Minister for Revenue and Assistant Treasurer
26 November 2001 - 17 July 2004
11 May 2004
CHANGES RELATING TO TAX CONCESSIONS FOR PHILANTHROPY
The Government will make changes to tax concessions relating to philanthropy to increase the flexibility available 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, announced today.
“This measure will improve the operation of these provisions, leading to greater levels of giving in Australia,” Senator Coonan said. “These changes flow from public submissions received by the Prime Minister’s Community Business Partnership, and I welcome the input of the 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 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.
“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,” Senator Coonan said. “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 introducing these measures receives Royal Assent.