Tax Deductible Donations by Wealthy Australians “Plummeting”

Philanthropic giving by Australia’s wealthiest has plummeted, with those earning over $1 million a year now becoming significantly less generous, according to the latest figures released by the Australian Tax Office.

Perpetual Trustees General Manager, Philanthropy, Andrew Thomas, says an analysis of the ATO’s Taxation Statistics, from a peak two years ago compared to the 2009-10 tax figures, shows that the tax deductible donations of those earning over $1 million has dropped from a collective $511 million down to just $120 million.

Thomas says the same 63% of wealthy Australians are still giving, but the average gift has plummeted from a high of $100,000 two years ago to just $27,500 in the the 2009-10 financial year.

“That’s a 73% less than two years earlier by these high earning Australians, amounting to drop of around $380million.”

“Generally, tax deductible giving has been growing steadily in Australia over recent years but not as well as it can and this can be attributed to high net worth individuals.”

Thomas says concerns about assets and capital may be part of the reason for these donors to be less generous.

He says the ATO statistics highlight the benefits of structured giving in the form of Private Ancillary Funds. The figures show that there are $2.2 billion dollars under management in these funds with $200 million being distributed in 2009-10.

The total number of Private Ancillary Funds increased by 6.9% during the 2009–10 income year. A Private Ancillary Fund is a type of trust which was previously known as a prescribed private fund to which taxpayers can make tax deductible donations.

“Private Ancillary Funds are growing at a rate that allows sustainable giving and there is evidence that shows that those who have these funds are likely to give four times more than those who don’t,” Thomas said.

Overall, the ATO’s latest figures show there’s been a decrease generally in the amount of money Australians are claiming in their tax returns as charitable donations.

Australians claimed $1.96 billion in deductible gifts in their tax returns for the 2009-10 income year – a decrease of 6.3% on the previous year.

The ATO’s figures for the 2010-11 financial year also show that charities claimed $520 million in refundable franking credits, a decrease of 17.7% on the previous year.

Some 36% of taxpayers claimed a gift or contribution to a DGR as a deduction in their income tax return and for the majority of these (83.9%) their contribution represented 1% or less of their total income.

“One of the interesting indicators from the ATO statistics is that the most generous Australians are those aged 75 years or older and in 2009-10 they collectively donated $260 million,” Thomas said.

He says these people are not motivated by a tax deduction but rather by giving back to the community.

For the first time the ATO has provided new information on the number of employees
who are participating in workplace giving programs and the amount of money donated through workplace giving schemes.

The workplace giving program allows employees to have deductions taken from each pay and given to charity.

For the 2009–10 income year, donations made through workplace giving totalled $23 million.

However, the figures show that while the total number of people employed by companies with workplace giving schemes was more than 2.5 million. only 101,204 employees were actively involved in giving.

The ATO Taxation Statistics can be found online. 

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