There are other income tax consequences of making a gift to a DGR that you may need to consider.
Tax consequences check list
- You need to ensure you have the correct records.
- Make sure you claim your tax deduction in the income year in which you made the donation.
- Your deduction cannot add to or create a tax loss. However, you can make a written election to spread the tax deduction.
- You must be aware of tax implications if you receive a reimbursement from someone else.
- Determine if your property is jointly-owned, as this may impact how you claim.
- You may be able to claim a deduction for the cost of getting a valuation.
- A decline in value for gifts of a depreciating asset will impact your claim.
- Consider capital gains tax (CGT) consequences.
Tax loss
A deduction for a gift or contribution cannot add to or create a tax loss. However, you can choose to spread the tax deduction for a gift or contribution over a period of up to five income years.
See also:
Reimbursements
If you claim a deduction for a gift or contribution, and you receive a refund or reimbursement of that gift or contribution from the DGR or another person, you must include the refund or reimbursement in your assessable income.
Jointly owned property
If you donate jointly owned property, your deduction is determined by your share or interest in the ownership of the property
Example
John and Miranda donate property to a DGR that is a public museum. The property value is $100,000. John owns 25% of the property and Miranda owns 75%. John can claim a deduction of $25,000 and Miranda $75,000 (or less if the claim adds to or creates a tax loss).
Capital gains tax (CGT)
If you donate property there may be CGT consequences.
If CGT applies to a gift of property valued by us at more than $5,000, our valuation can be used to work out the amount of the capital gain or capital loss, but only if our valuation is made within 90 days of the donation.
You don't have to pay CGT on the following donations to DGRs:
- Gifts made under a will (testamentary gifts) – but you can't claim a tax deduction for these
- Property donated under the Cultural Gifts Program
- Exempt personal use assets.
Example 1 – Capital gains when giving property
Conrad makes a gift of property to a DGR. He bought the property for $70,000 and its value at the time of the gift was $80,000. As donating the property meets the capital gains tax provisions, Conrad has a capital gain of $10,000 which is included in his taxable income (depending on his circumstances and ignoring the effect of indexation and other capital gains tax rules). This could result in a deduction of $80,000 for the gift and an amount of capital gain included in his assessable income.
End of example
Example 2 – Capital loss when giving shares
George purchased 100 shares in XYZ Resources two years ago at $14 a share. XYZ Resources is a listed public company on the Australian securities exchange.
George decides to gift the shares to a DGR. He signs and submits a share ownership transfer document to donate the 100 shares to the DGR.
The market value of the shares at the time George donates the shares was $12 per share, bringing the total market value of the parcel to $1,200. Therefore, George can claim a tax deduction of $1,200.
As the gifting of shares is a CGT event, George has incurred a capital loss. The capital loss will be the difference between the reduced cost base of the shares ($14 × 100 shares = $1,400) and the capital proceeds, which is the market value of the shares ($1,200). Therefore, George has a capital loss of $200.
End of exampleSee also
- Guide to capital gains tax
- When can I claim?
- Keeping a record of your donation
- How donors get valuations
- Donating under the Cultural Gifts Program