New Tax Concessions for Philanthropy
7 June 2004 at 1:06 pm
The Federal Government will make changes to tax concessions relating to philanthropy to increase the flexibility available to funds over how they distribute monies to deductible gift recipients.
The Government has also announced measures to provide further encouragement for taxpayers to make testamentary gifts of property to deductible gift recipients, by allowing gifts of any value to be exempt from capital gains tax.
The changes to tax concessions relate to charitable funds, ancillary funds and prescribed private funds in respect of how they distribute monies.
The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan says this measure will improve the operation of these provisions, leading to greater levels of giving in Australia.
The changes flow from public submissions received by the Prime Minister’s Community Business Partnership.
Under current law, the income tax exemption for charitable funds is only available where these funds distribute solely to charities that are located in and pursuing their purposes in Australia, or to charities that are also deductible gift recipients.
As a result of the measure, charitable funds will now also be able to access the exemption where they distribute all of their funds to a combination of these types of charities.
The Government says it will also provide an income tax exemption to ancillary funds and prescribed private funds where these funds distribute solely to deductible gift recipients that are income tax exempt.
Currently, ancillary funds and prescribed private funds can only benefit from income tax exempt status by being endorsed as an income tax exempt charity, which means they can only distribute to deductible gift recipients that are also charities.
Senator Coonan says this change will allow ancillary funds and prescribed private funds to benefit from an income tax exemption as long as they distribute to a deductible gift recipient that is income tax exempt, whether or not that deductible gift recipient is a charity.
Deductible gift recipients that are income tax exempt but are not charities include government bodies, such as public universities, public galleries and public libraries.
To access the exemption, funds will need to be endorsed by the Commissioner of Taxation. When endorsed, these funds will also be able to benefit from a refund of imputation credits.
Senator Coonan also announced that the Government will provide further encouragement for taxpayers to make testamentary gifts of property to deductible gift recipients, by allowing gifts of any value to be exempt from capital gains tax.
These changes will come into effect at the start of the income year following the date on which the bill receives Royal Assent.