• Legal database
Legal database

Draft Taxation Determination

TD 92/D202

Income tax: gifts: can a fund, authority or institution which is recognised under paragraph 78(1)(a), and has been established by a church or community organisation, have a dissolution clause that permits surplus property on winding-up of the fund, authority or institution to go to the general funds of the founding church or community organisation?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 93/191.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) represent the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. No. The only exception being if the founding organisation as a whole is recognised under paragraph 78(1)(a) of the Income Tax Assessment Act.

2. Paragraph 78(1)(a) enables donors to claim income tax deductions for gifts of $2 upwards to various classes of funds, authorities and institutions. The paragraph specifically names a small number of organisations and also lists various classes of organisations which attract the concession.

3. Taxation Ruling No IT 2259 discusses, and gives an example of, an appropriate dissolution clause for funds. The requirements of the dissolution clause as described in IT 2259 are to ensure that, in the event of an approved fund, authority or institution being wound-up, gifts which have attracted income tax deductibility for the donor flow to, and are ultimately used by, a fund, authority or institution which itself attracts the concession.

Example:

A church establishes a school building fund in terms of sub-paragraph 78(1)(a)(xv). As gifts to the general funds of a church are not deductible to donors it is not acceptable to provide that on the dissolution of the school building fund surplus cash and property are transferred to the general funds of the church . Surplus property may only be transferred to some other "tax deductible" fund conducted by the church , and if none exists, to some other "tax deductible" fund conducted by another organisation.

Commissioner of Taxation
12/11/92

References

ATO references:
NO COR PT2176/CHM

ISSN: 1038-8982

Related Rulings/Determinations:

IT 2259

Subject References:
Dissolution clause
gifts
winding-up

Legislative References:
ITAA Paragraph 78(1)(a)


Back to top