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The Cultural Gift Program
Ruth Richardson explains the new benefits
for donors
The Commonwealth Cultural Gifts Program began
in the late 1970s as a means to augment the nation's collections
of significant cultural heritage material. For more than 20 years,
the Program has played a pivotal role in attracting some $195 million
worth of gifts and ensuring that they are preserved for generations
to come.
Donations of such significant items from private
collections to approved public art galleries, museums and libraries
are encouraged by offering donors a tax deduction. The policy intent
of the Program is that gifts will only be accepted by recipient
institutions if the type of gift accords with the institution's
collecting policy and if the institution has the means to maintain
the gift within its permanent collection.
Donations under the Program must be accompanied
by at least two valuations of the gift's current GST inclusive market
value, provided by valuers approved specifically to participate
in the Program. Generally, the average of the valuations may be
claimed as a tax deduction.
Donors may elect to spread their deduction over
a period of up to five income years, beginning in the income year
in which the gift was made. If an election is not made, the total
deduction must be claimed against income during the year of the
donation. From 1 July 1999, all gifts made under the Program are
exempt from capital gains tax. The ability to apportion deductions
and the removal of the capital gains tax impost allow donors to
maximise the appreciated value of their gifts, and benefit institutions
by enabling them to attract larger and more valuable collections.
The veracity of donation valuations is assessed
by the Committee on Taxation Incentives for the Arts-an expert Committee
appointed by the Minister for the Arts and the Centenary of Federation
to oversee the operation of the Program.
There are some circumstances where the average
of valuations may not be claimed, such as:
- if a donor receives any advantage of a material
nature as a result of the gift (such as free or discounted entry
to exhibitions or discounted membership fees) or if legal ownership
of the item has not been transferred unconditionally to the recipient
institution, the Commissioner of Taxation may disallow the deduction;
- if a gift is made within twelve months of
its acquisition by a donor (other than by inheritance), the donor's
deduction will be the price paid for the item or its current market
value, whichever is the lesser;
- artist's may donate their own works under
the Program: if the work has been part of the artist's personal
collection for more than twelve months, the artist will be entitled
to claim the full market value. If, however, the gift is part
of the artist's trading stock, the artist is entitled to claim
the cost of acquiring or producing the item/s. The same entitlements
apply to dealers making gifts under the Program.
Galleries, museums and libraries endorsed by
the Australian Taxation Office (ATO) to participate in the Program
are also able to seek donations of cash from the public in order
to fund their cultural activities. Since 1 July 1999, non-testamentary
donations of property such as real estate, equipment and shares
valued at more than $5,000 by the Australian Valuation Office, are
tax deductible if they were not acquired by the donor within the
previous twelve months. Also since that date, any gift of property
left in a will, while not tax deductible, is exempt from capital
gains tax.
The Department of Communications, Information
Technology and the Arts, which administers the Program, has produced
a publication, The Art of Giving , which celebrates 20 years of
the Program's operation. Copies may be requested by phone on (02)
6271 1647. Further information on the Program is also available
by phoning (02) 6271 1643 or by accessing the Department's website
at >www.dcita.gov.au<.
Ruth Richardson is the Senior Project Officer
for Cultural Sponsorship and Tax Reform in the Department of Communications,
Information Technology and the Arts. For more information Ruth can
be contacted on (02) 6271 1642.
The donation process in brief:
- collecting institutions need to ensure that
they are eligible to participate in the program by getting confirmation
in writing from their local ATO that they are a public gallery,
museum or library under subdivision 30B of the act
- valuations need to be conducted by valuers
approved for the program
- the donor signs over the object according
to the requirements stated in the forms provided by the recipient
institution
- a certificate is forwarded to the committee
on taxation incentives for the arts for endorsement and on approval
the donor can claim their tax deduction
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