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Last Post 6 Sep 06 by Ken, 0 replies Sort by:

Author Post

Joined 31/7/06
60 posts
Posted 6 Sep 06
Donations of livestock

Many farmers are being caught out due to a lack of understanding of the rules surrounding donation rebates.
Care must be taken when making donations. Many reputable charitable organizations (such as IHC and World Vision) are asking farmers to donate livestock instead of cash.
This can create serious taxation difficulties for the generous farmer.
The charitable donations rebate only applies to gifts of money.
It is not possible to claim a rebate for the donation of time or goods – only money
Even worse for the farmer, the donation of an animal is a taxable supply for GST purposes – and when monetary consideration is not paid, the supply is deemed to be at open market value.
This means the ‘donation’ must be treated as a sale at open market value in the relevant GST return.
The donation must also be included as a sale for income tax purposes – once more at open market value.
And you still don’t get the rebate!
Donating livestock is a tax disaster. It is much better to sell the animal and account for income and GST in the normal way, then consider giving a cash donation to the charitable organization.
The ONLY way to access a donations rebate is to give a donation in money.

Tax Tips Prepared by Ian Stewart, Farm Accounting & Taxation, P.Bag 47900 Ponsonby.
Email Ph 09 3764894 Fax 093786682.