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Wednesday, 17 August 2011
Page: 4767

Taxation

(Question No. 706)


Senator Bob Brown asked the Minister representing the Treasurer, upon notice, on 22 June 2011:

In the case of a company or individual which donates the use of a private plane to Nauru for members of a federal political party, would the company or individual be eligible for a tax deduction for the cost of the flight.


Senator Wong: The Treasurer has provided the following answer to the honourable senator's question:

In the situation described, it is unlikely that a company or individual would be eligible for a tax deduction for the cost of the flight.

Amendments to the Income Tax Assessment Act 1997 effective from 1 July 2008 removed:

general deductions for business taxpayers for contributions and gifts to political parties, members and candidates, and

deductions for political donations made by businesses or individuals in the course of carrying on a business.

Political contributions and gifts made on or after 1 July 2008 must meet several requirements to be tax deductible under subdivision 30-DA of the Income Tax Assessment Act 1997.

The donor must be an individual and the contribution or gift must not be made in the course of carrying on a business.

The recipient must be:

a political party registered under Part XI of the Commonwealth Electoral Act1918 or under corresponding state or territory legislation, or

an individual who is or was an independent member of—or who is an independent candidate for—the Commonwealth Parliament, a state parliament, the Legislative Assembly of the Northern Territory or the Legislative Assembly for the Australian Capital Territory.

Even if the contribution or gift is made by an individual in their personal capacity and not made in the course of carrying on a business, there are other requirements that would not be met in this case. The contribution or gift must be $2 or more, and be:

money, or

property purchased by the contributor or donor during the 12 months before making the contribution or gift.

To be tax deductible under this subdivision, there must be a transfer of money or property. Therefore there is no deduction for the gift of a service, for example, the use of a private plane as neither money nor property has been transferred. If however property has been transferred as part of providing the service, a deduction may be allowed in relation to the property.

If it could be ascertained that some property was donated, the most that contributors or donors may claim in an income year is:

$1,500 for contributions and gifts to political parties, and

$1,500 for contributions and gifts to independent candidates and members.

Only employees or office holders may claim deductions for political contributions incurred in earning assessable income as a general deduction.