To claim a donation tax credit a person needs to provide an unconditional gift of money, of $5 or more, to a charity. There cannot be conditions attached to gift, for example, a payment to a charitable trust on the proviso the money is used for the purchase of a new building. If a payment has conditions it is not an unconditional gift.
It was previously thought that if a person loaned a charity money and that some or all of the loan was forgiven, a donation tax credit was denied. This was on the basis that the forgiveness of debt is not money, a condition required for a donation tax credit.
However, the High Court found on 2 October 2018 that annual forgiveness of debts to a charitable trust are monetary gifts paid to that charitable trust and as such qualified as charitable gifts. It is unclear whether Inland Revenue is appealing this decision.