Tax Moves On "Minor Benefits"
18 December 2006 at 10:42 am
There has been a small victory for the Not for Profit sector with changes to the restrictive ‘minor benefits’ measures affecting charity fundraisers.
The Federal Government has announced improvements to taxation deductibility provisions that affect fundraising charity dinners and events.
The Government has announced changes to the ‘Minor Benefits Measure’ following consultation with the Prime Minister’s Community Business Partnership which will take effect from January 1, 2007.
The Minor Benefits Measure provides a tax deduction for a payment to a charity where a benefit is received by the taxpayer, provided that the value of the benefit received, does not exceed the designated percentage of that payment.
Deductions allowed under this measure are separate to deductions currently allowed for gifts.
The changes will reduce the minimum contribution threshold to $150 (previously $250), which the Government says will allow a greater number of charities to use the measure for fundraising.
The value of the minor benefit allowed will be increased to 20 per cent of the gift – or ticket price – but not exceeding a
value of $150 (previously 10% not exceeding $100).
An example of the operation of the measure is where a ticket to a fundraising dinner cost $200. The market value of the benefit (say the value of the plate) could be up to $40 and participants would be entitled to a tax deduction of the balance of approximately $160.
The Government says it considered that the cost structures even of basic fundraisers were likely to exceed the existing limits. Additionally, it says it was concerned to ensure that smaller charities with lower ticket prices could get more benefit because the previous threshold at $250 was too high for many local charity fundraisers.
The Chairman of the Philanthropy and Taxation Working Group of the Partnership, David Gonksi welcomed the change saying it is a positive measure that will be helpful to charities and assist raising further funds for the community.
As with the existing measure these provisions will apply to specific one-off fundraising events held by deductible gift recipients.
Information regarding the changes to Deductions for contributions with Associated Minor Benefits will be incorporated on the Partnership and Australian Taxation Office websites (www.partnerships.gov.au and www.ato.gov.au) after 1 January 2007.
The Prime Minister’s Community Business Partnership is a group of eminent Australians from both the business and community sectors who have been invited to advise the Government on improving philanthropy and building better relations between business and the community sector.