Issue
Can the executor of a deceased estate claim a deduction under subdivisions 30-A and 30-B of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of a gift of property to a higher education institution?
Decision
Yes. The executor of a deceased estate can claim a deduction against the assessable income of the estate under subdivisions 30-A and 30-B of the ITAA 1997 in respect of a gift of property to a higher education institution.
Facts
The taxpayer is the executor of a deceased estate. As the executor, the taxpayer has made a gift of property from the estate to a higher education institution within the meaning of the Employment, Education and Training Act 1988 (EET 1988).
The property was purchased more than 12 months prior to gifting.
The gift of property has been valued by the Commissioner of Taxation at more than $5,000.
Reasons for Decision
Division 30 of the ITAA 1997 provides an income tax deduction for gifts or contributions made to a fund, authority or institution.
Section 30-15 of the ITAA 1997 provides the criteria that must be satisfied before a gift qualifies as a deduction to the donor.
For a gift of property to a higher education institution (within the meaning of the EET 1988) to qualify as a deduction, the following criteria must be satisfied: • the gift must be cash, or property valued by the Commissioner of Taxation at more than $5,000; and • the higher education institution must be mentioned by name in subdivision 30-B of the ITAA 1997.
Schedule 1 of the EET 1988 lists the higher education institutions that fall within item 2.1.3 of subsection 30-25(1) of the ITAA 1997.
The recipient higher education institution is mentioned in Schedule 1 of the EET 1988.
As the taxpayer is gifting the property as an executor of the estate, the deduction is allowable against the assessable income of the estate and not the assessable income of the taxpayer. Accordingly, the taxpayer as executor is entitled to claim a deduction equal to the value of the gift of property as determined by the Commissioner of Taxation, against the assessable income of the estate. Note: Section 26-55 of the ITAA 1997 provides that deductions for gifts or contributions under Division 30 of the ITAA 1997 cannot create or increase a tax loss as defined in section 36-15 of the ITAA 1997.