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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Taxation Laws
Amendment (Political Donations) Bill 1998
Date Introduced: 28 May 1998
House: House of Representatives
Portfolio: Treasury
Commencement: The amendments will apply to gifts or
contributions made on or after 1 July 1998.
To:
- widen the range of contributions and gifts eligible for a tax
deduction to include gifts and contributions made to:
- independent members and candidates of Commonwealth, State,
Northern Territory or ACT Parliaments and Assemblies and elections
and
- political parties registered under State or Territory
legislation and
- to increase the maximum deduction to $1 500 per year.
Division 30 of the Income Tax Assessment Act
1997 (the 1997 Act) provides that contributions to political
parties registered under the Commonwealth Electoral Act
1918 that consist of money or property purchased within a year
of the making of the contribution and exceed $2, are deductible to
the donor up to a maximum of $100 per year. The deduction is not
available to companies. As the deduction is only available to
registered political parties under the Commonwealth Electoral
Act 1918 it does not apply to independent candidates in a
Commonwealth election who have not registered as a political party
(it is common for 'independent' candidates to register as a
political party even if they are the only candidate for that party
in order to take advantage of benefits available to registered
parties, such as this tax deduction for contributors). The
deduction is also not available to political parties registered
only under State or Territory law.
In the Joint Standing Committee on Electoral
Matters report on the 1996 Federal Election, it was noted that the
Liberal Party had submitted that the annual maximum deduction be
increased to $10 000 and that the ALP submitted that the level
should be $1 500. The Committee noted:
An increase in the maximum deduction would
encourage small to medium donations, thereby increasing the number
of Australians involved in the democratic process and decreasing
the parties' reliance on a smaller number of large
donations.(1)
While the decrease in reliance on a smaller
number of large donations appears uncontroversial, arguments can be
made that the increase in the amount that can be deducted will have
little if any effect on the number of Australian individuals
involved in the democratic process. For example, it is difficult to
see that there is a significant number of people, if any, who
decide not to make any donation to a political party because only
$100 is deductible per year rather than a larger amount. This would
amount to a person deciding that if they cannot get a deduction for
the higher amount they will not donate the $100 subject to the
deduction. However, the Committee recommended that the deduction
also be available to companies and this may explain the suggestion
that the number of Australians involved in the democratic process
will increase so long as it is remembered that a company is legally
a person (although it may be further argued that an owner of a
company can claim a deduction from making the donation as an
individual rather than through a company structure. The extension
of the deduction to companies may therefore allow an individual to
claim a deduction for donations made on an individual basis and
through a company/companies, thus leading in effect to double or
multiple tax deductions being available. Person is defined in the
1997 Act to include a company).
Recommendation 78 of the report states:
that section 78 of the Commonwealth Income Tax
Assessment Act [this is a reference to the Income Tax
Assessment Act 1936 rather than the 1997 Act] be amended so
that donations to a political party of up to $1500 annually,
whether from an individual or a corporation, are tax
deductible.(2)
In relation to donations to independent Members
of Parliament the report noted that it had received submissions
from a number of independent members to the effect that donations
to such people are not deductible. The report concluded that: 'This
inequity should be rectified.'(3) The Committee recommended:
that section 78 of the Income Tax Assessment Act be
amended to provide that donations to an independent candidate at a
Federal or State election are tax deductible, at the same level as
donations to registered parties.(4)
The current disclosure rules will continue to
apply in respect of donations.
Part 1 of Schedule 1 of the
Bill will insert a new Subdivision 30-D into the
1997 Act. A deduction will be allowed for contributions made
to:
- a political party registered under the Commonwealth
Electoral Act 1918 or corresponding State or Territory
legislation
- an independent candidate (see below) for a Commonwealth, State,
Northern Territory or ACT election or
- a person who was or is an independent member (see below) of the
relevant Commonwealth, State, Northern Territory or ACT Parliament
or Assembly.
To be eligible the gift must be of money or
property acquired by the taxpayer during the year before the making
of the gift and must be valued at $2 or more. Testamentary gifts do
not qualify for the deduction. To qualify for the deduction, a gift
to an independent member must be made while the person is an
independent member or, if the person ceases to be a member because
of an election, during the period between when the person ceases to
be a member and when candidates for the election are declared
(proposed section 30-242).
A person will be an independent candidate if
they are a candidate for a Commonwealth, State, Northern Territory
or ACT election and are not endorsed by a registered political
party. The person ceases to be an independent candidate when the
election is declared or, if the election fails and the result is
not declared, when the result for the replacement election is
declared. (proposed section 30-244).
A person will be an independent member if they
are a member of a Commonwealth, State, Northern Territory or ACT
Parliament or Assembly and are not a member of a registered
political party. They will become an independent member on the
declaration of the election (proposed section
30-245).
The maximum deduction in a year will be $1 500
(proposed section 30-243).
Item 3 of the Table contained in section 30-15
of the 1997 Act, which currently deals with deductions for
contributions to political parties, will be repealed by
item 11 of Schedule 1.
Application: To contributions or gifts made on
or after 1 July 1998 (item 18).
- Joint Standing Committee on Electoral Matters, The 1996 Federal
Election, 103.
- Ibid., 104.
- Ibid.
- Ibid.
Chris Field
30 June 1998
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ISSN 1328-8091
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