Bronwyn Murray operates a clothing store in Brisbane as a sole trader. This business specialises in selling evening gowns and cocktail dresses to members of the public and it is registered as an enterprise for Goods and Services Tax (GST). Bronwyn comes to you for advice about seven separate questions in relation to her 20202021 income year ending 30 June 2021, and her Fringe Benefits Tax year ending 31 March 2021.

Question 1

A Brisbane-based charity, which is registered as a deductible gift recipient (DGR), contacts Bronwyn and asks her to gift an evening gown to them. This charity loans evening gowns to Year 12 high school students who cannot afford to buy dresses for their formal end-of-year dinner, so that they can dress up and attend this milestone event of their school careers. Bronwyn agrees to anonymously gift an evening gown from her end-of-season winter sale to this DGR on 31 July 2020. The cost price of this gown is $330. The original market selling value of the gown is $890. This gown is marked down to $450 in the end-of-season winter sale.

You are required to:

Advise Bronwyn by discussing all of the income tax implications for her of making this gift. Provide reasons for your answer, referencing relevant sections of the Income Tax Assessment Acts and relevant case law. In providing your answer to Question 1 you must ignore GST.