Bills Digest No. 237 1997-98
Taxation Laws Amendment (Political Donations)
Bill 1998
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
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
Bills Digest Service
Information and Research Services
This paper has been prepared for general distribution to Senators and
Members of the Australian Parliament. While great care is taken to ensure
that the paper is accurate and balanced, the paper is written using information
publicly available at the time of production. The views expressed are
those of the author and should not be attributed to the Information and
Research Services (IRS). Advice on legislation or legal policy issues
contained in this paper is provided for use in parliamentary debate and
for related parliamentary purposes. This paper is not professional legal
opinion. Readers are reminded that the paper is not an official parliamentary
or Australian government document.
IRS staff are available to discuss the paper's contents with Senators
and Members
and their staff but not with members of the public.
ISSN 1328-8091
© Commonwealth of Australia 1998
Except to the extent of the uses permitted under the Copyright Act
1968, no part of this publication may be reproduced or transmitted
in any form or by any means, including information storage and retrieval
systems, without the prior written consent of the Parliamentary Library,
other than by Members of the Australian Parliament in the course of their
official duties.
Published by the Department of the Parliamentary Library, 1998.
|
