with the ENT surgeon's instructions. There is no obligation, contractual or otherwise, on the ENT surgeon to make a donation to the RIDBC. 19. Where an ENT surgeon has elected to make a donation to the RIDBC of some or all of the funds held by the RIDBC on their behalf, a deductible gift receipt is provided to the ENT surgeon each year acknowledging the donations which have been made within the income year. 20. There are no incentives, gifts, marketing, referrals, recognition or any other rights, privileges, benefits or advantages afforded to ENT surgeons who participate in the RIDBC CI Program or make donations to the RIDBC. 21. Where donations are made to the RIDBC, they are made wholly at the discretion of the ENT surgeon in order to support the mission and objectives of the RIDBC. Commissioner of Taxation 15 February 2023

Ruling: 1. This Ruling sets out the income tax treatment of fees collected on behalf of ear, nose and throat surgeons (ENT surgeons) by the Royal Institute for Deaf and Blind Children (RIDBC) and donated to the RIDBC under the arrangements described in this scheme. 2. Details of this scheme are set out in paragraphs 9 to 21 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. Note: By issuing this Ruling, the ATO is not endorsing these arrangements. Potential participants must form their own view about the arrangements. | Who this Ruling applies to: 4. This Ruling applies to you if you are an ENT surgeon who performs medical services for patients under arrangements with the RIDBC (referred to in this Ruling as 'RIDBC linked services') and: 5. This Ruling does not apply to anyone who is subject to the taxation of financial arrangements rules in Division 230 in relation to the scheme outlined in paragraphs 9 to 22 of this Ruling. Note: Division 230 will not apply to individuals unless they have made an election for it to apply. | When this Ruling applies: 6. This Ruling applies from 15 February 2023 to 30 June 2028. | Assessability of the Medicare benefits assigned to ear, nose and throat surgeons and collected on their behalf by the Royal Institute for Deaf and Blind Children: 7. The Medicare benefits paid in respect of the RIDBC linked services that are assigned by patients to the ENT surgeon and collected on the surgeon's behalf by the RIDBC is income according to ordinary concepts and is assessable income of the ENT surgeon under section 6-5. | Deductibility of amounts donated to the Royal Institute for Deaf and Blind Children: 8. ENT surgeons are entitled to claim a deduction under section 30-15 for the donation of amounts they instruct the RIDBC to retain as a donation out of the Medicare benefits that are collected and held on their behalf by the RDIBC in respect of the RIDBC linked services. 9. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. | Background: 10. The RIDBC is incorporated under the Royal Institute for Deaf and Blind Children Act 1998 No 6 (NSW) (RIDBC Act) as an Australian charity whose primary object is '... the advancement in life, to the greatest extent practicable, of deaf and blind children', as stated in section 6 of the RIDBC Act. 11. The RIDBC is a registered public benevolent institution (PBI) and endorsed as a deductible gift recipient (DGR). 12. In accordance with its primary object, the RIDBC offers a broad range of services to people with hearing and vision loss, including cochlear implant (CI) services. 13. CI services are provided to patients by the RIDBC under the supervision of ENT surgeons as part of a shared-care model. 14. The RIDBC CI Program is a comprehensive service (or program) offered by the RIDBC that involves the following: 15. Generally, the following steps occur as part of the RIDBC CI Program: 16. The administration of the RIDBC CI Program is as follows: 17. The RIDBC issues periodic statements to the ENT surgeon informing them of the funds received from Medicare in respect of the RIDBC linked services that are being held on their behalf. 18. The ENT surgeon then instructs the RIDBC on how to apply the funds held on their behalf. This could include making a donation to the RIDBC or otherwise applying the funds in accordance with the ENT surgeon's instructions. There is no obligation, contractual or otherwise, on the ENT surgeon to make a donation to the RIDBC. 19. Where an ENT surgeon has elected to make a donation to the RIDBC of some or all of the funds held by the RIDBC on their behalf, a deductible gift receipt is provided to the ENT surgeon each year acknowledging the donations which have been made within the income year. 20. There are no incentives, gifts, marketing, referrals, recognition or any other rights, privileges, benefits or advantages afforded to ENT surgeons who participate in the RIDBC CI Program or make donations to the RIDBC. 21. Where donations are made to the RIDBC, they are made wholly at the discretion of the ENT surgeon in order to support the mission and objectives of the RIDBC. Commissioner of Taxation 15 February 2023 | Assessability of the Medicare benefits assigned by patients to ear, nose and throat surgeons and collected on their behalf by the Royal Institute for Deaf and Blind Children: 22. Subsection 6-5(1) provides that the assessable income of a taxpayer includes income according to ordinary concepts, which is called 'ordinary income' and includes amounts received in respect of providing personal services or from carrying on a business. 23. Subsection 6-5(2) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. 24. Subsection 6-5(4) provides that in working out whether a taxpayer has derived an amount of ordinary income, and (if so) when it has been derived, the taxpayer is taken to have received the amount as soon as it is applied or dealt with at the direction of the taxpayer. 25. ENT surgeons receive the Medicare benefits as payment for the services rendered in the RIDBC CI assessment process. The patient has assigned their right to the Medicare benefits to the ENT surgeon as payment for services rendered. The services are provided in the course of the ENT surgeon's private practice business and the payment is included in their assessable income under subsection 6-5(2). 26. The RIDBC makes the claim with Medicare on the ENT surgeon's behalf. The ENT surgeon nominates for the Medicare benefits payable to be paid into the RIDBC's bank account. Accordingly, Medicare is dealing with or applying the income as directed by the ENT surgeon and the income is taken to have been received by the ENT surgeon at the time it is paid into the RIDBC's bank account, pursuant to subsection 6-5(4). | Donation of fees by ear, nose and throat surgeons to the Royal Institute for Deaf and Blind Children: 27. Relevantly, Division 30 deals with the deductibility of gifts and contributions. Section 30-15 provides that you can deduct a gift that you make in the situations set out in the tables contained in that section. 28. The meaning of gift for the purposes of Division 30 is dealt with in Taxation Ruling TR 2005/13 Income tax: tax deductible gifts - what is a gift. 29. The word 'gift' is not defined in the Income Tax Assessment Act 1997. For the purposes of Division 30, the word 'gift' has its ordinary meaning. 30. As stated in paragraph 13 of TR 2005/13, the Courts have described a gift as having the following characteristics and features: 31. These characteristics are not absolute and may involve a matter of degree. In determining whether a transfer is a gift, it is necessary to consider the whole set of circumstances surrounding the transfer that provide the context and explanation for the transfer. | Transfer of money or property: 32. The making of a gift involves the transfer of a beneficial interest in property to the recipient of the gift. 33. In each case, it is necessary to ascertain whether a transfer has occurred, what property has been transferred and when the transfer took place. This is to ensure that ownership of identifiable property has been divested and transferred to the recipient. 34. The giver must have proprietary rights in the property just prior to its transfer. When money or property is transferred to the recipient, the recipient must receive full title, custody and control of the property so that the recipient is entitled to deal with the property in its own right. 35. Under the arrangements, ENT surgeons direct the RIDBC to retain the donation from the funds comprising Medicare benefits held by the RIDBC on their behalf. Following that direction, ownership of the money transfers to the RIDBC. 36. The donation is made when the direction is made to the RIDBC and it no longer holds those funds on the ENT surgeon's behalf but acquires full ownership of those funds. | Transfer made voluntarily: 37. A transfer must be made voluntarily in order for it to be a gift. 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. 38. 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 that has the other attributes of a gift will not fail to be considered a voluntary transfer merely because the means to give effect to the benefaction have contractual or similar features. 39. ENT surgeons are under no obligation to make the donations. There is nothing that interferes with the exercise of the ENT surgeon's free will. 40. Therefore, a payment under the arrangements is entirely voluntary. | Arises by way of benefaction: 41. A gift should confer benefaction on the recipient. Conferring benefaction means that the recipient is advantaged materially without any detriment arising from the terms of the transfer. 42. Where the giver is aware that the transfer will result in detriments, disadvantages, obligations, liabilities or limitations to the recipient, benefaction may be missing. 43. A gift ordinarily proceeds from detached and disinterested generosity. There may be a variety of reasons and motivations behind the giver making a gift. However, the fact that the giver has a personal motive for making the gift (such as a strong interest or emotional involvement in the work of the recipient) will not disqualify a transfer from being a gift. 44. In cases where the giver gives a gift for self-interested commercial or fiscal reasons rather than conferring a benefaction on the recipient, the transfer does not proceed from detached and disinterested generosity. However, a motive of seeking a tax deduction does not, by itself, disqualify a transfer from being a gift. 45. There is no commercial benefit for the ENT surgeon as a result of making the donation to the RIDBC. The ENT surgeon can provide services to patients in conjunction with the RIDBC irrespective of whether donations are made under the arrangements. 46. It is accepted that donations made by ENT surgeons under the arrangements confer benefaction on the RIDBC. | No material benefit or advantage: 47. To constitute a gift, the giver or an associate of the giver must not receive a material benefit or advantage from the transfer. It does not matter whether the material benefit or advantage comes from the recipient or another party. 48. It is a question of fact in each case whether any benefit or advantage is considered material. 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. 49. There are no incentives, gifts, marketing, referrals, recognition or any other rights, privileges, benefits or advantages afforded to ENT surgeons who participate in the RIDBC CI Program or make donations to the RIDBC under the arrangements. 50. ENT surgeons who participate in the RIDBC CI Program receive the Medicare benefits irrespective of whether donations are made under the arrangements. The donations are made by the ENT surgeon in order to support the mission and objectives of the RIDBC. 51. It is accepted that ENT surgeons do not receive any material benefit or advantage as a result of, or in connection with, the donation. | Donation amounts are gifts: 52. The donation amounts are gifts for the purposes of Division 30. | Tax deduction on donation amounts: 53. A donor can claim a tax deduction for a gift if the requirements in section 30-15 are satisfied. The table in subsection 30-15(2) sets out the categories of recipients of deductible gifts and contributions, the types of deductible gifts or contributions that can be made to each category of recipients, and how much can be deducted. | Gift recipient: 54. Table item 1 of subsection 30-15(2) states that deductible gifts and contributions can be made to a fund, authority or institution covered by any item in any of the tables in Subdivision 30-B. 55. Subdivision 30-B includes section 30-45. Table item 4.1.1 of subsection 30-45(1) includes recipients who are 'a registered public benevolent institution' (registered PBI). 56. Deductible gifts and contributions can therefore be made to a recipient that is a registered PBI. 57. A registered PBI is defined in subsection 995-1(1) as: 58. Gifts to a registered PBI will only be deductible if the registered PBI is also endorsed as a DGR under Subdivision 30-BA or is named in Subdivision 30-B (table item 1 of subsection 30-15(2) and section 30-17). 59. The RIDBC is a registered PBI that is endorsed as a DGR. Therefore, RIDBC can receive tax-deductible gifts and contributions. | Type of gift: 60. Table item 1 of subsection 30-15(2) provides that the deductible gifts and contributions that can be made to a table item 1 recipient includes gifts of money. Money can be paid in various ways, including by cash, cheque, credit card or electronically. 61. Under the arrangements, ENT surgeons direct the RIDBC to retain an amount of money for their own benefit from the funds held on behalf of the ENT surgeon. That is a gift of money to an endorsed DGR and a tax-deductible gift under Division 30. | Amount of gift that can be deducted: 62. Table item 1 of subsection 30-15(2) states that the amount that can be deducted for a gift of money is the amount that is given. 63. The value of the gift must be $2 or more (special conditions for table item 1 of subsection 30-15(2)). A donor can add together a series of gifts in an income year to work out whether the gift is $2 or more. 64. A deduction for a gift cannot add to or create a tax loss for the donor. Subsection 26-55(1) states there is a limit on the total amount you can deduct for the income year under Division 30. The limit is calculated pursuant to subsection 26-55(2) and, in effect, means the deduction can reduce the donor's assessable income to nil in the income year in which the gift is made, but cannot contribute to a tax loss of the donor for the income year. 65. While a deduction for a gift cannot contribute to a tax loss for the donor, Subdivision 30-DB allows donors to elect to spread a tax deduction for a gift of money of $2 or more, over and up to 5 years. 66. If the donor chooses to spread a deduction, the election must: 67. A contributing ENT surgeon can claim a deduction for amounts of $2 or more, provided the deduction does not contribute to a tax loss. | Gift receipts: 68. Tax law does not require a DGR to issue a receipt for tax-deductible gifts it received. However, where a DGR does issue a receipt, subsection 30-228(1) sets out the information that must be included in the receipt: 69. The RIDBC will issue a receipt to each contributing ENT surgeon each year acknowledging the donations which have been made by them within the income year. The contents of each receipt must include the name and Australian business number of the RIDBC and the fact that the receipt is for a gift. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


Appendix: Assessability of the Medicare benefits assigned by patients to ear, nose and throat surgeons and collected on their behalf by the Royal Institute for Deaf and Blind Children: 22. Subsection 6-5(1) provides that the assessable income of a taxpayer includes income according to ordinary concepts, which is called 'ordinary income' and includes amounts received in respect of providing personal services or from carrying on a business. 23. Subsection 6-5(2) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. 24. Subsection 6-5(4) provides that in working out whether a taxpayer has derived an amount of ordinary income, and (if so) when it has been derived, the taxpayer is taken to have received the amount as soon as it is applied or dealt with at the direction of the taxpayer. 25. ENT surgeons receive the Medicare benefits as payment for the services rendered in the RIDBC CI assessment process. The patient has assigned their right to the Medicare benefits to the ENT surgeon as payment for services rendered. The services are provided in the course of the ENT surgeon's private practice business and the payment is included in their assessable income under subsection 6-5(2). 26. The RIDBC makes the claim with Medicare on the ENT surgeon's behalf. The ENT surgeon nominates for the Medicare benefits payable to be paid into the RIDBC's bank account. Accordingly, Medicare is dealing with or applying the income as directed by the ENT surgeon and the income is taken to have been received by the ENT surgeon at the time it is paid into the RIDBC's bank account, pursuant to subsection 6-5(4). | Donation of fees by ear, nose and throat surgeons to the Royal Institute for Deaf and Blind Children: 27. Relevantly, Division 30 deals with the deductibility of gifts and contributions. Section 30-15 provides that you can deduct a gift that you make in the situations set out in the tables contained in that section. 28. The meaning of gift for the purposes of Division 30 is dealt with in Taxation Ruling TR 2005/13 Income tax: tax deductible gifts - what is a gift. 29. The word 'gift' is not defined in the Income Tax Assessment Act 1997. For the purposes of Division 30, the word 'gift' has its ordinary meaning. 30. As stated in paragraph 13 of TR 2005/13, the Courts have described a gift as having the following characteristics and features: 31. These characteristics are not absolute and may involve a matter of degree. In determining whether a transfer is a gift, it is necessary to consider the whole set of circumstances surrounding the transfer that provide the context and explanation for the transfer. | Transfer of money or property: 32. The making of a gift involves the transfer of a beneficial interest in property to the recipient of the gift. 33. In each case, it is necessary to ascertain whether a transfer has occurred, what property has been transferred and when the transfer took place. This is to ensure that ownership of identifiable property has been divested and transferred to the recipient. 34. The giver must have proprietary rights in the property just prior to its transfer. When money or property is transferred to the recipient, the recipient must receive full title, custody and control of the property so that the recipient is entitled to deal with the property in its own right. 35. Under the arrangements, ENT surgeons direct the RIDBC to retain the donation from the funds comprising Medicare benefits held by the RIDBC on their behalf. Following that direction, ownership of the money transfers to the RIDBC. 36. The donation is made when the direction is made to the RIDBC and it no longer holds those funds on the ENT surgeon's behalf but acquires full ownership of those funds. | Transfer made voluntarily: 37. A transfer must be made voluntarily in order for it to be a gift. 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. 38. 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 that has the other attributes of a gift will not fail to be considered a voluntary transfer merely because the means to give effect to the benefaction have contractual or similar features. 39. ENT surgeons are under no obligation to make the donations. There is nothing that interferes with the exercise of the ENT surgeon's free will. 40. Therefore, a payment under the arrangements is entirely voluntary. | Arises by way of benefaction: 41. A gift should confer benefaction on the recipient. Conferring benefaction means that the recipient is advantaged materially without any detriment arising from the terms of the transfer. 42. Where the giver is aware that the transfer will result in detriments, disadvantages, obligations, liabilities or limitations to the recipient, benefaction may be missing. 43. A gift ordinarily proceeds from detached and disinterested generosity. There may be a variety of reasons and motivations behind the giver making a gift. However, the fact that the giver has a personal motive for making the gift (such as a strong interest or emotional involvement in the work of the recipient) will not disqualify a transfer from being a gift. 44. In cases where the giver gives a gift for self-interested commercial or fiscal reasons rather than conferring a benefaction on the recipient, the transfer does not proceed from detached and disinterested generosity. However, a motive of seeking a tax deduction does not, by itself, disqualify a transfer from being a gift. 45. There is no commercial benefit for the ENT surgeon as a result of making the donation to the RIDBC. The ENT surgeon can provide services to patients in conjunction with the RIDBC irrespective of whether donations are made under the arrangements. 46. It is accepted that donations made by ENT surgeons under the arrangements confer benefaction on the RIDBC. | No material benefit or advantage: 47. To constitute a gift, the giver or an associate of the giver must not receive a material benefit or advantage from the transfer. It does not matter whether the material benefit or advantage comes from the recipient or another party. 48. It is a question of fact in each case whether any benefit or advantage is considered material. 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. 49. There are no incentives, gifts, marketing, referrals, recognition or any other rights, privileges, benefits or advantages afforded to ENT surgeons who participate in the RIDBC CI Program or make donations to the RIDBC under the arrangements. 50. ENT surgeons who participate in the RIDBC CI Program receive the Medicare benefits irrespective of whether donations are made under the arrangements. The donations are made by the ENT surgeon in order to support the mission and objectives of the RIDBC. 51. It is accepted that ENT surgeons do not receive any material benefit or advantage as a result of, or in connection with, the donation. | Donation amounts are gifts: 52. The donation amounts are gifts for the purposes of Division 30. | Tax deduction on donation amounts: 53. A donor can claim a tax deduction for a gift if the requirements in section 30-15 are satisfied. The table in subsection 30-15(2) sets out the categories of recipients of deductible gifts and contributions, the types of deductible gifts or contributions that can be made to each category of recipients, and how much can be deducted. | Gift recipient: 54. Table item 1 of subsection 30-15(2) states that deductible gifts and contributions can be made to a fund, authority or institution covered by any item in any of the tables in Subdivision 30-B. 55. Subdivision 30-B includes section 30-45. Table item 4.1.1 of subsection 30-45(1) includes recipients who are 'a registered public benevolent institution' (registered PBI). 56. Deductible gifts and contributions can therefore be made to a recipient that is a registered PBI. 57. A registered PBI is defined in subsection 995-1(1) as: 58. Gifts to a registered PBI will only be deductible if the registered PBI is also endorsed as a DGR under Subdivision 30-BA or is named in Subdivision 30-B (table item 1 of subsection 30-15(2) and section 30-17). 59. The RIDBC is a registered PBI that is endorsed as a DGR. Therefore, RIDBC can receive tax-deductible gifts and contributions. | Type of gift: 60. Table item 1 of subsection 30-15(2) provides that the deductible gifts and contributions that can be made to a table item 1 recipient includes gifts of money. Money can be paid in various ways, including by cash, cheque, credit card or electronically. 61. Under the arrangements, ENT surgeons direct the RIDBC to retain an amount of money for their own benefit from the funds held on behalf of the ENT surgeon. That is a gift of money to an endorsed DGR and a tax-deductible gift under Division 30. | Amount of gift that can be deducted: 62. Table item 1 of subsection 30-15(2) states that the amount that can be deducted for a gift of money is the amount that is given. 63. The value of the gift must be $2 or more (special conditions for table item 1 of subsection 30-15(2)). A donor can add together a series of gifts in an income year to work out whether the gift is $2 or more. 64. A deduction for a gift cannot add to or create a tax loss for the donor. Subsection 26-55(1) states there is a limit on the total amount you can deduct for the income year under Division 30. The limit is calculated pursuant to subsection 26-55(2) and, in effect, means the deduction can reduce the donor's assessable income to nil in the income year in which the gift is made, but cannot contribute to a tax loss of the donor for the income year. 65. While a deduction for a gift cannot contribute to a tax loss for the donor, Subdivision 30-DB allows donors to elect to spread a tax deduction for a gift of money of $2 or more, over and up to 5 years. 66. If the donor chooses to spread a deduction, the election must: 67. A contributing ENT surgeon can claim a deduction for amounts of $2 or more, provided the deduction does not contribute to a tax loss. | Gift receipts: 68. Tax law does not require a DGR to issue a receipt for tax-deductible gifts it received. However, where a DGR does issue a receipt, subsection 30-228(1) sets out the information that must be included in the receipt: 69. The RIDBC will issue a receipt to each contributing ENT surgeon each year acknowledging the donations which have been made by them within the income year. The contents of each receipt must include the name and Australian business number of the RIDBC and the fact that the receipt is for a gift. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | ... an institution that is: | (a) a registered charity; and | (b) registered under the Australian Charities and Not-for-profits Commission Act 2012 as the subtype of entity mentioned in column 2 of item 14 of the table in subsection 25-5(5) of that Act. | If a deductible gift recipient issues a receipt for a gift described in the relevant item of the table in section 30-15 to the fund, authority or institution, the deductible gift recipient must ensure that the receipt states: | (a) the name of the fund, authority or institution; and | (b) the ABN (if any) of the deductible gift recipient; and | (c) the fact that the receipt is for a gift.


Related rulings: TR 2005/13
Legislative references: ITAA 1997 6-5 ITAA 1997 6-5(1) ITAA 1997 6-5(2) ITAA 1997 6-5(4) ITAA 1997 26-55(1) ITAA 1997 26-55(2) ITAA 1997 Div 30 ITAA 1997 30-15 ITAA 1997 30-15(2) ITAA 1997 30-17 ITAA 1997 Subdiv 30-B ITAA 1997 30-45 ITAA 1997 30-45(1) ITAA 1997 Subdiv 30-BA ITAA 1997 30-228(1) ITAA 1997 Subdiv 30-DB ITAA 1997 30-248 ITAA 1997 30-248(1)(b) ITAA 1997 30-248(2) ITAA 1997 30-248(3) ITAA 1997 30-248(5) ITAA 1997 Div 230 ITAA 1997 995-1(1) Royal Institute for Deaf and Blind Children Act 1998 No 6 (NSW)