Tag 5 of 6 · Cultural gifts
Valuing a cultural gift
Under the Cultural Gifts Program, a donation is valued by two valuers approved for the program, each completing its Valuation Certificate. The ATO’s general rule is that the deduction is the average of two or more written valuations by valuers approved by the Arts Secretary, and each certificate states the gift’s GST-inclusive market value as at a date within 90 days of the donation.
General information, not tax or legal advice. The Office for the Arts runs the program and publishes the Cultural Gifts Program Guide, and says that, before starting, “prospective donors are encouraged to seek independent tax advice”. The ATO’s Cultural Gifts Program page sets out the tax rules.
What the program is
The Cultural Gifts Program offers tax incentives to encourage people to donate cultural items to Australia’s public galleries, museums, libraries and archives. The Office for the Arts, part of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts, runs it. The ATO’s own page on the program, last updated in 2017, still names an earlier department.
The ATO’s examples of eligible gifts range from paintings, books, manuscripts, antiques and jewellery to Indigenous arts, cultural artefacts, natural and scientific materials, and film and social history pieces. Land and buildings are excluded: you can donate property other than an estate or interest in land or a building. Property donated under the program is exempt from capital gains tax.
Who does what
| Who | Their part |
|---|---|
| The donor | Contacts an eligible recipient institution, which must be a Deductible Gift Recipient listed on the Australian Business Register. |
| The institution | Accepts the item into its permanent collection, without which the donation is not eligible; helps find approved valuers or may arrange the valuation; and submits the documents. |
| Two approved valuers | Each values the GST-inclusive market value of the donation, and each must be approved for the class of work being donated. |
| The Office for the Arts | Receives a Certificate of Donation, at least two Valuation Certificates and colour images of the items (except printed, manuscript, library and archival material), assesses them, and writes to say whether the deduction can be claimed. |
| The donor, at the end | Gets the documents back from the institution for their tax records. |
Who may value
To value donations under the program, a valuer must be approved for that purpose by the Secretary responsible for the Arts, or their delegate, and approval is for specific classes of property. The Office for the Arts publishes the current list of approved valuers. A valuer asked to value something outside their classes can seek a one-off approval, but it must be granted before the valuation starts; retrospective approval cannot be granted.
The program says it welcomes all valuer applications, with a current emphasis on classes including large technology objects, militaria, items relating to Oceania (excluding Australia and New Zealand), jewellery, textiles and tapestries. It treats Australian Indigenous art as a specialist area and asks that valuers approved for it be engaged.
What a valuation must show
The program’s answers to valuers describe what each certificate has to carry. Set out as a card:
The Valuation Certificate, in summary
Drawn from the Office for the Arts’ answers for valuers. The form itself is on the program’s page.
- The value
- The gift’s GST-inclusive market value as at a date within 90 days of the donation, whenever the valuation was carried out.
- The method
- How the value was decided, including the methodology, with the valuer’s own research on factors such as size, complexity, condition, medium, context, desirability for collectors and demand, including primary and secondary sales.
- The valuer’s own work
- The valuer makes their own inquiries and does not rely on those of other valuers. The program stresses that valuers act independently, so that they cannot be taken to have colluded with other valuers.
- The sales evidence
- Actual sales, not advertised asking prices, which the program says do not demonstrate market value and cannot be substantiated. Where an artist’s own sales are not available, comparable sales by the artist’s peers in the same medium are acceptable.
- Sales overseas
- The precise date of sale, with prices converted to Australian dollars using the Reserve Bank of Australia’s historical exchange rates and the total price, including the buyer’s premium and the hammer price.
When the deduction is limited
The average of the valuations is the general rule, not the whole story. The program and the ATO each list cases where the amount changes:
| The situation | What happens |
|---|---|
| A gift made from an estate | Testamentary gifts are not eligible under the program. |
| Donated within 12 months of acquiring it (other than by inheritance) | Limited to the lesser of the purchase price and the market value. |
| Acquired to donate, or under an agreement to donate | Limited to the lesser of the purchase price and the market value. |
| Donated from a collector’s or artist’s trading stock | Limited to the cost of acquiring or producing the item. |
| Conditions that keep the institution from holding full custody, control and clear title | The Commissioner of Taxation may lower the deduction by a reasonable amount. |
| A material advantage to the donor, such as free or discounted membership | The Commissioner may disallow the deduction. |
Artists giving their own work face a further distinction between trading stock and their personal collection, which the Office for the Arts sets out on its page for donors.
Spreading the deduction
Since 1 July 2020, a donor no longer needs to tell the Office for the Arts that they want to spread their deduction over several years; the program points donors to their tax adviser or the ATO for how to do it. Gifts of other property to a deductible gift recipient, valued by the ATO itself, follow a different path, described in Valuations for tax at home.