ATO Warning on Tax Deductible Events
9 October 2006 at 1:10 pm
As the busy Not for Profit annual fundraising period is in full swing, the Australian Tax Office is warning Not for Profits not to mislead donors regarding tax deductibility for some fundraising events.
The ATO says that when deductible gift recipients (DGRs) conduct fundraising events they should understand the requirements associated with tax deductible gifts and failure to meet the requirements can mean donors will not be entitled to claim tax deductions.
The requirements for tax deductible gifts are outlined in the ATO publication GiftPack for deductible gift recipients & donors. However, the ATO says DGRs should pay particular attention to the following issue:
Certain fundraising events conducted by DGRs encourage contributions that extend benefits to the contributor. As a benefit is received in return, there is no entitlement to claim the contribution as a tax deductible gift. This is the case even where some of the cost of attending the event was intended to be a donation.
For example, Albert attends a dinner and show organised as a fundraiser by a DGR. He purchases a ticket to the event for $500. The ticket indicates that the cost of attending the event includes a donation to the organisation.
The amount of the donation included in the ticket price is not eligible as a tax deductible gift as it does not have the characteristics of a gift because a material benefit is received in return for the payment.
However, if Albert purchases his ticket to the event for $200 and on the night makes a voluntary donation of $300, the $300 would be considered to be a gift and Albert may be entitled to claim a tax deduction.
In addition, contributions made by individuals to DGRs for the right to participate in an eligible fundraising event (for example, the purchase of a ticket to attend a charity ball), or the purchase by successful bidding of goods and services at fundraising auctions conducted by a DGR may be tax deductible.
If you would like an electronic version of the ATO DGR guidelines just send us an email with the words “ATO Giftpack” in the subject line to email@example.com.
To order a paper copy you can call the ATO Publications Distribution Service on 1300 720 092 for the cost of a local call – the service operates from 8.00am to 6.00pm Monday to Friday, or write to GPO Box 9935 in your capital city.