House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 2 - Gifts and covenants

Outline of chapter

2.1 Schedule 2 to this bill amends the ITAA 1997 to update the lists of specifically-listed DGRs.

2.2 Schedule 3 to this bill amends the ITAA 1997 from 1 July 2003:

•

to simplify the listing in the tax law of specifically-listed DGRs; and

•

to allow deductions for cash donations to DGRs to be spread over a period of up to 5 years.

Context of amendments

2.3 The income tax law allows taxpayers to claim income tax deductions for certain gifts to DGRs. To be a DGR, an organisation must fall within a category of organisations set out in Division 30 of the ITAA 1997, or be specifically listed under that Division.

2.4 The addition of organisations to the lists of specifically-listed DGRs will assist these organisations to attract public support for their activities.

2.5 The Treasurer has proposed an amendment to the ITAA 1997, with effect from 1 July 2003, to allow specifically-listed DGRs to be prescribed by regulation (Treasurer's Press Release No. 49 of 29 August 2002). The measure is part of the Government's response to the Report of the Inquiry into the Definition of Charities and Related Organisations. It will allow continued scrutiny by the Parliament but will make legislative amendments concerning specifically-listed DGRs less administratively costly and more timely.

2.6 Deductions for all gifts of property valued at more than $5,000 and made from 1 July 2002 can be spread over a period of up to 5 years.

2.7 The Prime Minister has proposed an amendment to the ITAA 1997 to allow deductions for cash donations made from 1 July 2003 to DGRs to be spread over a period of up to 5 years (Prime Minister's Press Release of 11 December 2002). The measure will ensure that cash and property gifts are treated similarly. It will make it more attractive for taxpayers to make donations to DGRs sooner. DGRs that receive funds earlier from donors will benefit from the measure.

Summary of new law

Schedule 2

2.8 The amendments will allow income tax deductions for certain gifts to the value of $2 or more made to the funds and organisations listed in Table 2.1 from, and including, the day of announcement.

2.9 The ITAA 1997 is also amended so that deductions for gifts made to the Stolen Children's Support Fund be limited to gifts made before 4 February 2003, as the dissolution of the Fund was confirmed on this date.

Schedule 3

Simplifying the listing in the tax law of specifically-listed DGRs

2.10 The ITAA 1997 will be amended to simplify the listing in the tax law of specifically-listed DGRs.

2.11 The amendments are designed to allow all existing specifically-listed DGRs to be transferred from the ITAA 1997 to regulations to the ITAA 1997, and to allow any new specifically-listed DGRs to be prescribed in regulations.

2.12 The amendments will add regulation-making provisions to Division 30 of the ITAA 1997 to allow both existing and any new specifically-listed DGRs to be specified in regulations. A 'first set' of regulations will be made under the regulation-making provisions providing DGR status for all existing specifically-listed DGRs.

2.13 The amendments will remove specific references to existing specifically-listed DGRs from the Division. The amendments have been designed so that this removal dovetails with the 'first set' of regulations, which will ensure that the DGR status of each existing specifically-listed DGR is unaffected by the process.

Spreading deductions for cash donations to DGRs

2.14 The amendments will allow deductions for cash gifts made from 1 July 2003 to DGRs to be spread, in instalments chosen by the taxpayer, over a period of up to 5 years.

2.15 The amendments will also simplify the gift provisions of the ITAA 1997 by replacing the 4 Subdivisions in Division 30 relating to the spreading of deductions with one Subdivision.

Comparison of key features of new law and current law

Detailed explanation of new law - Schedule 2

2.16 The funds, authorities and institutions discussed in paragraphs 2.17 to 2.21 have been included in the gift provisions of the ITAA 1997. Gifts of $2 or more to these organisations will allow a donor to claim the gift as an income tax deduction.

2.17 The Australian Literacy and Numeracy Foundation was established:

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to provide financial assistance to those suffering from illiteracy;

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to work towards ensuring a practical and measurable decrease in the severity of illiteracy; and

•

to gain the support of the Australian community.

The Foundation principally engages in the direct provision of speech, numeracy and literacy services as well as developing, teaching and training others in sound methods of teaching literacy and numeracy skills and facilitating both professional and public access to information about literacy and numeracy. [Schedule 2, item 1, subsection 30-25(2)]

2.18 Crime Stoppers Western Australia Limited, New South Wales Crime Stoppers Limited, Crime Stoppers Tasmania, Crime Stoppers Queensland Limited and Crime Stoppers Australia Limited encourage community involvement in the apprehension and conviction of criminals, and the reduction in crime by the provision of information to the proper authorities. [Schedule 2, item 2, subsection 30-45(2)]

2.19 The Australian-American Educational Foundation was established to promote educational and cultural exchange between Australia and the USA in order to enhance mutual understanding and goodwill between the 2 countries. The principal activity of the Foundation is to administer the Australian-American Fulbright Awards. [Schedule 2, item 1, subsection 30-25(2)]

2.20 The Constitution Education Fund will administer a nationwide competitive prize scheme commencing in 2004 that involves participants engaging in debates, public speaking and essay writing. The primary object of the Fund is to educate students of all ages about the Australian Constitution and the workings of all levels of government. [Schedule 2, item 1, subsection 30-25(2)]

2.21 The principal activity of the Alcohol Education and Rehabilitation Foundation is to administer funding grants for the benefit of the treatment, research and prevention of alcohol and other licit substance misuse. The Foundation makes a significant contribution towards the prevention of alcohol and other licit substance misuse. [Schedule 2, item 2, subsection 30-45(2)]

Establishing an end date for deductibility

2.22 The Stolen Children's Support Fund has been dissolved, with the Chairman of the Fund confirming the dissolution on 4 February 2003. Accordingly, Schedule 2 limits deductions for gifts to the Fund to gifts made before 4 February 2003. [Schedule 2, item 3, subsection 30-70(2)]

Application provisions - Schedule 2

2.23 The amendments to include organisations in the gift provisions of the ITAA 1997 apply from the dates of the press releases shown in Table 2.1.

2.24 The amendment relating to the Stolen Children's Support Fund limits deductions for gifts to the Fund to gifts made before 4 February 2003.

Detailed explanation of new law - Schedule 3 - simplifying the listing in the tax law of specifically-listed DGRs

2.25 The ITAA 1997 will be amended to simplify the listing in the tax law of specifically-listed DGRs.

2.26 The amendments are designed to allow any new specifically-listed DGRs to be prescribed in regulations. The amendments are also designed to allow all existing specifically-listed DGRs to be transferred from the ITAA 1997 to regulations to the ITAA 1997.

2.27 The amendments will add regulation-making provisions to Division 30 of the ITAA 1997 to allow both existing and any new specifically-listed DGRs to be specified in regulations. A 'first set' of regulations will be made under the regulation-making provisions providing DGR status for all existing specifically-listed DGRs.

2.28 The amendments will remove specific references to existing specifically-listed DGRs from the Division. The amendments have been designed so that this removal dovetails with the 'first set' of regulations, which will ensure that the DGR status of each existing specifically-listed DGR is unaffected by the process.

2.29 This process is set out under the heading below entitled "Changing the DGR definition".

2.30 The amendments will insert Subdivision 30-FA into the ITAA 1997. This Subdivision relates to regulations made under Division 30. It provides for a number of variations from the treatment of regulations outlined under the Acts Interpretation Act 1901. These variations are discussed under the heading below entitled "Special provisions about regulations".

Changing the DGR definition

2.31 Prior to the amendments, DGRs were defined as entities that were:

•

endorsed as DGRs (endorsement being a requirement for entities that seek DGR status and that fall under general DGR categories);

•

prescribed private funds;

•

mentioned by name in Subdivision 30-B; or

•

mentioned by name in the table in section 30-15.

2.32 The amendments affect only those DGRs mentioned by name in Subdivision 30-B or mentioned by name in the table in section 30-15. As such, entities that are endorsed as DGRs under a general DGR category and prescribed private funds are unaffected by the amendments.

Entities mentioned by name in Subdivision 30-B

2.33 An entity will no longer be defined as a DGR by way of being mentioned by name in Subdivision 30-B. [Schedule 3, item 52, subparagraph 30-227(2)(a)(ii)]

2.34 As a result, references where an entity is mentioned by name in Subdivision 30-B would be of no effect. Accordingly, these references are repealed. [Schedule 3, items 14, 16, 30-95 and 30-105, subsections 30-20(2), 30-25(2), 30-40(2), 30-45(2), 30-50(2), 30-18, 19, 20, 23, 25, 27, 29, 30, 32, 34, 37, 40, 42, 44, 46, sections 30-60, 30-65, 30-90, 55(2), 30-70(2), 30-80(2) and 30-100(2), paragraphs 30-30(1)(b), 30-30(1)(c) and 30-30(1)(d)]

2.35 An intention of the amendments is for these entities to continue to be DGRs.

2.36 To provide for this, the DGR definition will be amended so that an entity mentioned by name in regulations made for the purposes of section 30-105 will be a DGR [Schedule 3, item 52, subparagraph 30-227(2)(a)(ii)]. In place of the repealed section 30-105, a section is inserted setting out that a fund, authority or institution may be specified in regulations under the section [Schedule 3, item 46, section 30-105].

2.37 Regulations will be made under section 30-105 specifying all entities that were mentioned by name in Subdivision 30-B immediately prior to the repeal of these references. This will ensure that the DGR status of each entity is unaffected.

2.38 Under subsection 46(2) of the Acts Interpretation Act 1901, where an authority has a power to make a regulation prescribing a thing, the authority may identify the thing by referring to a class or classes of things. However, when prescribing an entity as a specifically-listed DGR, a reference to a class or classes of entities is neither necessary nor appropriate. Accordingly, the amendments provide that subsection 46(2) of the Acts Interpretation Act 1901 does not apply to regulations made for the purposes of section 30-105. Regulations made under section 30-105 will be required to refer to specific entities, rather than a class or classes of entities. [Schedule 3, item 46, subsection 30-105(7)]

Special conditions

2.39 Some entities that were mentioned by name in Subdivision 30-B prior to the repeal of these references were subject to special conditions. These conditions had to be satisfied in order for deductions to arise for gifts made to the entity. For example, a special condition was attached to the Young Endeavour Youth Scheme Public Fund whereby, in order for a deduction to arise, a gift to the Fund would need to be made after 24 September 2001.

2.40 These special conditions attached to particular entities will be replicated in the relevant regulations made under section 30-105 so that the DGR status of each entity is unaffected.

2.41 Special conditions may require that:

•

the gift must be made after a specified date, before a specified date, or during a specified period (all of which may be before the regulation takes effect - see paragraph 2.67);

•

the gift must be made for a specified purpose;

•

the conditions set out in section 30-30 (including the requirement that the gift is for a purpose that relates solely to tertiary education) must be satisfied; or

•

the conditions set out in section 30-110 (requiring the entity to agree to provide statistical information about gifts made to it, and requiring the entity to not be merely a conduit for donations to other entities) must be satisfied.

[Schedule 3, item 46, section 30-105]

Transitional provisions relating to special conditions

2.42 Section 30-30 outlines a special condition that applies to certain entities that includes a requirement that certain declarations specific to the entity be made.

2.43 Prior to the amendments, section 30-30 made specific reference to the Marcus Oldham Farm Management College. This reference has been repealed (see paragraph 2.33). A regulation will be made under section 30-105 for the College (see paragraph 2.36) and that this regulation will specify that the College is subject to the condition set out in section 30-30.

2.44 Despite the repeal of the specific reference in section 30-30 to the Marcus Oldham Farm Management College, declarations specific to the College that were in force immediately prior to 1 July 2003 have effect as if the declarations had been made under section 30-30 as amended. [Schedule 3, item 73]

2.45 Prior to the amendments, section 30-60 outlined a special condition on certain entities, that included a requirement that certain agreements be made. This section has been repealed [Schedule 3, item 30, section 30-60]. Under the amendments, the special condition is outlined in section 30-110 [Schedule 3, item 46, section 30-110].

2.46 Regulations will be made under section 30-105 for all entities that were subject to the special condition outlined in section 30-60 prior to its repeal. These regulations will specify that the entities are subject to the special condition outlined in section 30-110. This will ensure that these entities will continue to be subject to the special condition.

2.47 Despite the repeal of section 30-60, agreements that were in force under section 30-60 immediately prior to 1 July 2003 have effect as if the agreements had been made under section 30-110. [Schedule 3, item 74]

Entities mentioned by name in the table in section 30-15

2.48 Entities are mentioned by name in items 4 and 6 of the table in section 30-15.

2.49 An entity will no longer be defined as a DGR solely because it is mentioned by name in the table in section 30-15. [Schedule 3, item 52, subparagraph 30-227(2)(a)(ii)]

2.50 As a result, references where an entity is mentioned by name in items 4 and 6 of the table in section 30-15 would be of no effect. Accordingly, these references are omitted or repealed. [Schedule 3, items 6 to 8, section 30-15 (item 4 in the table, paragraph (a) in the column headed "Recipient" and paragraph (ba) in the column headed "Special Conditions") and section 30-15 (item 6 in the table, column headed "Recipient")]

2.51 An intention of the amendments is for these entities to continue to be DGRs.

2.52 To provide for this, the DGR definition will be amended so that an entity specified in regulations made for the purposes of item 4 or 6 of the table in section 30-15 will be a DGR [Schedule 3, item 52, subparagraph 30-227(2)(a)(ii)]. References to "a fund, authority or institution specified in regulations made for the purposes of this item" will be added in place of the omitted and repealed references in items 4 and 6. [Schedule 3, items 6 to 8, section 30-15 (item 4 in the table, paragraph (a) in the column headed "Recipient" and paragraph (ba) in the column headed "Special Conditions") and section 30-15 (item 6 in the table, column headed "Recipient")]

2.53 Regulations will be made for the purposes of item 4 or 6 in the table in section 30-15 specifying all entities that were mentioned by name in items 4 and 6 immediately prior to the repeal of these references. This will ensure that the DGR status of each entity is unaffected.

2.54 Under subsection 46(2) of the Acts Interpretation Act 1901, where an authority has a power to make a regulation prescribing a thing, the authority may identify the thing by referring to a class or classes of things. However, when prescribing an entity as a specifically-listed DGR, a reference to a class or classes of entities is neither necessary nor appropriate. Accordingly, the amendments provide that subsection 46(2) of the Acts Interpretation Act 1901 does not apply to regulations made for the purposes of item 4 or 6 of the table in section 30-15. Regulations made for the purposes of item 4 or 6 will be required to refer to specific entities, rather than a class or classes of entities. [Schedule 3, item 9, subsection 30-15(4)]

An exception for the Commonwealth (for the purposes of Artbank)

2.55 Item 5 in the table in section 30-15 relates solely to gifts accepted for the purposes of Artbank. The sole recipient under this item, namely the Commonwealth (for the purposes of Artbank), is mentioned by name. This entity is inherently related to the item, and no other entity is likely to be related to the item in future. As such, maintaining specific reference to this entity in the ITAA 1997 is consistent with the intention to simplify the listing in the tax law of specifically-listed DGRs.

2.56 To provide for this, the DGR definition will be amended so that the Commonwealth (for the purposes of Artbank) will be a DGR. [Schedule 3, item 52, subparagraph 30-227(2)(a)(ii)]

Consequential amendments

2.57 A number of minor consequential amendments arise from the insertion of section 30-105 (setting out that a fund, authority or institution may be specified in regulations under the section), the repeal of references where an entity is mentioned by name in Subdivision 30-B, and the associated change in the DGR definition. [Schedule 3, items 1, 3, 4, 5, 11, 13, 15, 17, 21, 22, 24, 26, 28, 31, 33, 35, 36, 38, 39, 41, 43, 45, 50, 59, 62, 64, 65, 66, 67, 68, 69, 70 and 71, section 30-15, item 1 in the table, paragraphs (aa) and (c) in the column headed "Special conditions", item 2 in the table, paragraph (a) in the column headed "Recipient", group headings before sections 30-65, 30-90, 30-95 and 30-105, at the end of section 50-60, subsections 30-5(3), 30-35(1), 30-75(1), 30-85(1), 30-125(2), 31-10(2) and 50-75(2), note to subsections 30-20(1), 30-25(1), 30-40(1), 30-45(1), 30-50(1), 30-55(1), 30-70(1), 30-80(1), 30-100(1) and 31-10(2), subsections 207-130(4A) and(4B), note to subsection 30-315(2), subsection 30-315(2) (numerous items in the table contained in the index to the Division), paragraphs 30-17(1)(a), 30-30(1)(a), 31-10(1)(a), 50-60(b), 207-130(4)(a), 207-130(4)(b) and 207-130(4)(c)]

2.58 A number of minor consequential amendments arise from the insertion of reference to entities specified in regulations made for the purposes of item 4 or 6 in the table in section 30-15, the repeal of references where an entity is mentioned by name in items 4 and 6, and the associated change in the DGR definition. [Schedule 3, items 12, 49, 55 and 56, subsections 30-125(2) and 30-230(2A), paragraphs 30-17(1)(c) and 30-230(2)(a)]

2.59 A number of minor consequential amendments arise from both of the changes referred to in paragraphs 2.56 and 2.57. [Schedule 3, items 10, 47, 48, 51, 53, 54 and 60, sections 30-115 and 30-228, subsection 30-17(1), subsection 30-315(2) (numerous items in the table contained in the index to the Division), paragraphs 30-227(2)(a) and 30-227(2)(b), subparagraphs 30-125(1)(b)(i) and (ii)]

Special provisions about regulations

2.60 The amendments will insert Subdivision 30-FA into the ITAA 1997 [Schedule 3, item 58]. This Subdivision relates to regulations made under Division 30 [Schedule 3, item 58, section 30-311]. It provides for a number of variations from the treatment of regulations outlined under the Acts Interpretation Act 1901.

2.61 The Subdivision has effect despite the following sections of the Acts Interpretation Act 1901:

•

section 48, entitled "Regulations";

•

section 48A, entitled "Regulations not to be re-made while required to be tabled";

•

section 48B, entitled "Regulations not to be re-made while subject to disallowance"; and

•

section 49, entitled "Disallowed regulations not to be re-made unless resolution rescinded or House approves".

[Schedule 3, item 58, section 30-314A]

'First set' of regulations to take effect on 1 July 2003

2.62 A 'first set' of regulations will be made under the regulation-making provisions for all existing specifically-listed DGRs to ensure that the DGR status of each is unaffected by the process.

2.63 The regulation-making provisions will require that this first set of regulations take effect on 1 July 2003. Accordingly, if this first set survives the disallowance period, it will take effect on 1 July 2003. This would represent a seamless transfer of specifically-listed DGRs from the ITAA 1997 to regulations to the ITAA 1997. [Schedule 3, item 58, paragraph 30-312(4)(a)]

Subsequent regulations to take effect after the risk of disallowance passes

2.64 The regulation-making provisions will require that the regulations (other than the 'first set' of regulations discussed above) take effect on the day immediately after the last day on which a resolution disallowing the regulations could have been passed. [Schedule 3, item 58, paragraph 30-312(4)(b)]

2.65 Without this requirement, these regulations could take effect before the risk of disallowance passes. This would open up the possibility of an entity being recognised under law as a specifically-listed DGR, only to have this recognition removed shortly thereafter by the Parliament. This could inconvenience both the entity and donors to it.

2.66 This provision will only affect the regulation's date of effect, not the regulation's date of application (e.g. the date from which a regulation may allow deductions for gifts made to a particular entity).

Application dates of regulations

2.67 The regulations do not apply to gifts made before 1 July 2003 [Schedule 3, item 58, subsection 30-313(1)]. Paragraph 2.100 outlines how the specific references to specifically-listed DGRs in the ITAA 1997 (which are repealed) will nonetheless continue to apply for gifts made before 1 July 2003.

2.68 Unless the contrary intention appears in a regulation, the regulation applies to gifts made on or after 1 July 2003. As such, a regulation may apply retrospectively. [Schedule 3, item 58, subsection 30-313(2)]

2.69 However, the capacity for regulations to apply retrospectively is limited for amending regulations that have the effect of terminating or limiting the DGR status of a particular entity after a particular time (the termination/limitation time). [Schedule 3, item 58, section 30-314]

2.70 Such amending regulation may be made if it does not apply retrospectively. That is, if the termination/limitation time occurs at or after the time when the amending regulation takes effect. [Schedule 3, item 58, paragraph 30-314(1)(a)]

2.71 Where such amending regulation is to apply retrospectively, it may be made only if the following conditions are met.

•

The amending regulation must give effect to a public announcement made by the Treasurer, or another Minister, at or before the termination/limitation time. A copy of the announcement must be published on the Internet.

•

The termination/limitation time must not be earlier than 60 days before the day on which the amending regulation is made.

[Schedule 3, item 58, paragraph 30-314(1)(b) and subsection 30-314(2)]

2.72 These conditions would accommodate an instance where the Treasurer considers that an immediate termination/limitation of an entity's DGR status is appropriate, such that an announcement of immediate termination/limitation is required before the amending regulation is drafted and made.

Notification and disallowance

2.73 Notification of a regulation must be made in the Gazette within 21 days after the regulation is made. [Schedule 3, item 58, subsection 30-312(1)]

2.74 The Treasurer must cause a copy of a regulation to be tabled in each House of the Parliament within 15 sitting days (of that House) after the regulations are made. [Schedule 3, item 58, subsection 30-312(2)]

2.75 Each House may, following a motion upon notice, pass a resolution disallowing a regulation. To be effective, the resolution must be passed within 15 sitting days (of that House) after the copy of the regulation was tabled in that House. [Schedule 3, item 58, subsection 30-312(3)]

Detailed explanation of new law - Schedule 3 - allowing deductions for cash donations to DGRs to be spread over a period of up to 5 years

2.76 The amendments will allow deductions for cash gifts made from 1 July 2003 to DGRs to be spread, in instalments chosen by the taxpayer, over a period of up to 5 years.

2.77 The amendments will also simplify the gift provisions of the ITAA 1997 by replacing the 4 Subdivisions in Division 30 relating to the spreading of deductions with one Subdivision.

Cash gifts

2.78 Deductions for cash gifts are allowed for gifts to a fund, authority or institution covered by item 1 or 2 in the table in section 30-15. The amendments will allow taxpayers to make a written election to spread these deductions over the current income year and up to 4 of the immediately following income years. [Schedule 3, item 57, section 30-248, subparagraph 30-247(1)(a)(i)]

2.79 The conditions on, and the effects of, this election are the same as for elections relating to gifts of property valued at over $5,000 (other than environmental, heritage and certain cultural property gifts) and conservation covenants. The conditions and effects are set out below.

2.80 In the election, the taxpayer must specify the percentage (if any) of the deduction that will be deducted in each of the income years. [Schedule 3, item 57, subsection 30-248(2)]

2.81 The election must be made before the lodgment of the taxpayer's income tax return for the income year in which the gift was made. [Schedule 3, item 57, subsection 30-248(3)]

2.82 The taxpayer may vary an election at any time. However, the variation can only change the percentage that will be deducted in respect of income years for which an income tax return has not yet been lodged. [Schedule 3, item 57, subsection 30-248(4)]

2.83 The election and any variation must be in the form approved in writing by the Commissioner. [Schedule 3, item 57, subsection 30-248(5)]

2.84 As a result of the election, the taxpayer cannot deduct the amount that the taxpayer otherwise would have been able to deduct in the income year in which the gift was made [Schedule 3, item 57, subsection 30-249(2)]. Instead, in each of the income years specified in the election, the taxpayer can deduct the amount corresponding to the percentage specified for that year [Schedule 3, item 57, subsection 30-249(1)].

Replacing 4 Subdivisions with one

2.85 The amendments repeal Subdivisions 30-DB to 30-DE, and substitute Subdivision 30-DB. [Schedule 3, item 57]

2.86 The effect of the repealed Subdivisions is preserved. As such, elections to spread deductions will continue to be allowed for:

•

gifts of property valued by the Commissioner at more than $5,000 and made to a fund, authority or institution covered by item 1 or 2 in the table in section 30-15;

•

gifts covered by item 4 or 5 in the table in section 30-15;

•

gifts covered by item 6 in the table; and

•

entering into a conservation covenant under Division 31.

[Schedule 3, item 57, section 30-247 and subsection 30-248(1)]

2.87 The conditions and effects outlined in paragraphs 2.79 to 2.81, and in paragraph 2.83, continue to apply for these gifts and covenants. [Schedule 3, item 57, sections 30-248 and 30-249]

2.88 Environmental property gifts, heritage property gifts, and certain cultural property gifts will continue to be excepted from the condition requiring elections and any variation to be in the form approved in writing by the Commissioner, and will continue to be subject to additional requirements instead (see paragraphs 2.89 to 2.96). Other property gifts will continue to be subject to the condition requiring elections and any variation to be in the form approved in writing by the Commissioner. [Schedule 3, item 57, subsection 30-248(5)]

2.89 Conservation covenants will continue to be subject to the condition requiring elections and any variation to be in the form approved in writing by the Commissioner [Schedule 3, item 57, subsection 30-248(5)]. Conservation covenants will also continue to be subject to additional requirements (see paragraphs 2.97 to 2.98).

Additional requirements - environmental property gifts

2.90 An election for a gift of property is subject to additional requirements if the gift is made to a fund, authority or institution:

•

covered by section 30-55; or

•

specified in regulations for the purposes of the additional requirement.

[Schedule 3, item 57, subsection 30-249A(1)]

2.91 Regulations for these purposes will be made specifying the entities listed from items 6.2.1 to 6.2.12 and from 6.2.22 to 6.2.23 in subsection 30-55(2) immediately prior to the repeal of this subsection. This will ensure that these entities continue to be subject to the additional requirements.

2.92 The additional requirements are as follows:

•

a copy of the election must be given to the Secretary to the Department of Environment and Heritage before lodgment of the income tax return for the income year in which the gift is made [Schedule 3, item 57, subsection 30-249A(2)];

•

if the election is varied, a copy of the variation must be given to the Secretary to the Department of Environment and Heritage before lodgment of the income tax return for the income year to which the variation applies [Schedule 3, item 57, subsection 30-249A(3)]; and

•

the election and any variation must be in a form approved in writing by the Secretary to the Department of Environment and Heritage [Schedule 3, item 57, subsection 30-249A(4)].

Additional requirements - heritage property gifts

2.93 An election for a gift of property is subject to additional requirements if the gift is made to a fund, authority or institution:

•

covered by item 6 in the table in section 30-15; or

•

specified in regulations for the purposes of the additional requirement.

[Schedule 3, item 57, subsection 30-249B(1)]

2.94 Regulations for these purposes will be made specifying the entities listed from items 6.2.13 to 6.2.21 in subsection 30-55(2) immediately prior to the repeal of this subsection. This will ensure that these entities continue to be subject to the additional requirements.

2.95 The additional requirements are as follows:

•

a copy of the election must be given to the Secretary to the Department of Environment and Heritage before lodgment of the income tax return for the income year in which the gift is made [Schedule 3, item 57, subsection 30-249B(2)];

•

if the election is varied, a copy of the variation must be given to the Secretary to the Department of Environment and Heritage before lodgment of the income tax return for the income year to which the variation applies [Schedule 3, item 57, subsection 30-249B(3)]; and

•

the election and any variation must be in a form approved in writing by the Secretary to the Department of Environment and Heritage [Schedule 3, item 57, subsection 30-249B(4)].

Additional requirements - certain cultural property gifts

2.96 An election for a gift of property is subject to additional requirements if the gift is made to a fund, authority or institution covered by item 4 or 5 in the table in section 30-15. [Schedule 3, item 57, subsection 30-249C(1)]

2.97 The additional requirements are as follows:

•

a copy of the election must be given to the Secretary to the Department of Communications, Information Technology and the Arts before lodgment of the income tax return for the income year in which the gift is made [Schedule 3, item 57, subsection 30-249C(2)];

•

if the election is varied, a copy of the variation must be given to the Secretary to the Department of Communications, Information Technology and the Arts before lodgment of the income tax return for the income year to which the variation applies [Schedule 3, item 57, subsection 30-249C(3)]; and

•

the election and any variation must be in a form approved in writing by the Secretary to the Department of Communications, Information Technology and the Arts [Schedule 3, item 57, subsection 30-249C(4)].

Additional requirements - conservation covenants

2.98 An election related to a conservation covenant is subject to the additional requirements. [Schedule 3, item 57, subsection 30-249D(1)]

2.99 The additional requirements are as follows:

•

a copy of an election relating to a conservation covenant must be given to the Secretary to the Department of Environment and Heritage before lodgment of the income tax return for the income year in which the gift is made [Schedule 3, item 57, subsection 30-249D(2)]; and

•

if the election is varied, a copy of the variation must be given to the Secretary to the Department of Environment and Heritage before lodgment of the income tax return for the income year to which the variation applies [Schedule 3, item 57, subsection 30-249D(3)].

Consequential amendments

2.100 A number of minor consequential amendments arise from the simplification of the gift provisions involving the replacement of 4 Subdivisions relating to the spreading of deductions with one Subdivision. [Schedule 3, items 2, 61, 63, subsection 30-5(4B), subsection 30-315(2) (item 112AA in the table, column headed "Provision"), note to subsection 31-5(3)]

Application and transitional provisions - Schedule 3

2.101 Despite the amendments made by Schedule 3, Division 30 continues to apply, in relation to gifts made before 1 July 2003, as if those amendments had not been made. Despite the amendments made by Schedule 3, Subdivision 30-DE continues to apply, in relation to covenants entered into under Division 31 before 1 July 2003, as if those amendments had not been made. [Schedule 3, item 72]

2.102 This transitional provision ensures that the removal of specific references to specifically-listed DGRs will not affect the deductions arising from gifts made before 1 July 2003.

2.103 A first set of regulations will be made under the regulation-making provisions for all existing specifically-listed DGRs. If this first set survives the disallowance period, it will take effect on 1 July 2003 (see paragraph 2.62). As a result, the DGR status of each existing specifically-listed DGR will be unaffected.

2.104 The transitional provision ensures that deductions for cash gifts can be spread only for cash gifts made on or after 1 July 2003.

2.105 It also ensures that the replacement of 4 Subdivisions relating to the spreading of deductions with one Subdivision does not affect the spreading of deductions for gifts made and covenants entered into before 1 July 2003. The repealed Subdivisions applied to gifts made and covenants entered into from different dates. These dates of application continue to apply.

2.106 To ensure that arrangements prior to 1 July 2003 are unaffected, further transitional provisions apply to a number of minor consequential amendments outside of Division 30. [Schedule 3, items 75 to 77]