V A L U A T I O N S

• Advice for Donors
• What is the Cultural Gifts Program?
• The Cultural Gifts Program* encourages gifts of significant cultural items to public art galleries, museums and libraries by offering donors a tax deduction for the market value of their gifts, under Subdivision 30-A of the Income Tax Assessment Act 1997.
• The Department of Communications and the Arts administers the program with the advice of the Committee on Taxation Incentives for the Arts. The Committee advises the Secretary to the Department on the approval of valuers to participate in the program and examines donations to ensure they conform with the program's requirements.
• * Previously named the Taxation Incentives for the Arts (TIA) Scheme.
• Make sure the public collecting institution of your choice is eligible to participate in this program and that it wants to accept your gift for its collection.
• You will need two valuations of the market value of your gift at the time of donation. Ask the institution to help you choose valuers who are approved to value items for the program, and to help you arrange for these valuations to be carried out. Each valuer will give you a valuation certificate for which you may be charged a fee. Some institutions may meet part or all of such fees-their staff will advise you about this.
• Following valuation, present your donation to the institution, together with a completed certificate of donation (available from the institution) which describes the gift and transfers ownership to the institution, and the originals of the valuation certificates. The institution will forward these certificates to the Committee for endorsement, after which they will be returned to you for your tax records.
• You may then claim the average of the valuations as a tax deduction for the financial year in which the gift was made, unless otherwise advised by the Committee.
• Common Questions
• When should I have valuations carried out?
• Valuations must be done within 90 days before or after the date on which the donation is made, to reflect the current market value.
• Do I have to use particular valuers?
• You should approach the institution to help you choose suitable valuers. The institution will know which valuers are approved, for the purposes of the program, to value your gift.
• Can I claim a tax deduction for the cost of the valuations?
• Yes, if the valuations are obtained specifically for this program they are a tax related expense for the purposes of section 25-5 of the Act.
• What about capital gains tax?
• If you acquired the donated item on or after 20 September 1985, Capital Gains Tax may apply. Your accountant or tax agent can advise you about this.
• Will the Market value for my gift be tax deductible in all cases?
• Not always. The Commissioner of Taxation may vary or disallow the deductible amount when:
• #The deduction claimed is greater than the amount needed to reduce your taxable income to nil for the financial year in which the gift is made.
• #The gift is given with conditions that prevent or delay the receiving institution having clear title, custody and control of it or which involve a material benefit to the donor.
• #The item was acquired by the donor (other than by inheritance) within 12 months of the donation, or acquired specifically for the purpose of donating it. The amount of the deduction to be claimed is then restricted to the purchase price or the market value, whichever is the lesser amount.
• #Artists donate their own work, or dealers donate items and the donation is part of their trading stock (that is, it could have been sold and the proceeds deemed assessable income). In such cases the deduction would be limited to the cost of producing or acquiring the item. If the donation is not trading stock, the donor would need to demonstrate to the Committee for the satisfaction of the Commissioner of Taxation, that the item was not held for commercial gain.
• Advice for Institution
• Confirm with your local branch of the Australian Taxation Office that your institution is eligible to receive gifts in accordance with subsection 30-15(1), Item 4 of the Act. Then send a copy of that advice and your institution's collection policy to the Committee.
• You will need to refer to the Guide to the Cultural Gifts Program which sets out your responsibilities and the procedures for accepting a gift. You will also need the list of approved valuers and donation forms. You should contact the Department of Communications and the Arts (see over for address) about supplies of these.
• Points to remember
• Before you accept a proposed gift, ensure that it fits within your acquisition policy and that it is a desirable acquisition for your collection. Institutions have the right to reject a proposed gift if it is not considered appropriate for the collection.
• Discuss the gift with the owner to ensure there are no conditions attached to the gift and that the owner has clear title to the item(s). Also check whether copyright is included with the gift. You should help the donor select appropriate valuers. Check that valuations reflect current market value and are well substantiated, as this will help the Committee assess valuations and avoid delays in endorsing gifts. Also check that valuation certificates are dated within a period of 90 days before or after the date of the gift.
• Ensure that the donor completes a certificate of donation, describing the gift and transferring ownership, and that you complete a donation summary sheet.
• Why not check out the cultural gifts web site at http://www.arts.gov.au/tax_incentives/cultural_gifts_program