Tax Deductible Giving On the Rise

A review of the tax-deductible donations made by Australians in their income tax returns for 2005-06 has found more money is being donated by fewer people.

The review by the QUTs Centre for Philanthropy CPNS of AustralianTax Office figures shows the total amount of donated and claimed was $1.55 billion compared to $1.47 billion for the previous income year). This is an increase of $84.05 million (or 5.7%) from the previous income year.

Deductible gifts claimed ($1.55b) represented 5.8% of all personal taxpayer deductions ($27.03b). In comparison, Australian taxpayers claimed 4.8% ($1.3b) of all personal taxpayer deductions in tax agent fees and 48.3% ($13.1b) of all personal taxpayer deductions for work related expenses.

The analysis says the actual total tax-deductible donations made by Australian taxpayers far exceeds the inflation-adjusted total tax-deductible donations as measured by the Consumer Price Index (CPI).

The average tax-deductible donation made and claimed by Australian taxpayers to DGRs in 2006 was $370.83 (compared to $341.60 in the previous income year).

According to CPNS this average amount has more than doubled in the last decade.

However the review found that there are fewer individual taxpayers making deductible gifts. In 2005-06, 4.2 million Australian taxpayers (or 36.45%) made and claimed tax-deductible donations compared to 38.38% or 4.3 million in the previous year.

CPNS says that over the past five years tax deductible giving has increased by 11.6% per annum due in part to the incentives to encourage philanthropy such as Prescribed Private Funds (PPFs) and deductibility of property valued by the Commissioner of Taxation at more than $5,000.

In the year 2004-05, the increase was 26.39% due in part to the Tsunami donations. It says it is a sign of a vital philanthropic environment that giving still increased again for this year.

Although 116,905 fewer taxpayers claimed a gift deduction, the dollar amount of donations still rose.

A total of 1.4 million taxpayers in New South Wales claimed tax-deductible donations to DGRs of $648.72 million. This amount represented almost 41.69% of the national total.

The next largest donor state was Victoria whose taxpayers made and claimed tax-deductible donations to DGRs of $411.8 million, representing 26% of the national total.

Queensland taxpayers claimed tax-deductible donations totalling $219.28 million. This represented 14% of the national total. Together, these three states accounted for 82% of total tax-deductible donations made to DGRs in 2005-06.

New South Wales taxpayers made and claimed the largest average tax-deductible donation to DGRs of $462.10 compared to the national average of $370.83.

Australian Capital Territory taxpayers made the next highest average tax-deductible donation to DGRs with $386.94, followed by Victoria with an average tax-deductible donation of $363.54. Queensland taxpayers made and claimed an average tax-deductible donation in 2006 of $282.65.

For the first time the analysis has included deductible gifts by postcode.

CPNS says a clear link can be made in most cases to postcodes which would be expected to contain significant numbers of wealthy taxpayers.

Electronic copies of the complete working paper CPNS 40: An Examination of Tax-Deductible Donations made by Individual Australian Taxpayers in 2005-06 are available from the Publications page at www.cpns.bus.qut.edu.au or via ePrints http://eprints.qut.edu.au/archive/00013517/.