Gifts and Fundraising March 27, 2018 Overview Receiving - - PowerPoint PPT Presentation

Gifts and Fundraising

March 27, 2018

Overview

• Receiving tax-deductible gifts: What is a gift?
• Donors claiming tax deductions
• Fundraising events
• Valuing contributions and minor benefits
• Gifts and fundraising for non-DGRs

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What is a Gift?

What is a Gift?

• A gift is a donation of money or property made voluntarily with

no material benefit to the donor.

• To be tax-deductible, the gift must have the following

characteristics & features:

• There is a transfer of money or property
• The transfer is made voluntarily
• The DGR is advantaged materially by the transfer
• The donor does not materially benefit from the gift.
• This is explored in detail in Taxation Ruling 2005/13

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What is a Gift?

There is a transfer of money or property:

• DGR must receive full title, custody and control
• Donor must have held the donated property prior to transfer
• If the donor owns a building and allows a DGR to lease it with no rent,

this is not a tax deductible gift as the donor didn’t hold the leasehold interest

• DGR cannot act as a conduit or trustee for a non-DGR
• Transfer must be of money or property
• Services provided to a DGR or expenses paid by a volunteer are not

tax deductible gifts (no transfer of money or property)

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What is a Gift?

The transfer is made voluntarily

• Transfer is not a gift if it is made to fulfil a legal obligation
• Payments to a school building fund as an alternative to school fees

are not a gift

• Transfer is not a gift if it entitles donors to services
• But will be a gift if donors are entitled to receive the services

whether or not they make the gift (e.g. collection tin in free counselling suite)

• Transfer can take the form of a contract and still be a gift
• A donor can enter an agreement to make monthly donations

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What is a Gift?

The DGR is advantaged materially by the transfer

• The DGR must obtain the full benefit of the transferred property
• DGR cannot act as a conduit or trustee for a non-DGR
• The DGR must have absolute discretion on how the money or

property will be used

• Donor can nominate a preference for how the money or property will

be used but DGR must have absolute discretion

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What is a Gift?

The donor does not materially benefit from the gift

• Donor cannot receive a benefit in return, even if the benefit is

less than the value of the property they transferred

• Cannot notionally split the price of a ticket between the value of a

meal received and a portion that represents a gift – no part of the transfer would be a gift (might be a deductible contribution)

• The only exception to the above is if there is considerable

disproportion between value of transfer and benefit received

• Such as a $4 key ring compared to a $4,000 donation, receiving

updates on a sponsor child or mere acknowledgement of a donor in a newsletter

• Question of fact

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What is a Gift?

The donor does not materially benefit from the gift

• Transfer may still be a gift if the benefit is:
• Received regardless of whether a transfer is made
• Collections at the door of an event if no one is refused entry

should they choose not to give

• Not anticipated by the giver
• Transfers made during DGR fundraising campaigns that offer

incentives are unlikely to be gifts

• Sponsorships that earn the giver a benefit of commercial

advertising are unlikely to be gifts (might be a business deduction)

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What is not a Gift?

• Providing services to a DGR
• Costs incurred by a volunteer when providing services to a DGR
• Items bought at a charity auction
• Raffle tickets
• Gift vouchers donated to a DGR
• Purchasing pens, pins, teddy bears etc
• Payments to a school building fund as an alternative to a portion of school

fees

• Amounts given to a DGR to be merely passed on to a non-DGR
• Allowing a DGR to use your property rent-free

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Donors claiming tax deductions

Is it Deductible?

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Is the recipient a DGR?

No Yes

Does it meet the definition of a gift? Does it fall into one

• f the Gift Types?

Yes

Not deductible to donor

No Yes

Deductible to donor

No

Is it a Deductible Contribution?

No Yes

As a donor you can claim a tax deduction for most gifts and contributions in the income year you made the gift or contribution.

Gift Types

Gift Types

• To be deductible, the gift must fall into a Gift Type:
• Gifts of $2 or more
• Property purchased during the 12 months before making

the gift

• Property we value at more than $5,000
• Shares valued at $5,000 or less
• Trading stock
• Cultural Gifts Program
• Heritage gifts

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Property purchased during the 12 months before making the gift

• Amount of tax deduction is the lesser of:
• Market value on day of donation; and
• Amount donor paid for the property
• Donor is responsible for determining the value of the gift (not the

DGR)

• GST implications for donor if the donor is registered for GST

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Property we value at more than $5,000

• Property must have been either:
• purchased more than 12 months before it was donated or
• not purchased by the donor (e.g. won or inherited)
• Requires a Commissioner valuation (for deduction value)
• Must complete an application form and provide a certificate from

the DGR (describing the gift and confirming it has been received)

• Must pay a non-refundable (but tax deductible) application fee

upfront and a valuation fee (less application fee)

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Shares valued at $5,000 or less

• The shares must be:
• Acquired by the donor at least 12 months before being

donated

• In a listed public company
• Quoted on ASX at time of donation as less than $5,000
• Shares can be purchased, inherited, won etc
• Amount of the tax deduction is the market value as listed on the

ASX on the day the shares were donated

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Trading Stock

• Amount of tax deduction is the market value on the day the

trading stock was donated

• Adjustments are required if the donor is registered for GST
• Market value may also need to be included in the donor’s

assessable income

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Cultural Gifts Program

• To encourage people to donate cultural items to the following:
• the Australiana Fund
• the Australian Government for Artbank
• public library in Australia
• public museum in Australia
• public art gallery in Australia
• institution in Australia consisting of a public library, a public

museum and a public art gallery or of any two of them

• Generally the donor can claim the average of two or more

written valuations made by valuers approved by the Arts Secretary

• More detailed information is available on our website

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Fundraising events and deductible contributions

• If you run a fundraising event your donors may make contributions, like

the cost of a ticket to attend your event.

• Because they get a benefit they have not made a gift; however, they

may be able to claim a portion of their contribution as a tax deduction.

• For your donors to be able to claim tax deductibility there are various

conditions that must be met. The things you must do are:

• Ensure your organisation is a DGR.
• Advise your donors if any part of their contribution is tax deductible, and if so,

how much (that is, let them know what the minor benefit is).

• Provide your donors with receipts.
• Comply with state, territory and local government fundraising requirements.
• Run fewer than a total of 15 events of the same type in one financial year.

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Running Fundraising Events

Deductible Contributions

• A contribution occurs when a donor receives something with a monetary

value in return for their donation

• To be deductible, a contribution to a DGR must be:
• in respect of an eligible fundraising event; and
• an eligible contribution
• The deduction will be the value that would have been allowed under the

Gift Type rules, less the GST inclusive market value of what the donor received

• This is only available to individual taxpayers

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Eligible Fundraising Event

• For a contributor to claim a tax-deductible contribution, the donation

must be for an eligible fundraising event, which is a DGR fundraising event conducted in Australia, including:

• fetes, balls, gala shows, dinners, performances and similar events
• events involving sales of goods if selling these goods is not a

normal part of the supplier's business

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Eligible Contribution

• Eligible contributions are either:
• Money over $150 (e.g. event ticket price)
• Property purchased during the 12 months before making the

contribution and valued at more than $150

• Property valued by us at more than $5,000
• Shares (same conditions as the Gift Type but with $150 min value)
• Benefit received in return must be:
• No more than $150; and
• No more than 20% of the value of the contribution

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Valuing the Benefit

• The DGR is responsible for determining the market value of the

benefit provided to the donor (and stating this on the receipt)

• Two methods:
• 1. Price or market comparison: Use this method if the benefit is a

standard good, service or event commercially available on the open market

• 2. Cost-based approach: Use this method if you cannot establish a

reasonable estimate using price or market comparisons. Base your valuation on actual costs, notional costs and a profit element associated with providing the benefit.

• Auction items: benefit value is the market value at the time the

contribution was made to successfully bid on the item

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Valuing the Benefit

• Mel pays $420 to attend a charity dinner.
• The restaurant usually charges $80 per head for this set menu.
• A tax deduction is allowed because Mel paid more than $150 and

the value of the benefit ($80) is less than $150 and not more than 20% of her contribution (20% of $420 = $84)

• The tax deduction will be $340. This is the cost of the ticket less

the value of the dinner ($420 - $80)

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Example

GST & Fundraising

• DGRs, charities endorsed with GST Concessions and government

schools can elect to treat certain fundraising events as input taxed

• This means the fundraising event will not be subject to GST. No GST will

need to be collected on sales and GST credits cannot be claimed for purchases relating to the event.

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GST & Fundraising

• Eligible fundraising events include:
• Fetes, balls, gala shows, dinners, performances
• Events involving the sale of fundraising goods which are for $20 or

less and:

• The event doesn’t include the sale of alcohol or tobacco
• The selling of these goods are not a normal part of the not-for

profit’s business

• Events approved in writing by the ATO
• More information on this and other GST Concessions can be viewed on

the ATO website

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Receipts

Receipting Gifts

• DGRs are not required by law to issue a receipt
• Donors can use other records to substantiate their tax deduction,

such as bank statements

• If DGRs issue receipts for gifts, the following information must be

included:

• Name of the DGR fund authority or institution
• ABN of the DGR
• That the receipt is for a gift
• Recall it is the donor’s responsibility to determine the value of

gifts of property in line with the requirements of the “gift type”

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Receipting Contributions

• If DGRs issue receipts for contributions, the following information

must be included:

• Name of the DGR fund authority or institution
• ABN of the DGR
• That the receipt is for a contribution with a benefit received in

return

• Amount of the contribution (if money)
• GST-inclusive market value of the benefit received

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Receipting successful auction bids

• If DGRs issue receipts for amounts received from a successful

bidder at an auction, the following information must be included:

• Name of the DGR fund authority or institution
• ABN of the DGR
• That the receipt is for a contribution for goods or services

purchased through a successful bid at a fundraising event auction

• Amount of the contribution (if money)
• GST-inclusive market value of the goods or services received

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Receipts from third parties

• Donors can use records from third parties if these identify the

DGR and states that the amount is for a donation

• Examples of eligible records:
• bank statement where the transaction detail includes DGR

name and “donation”

• Statement from donor’s employer identifying DGR(s) and

amount of donations

• Shopping docket identifying DGR and donation

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Workplace Giving Programs

• Employers and employees may agree to support DGRs through

the workplace.

• This can be arranged as either:
• Workplace giving programs; or
• Salary sacrifice arrangements
• Workplace giving programs involve employees donating a portion
• f their after tax salary. The employer organises the transfer but

the employee claims the tax deduction

• Salary sacrificing involves employees donating a portion of their

pre-tax salary. The employer organises the transfer and claims the tax deduction. The employee’s tax benefit is the reduction of their assessable income

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Gift and fundraising for non-DGRs

Gifts and fundraising for non-DGRs

If you are a Not-for-profit entity but not a DGR and you want to fundraise, you can:

• start your own DGR
• collect for an established DGR
• collect funds without supporters being eligible to claim a tax-

deduction.

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Contact us

• Charities and Not-for-profits

1300 130 248

• Translating and interpreting service

13 14 50

• National Relay Service

Relayservice.gov.au

• 24 hour self-help service

13 72 26

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Questions?