Bills Digest no. 62 2006–07
Tax Laws Amendment (2006
Measures No. 6) Bill 2006
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
Financial Implications
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Tax Laws
Amendment (2006 Measures No. 6) Bill
2006
Date introduced: 2 November
2006
House: House of
Representatives
Portfolio:
Treasury
Commencement: Most
sections commence on Royal Assent. One part, Schedule 2, item 24,
commences immediately after the commencement of Part 1 of Schedule
2 to the Tax Laws Amendment (Repeal of Inoperative Provisions)
Act 2006.
To amend the Income Tax Assessment Act 1997
(ITAA 1997) to update the list of deductible gift recipients (DGRs)
and extend the period for which deductions are allowed for gifts to
certain funds that have time limited DGR status. Also, to make
minor technical amendments to other tax law.
Basis of policy commitment
Under Australian taxation law, taxpayers may claim an income tax
deduction for gifts of $2 or more, or property, to eligible gift
recipients. In the law these recipients are called deductible gift
recipients (DGRs). For a taxpayer to claim a tax deduction for a
donation, there are several requirements:
-
the payment must be truly a gift
-
it must be made to a DGR
-
it must be a gift of money or property that is covered by
a gift type, and
-
it must comply with any relevant gift conditions.
Not all payments to DGRs are tax deductible. Gifts have the
following characteristics, including that they:
are made
voluntarily
do not
provide a material benefit to the donor, and
essentially
arise from benefaction, and proceed from detached and disinterested
generosity.(1)
The law specifies the types of gifts that can be donated. To be
deductible, a gift must be of money or property that is covered by
one of the gift types. These are:
-
$2 or more money
-
property less than 12 months property purchased during the 12
months before the gift was made
-
property valued at more than $5,000 a valuation by the Tax
Office is required
-
trading stock trading stock disposed of outside the ordinary
course of business
-
cultural gifts property under the Cultural Gift Program, and
-
National Estate gifts places listed in the Register of the
National Estate.
For some DGRs, the income tax law adds extra conditions
affecting the sorts of deductible gifts they can receive. The gift
may only be tax deductible:
The income tax law determines which organisations and types of
organisations can be DGRs. DGRs are:
The majority of DGRs are endorsed by the Tax
Office.(2)
The Explanatory Memorandum states that the DGR listings will
have the following revenue implications:
|
2006-07
|
2007-08
|
2008-09
|
2009-10
|
2010-11
|
Total
|
|
-$0.74 m
|
-$3.06m
|
-$2.40m
|
-$2.84m
|
-$0.55m
|
-$9.59m
|
Schedule 1 of the Bill contains the list of
seven new DGRs. Table 1.1 of the Explanatory Memorandum, which
lists the DGRs and any conditions attached to their listing, is
reproduced below:
|
Name of
fund
|
Date of
effect
|
Special
conditions
|
|
Don Chipp Foundation Ltd
|
27 June 2006
|
|
|
Lingiari Policy Centre
|
26 July 2006
|
|
|
Nonprofit Australia Ltd
|
29 June 2006
|
The gift must be made before 29 June 2009.
|
|
Playgroup SA Inc
|
6 August 2006
|
|
|
Point Nepean Community Trust
|
27 June 2006
|
The gift must be made before 11 June 2009.
|
|
St Mary s Cathedral Restoration Appeal
Incorporated
|
27 April 2006
|
The gift must be made before 27 April 2007.
|
|
The Ranfurly Library Service Incorporated
|
3 May 2006
|
|
An overview of the activities of each of the above bodies is
provided in the EM.(3)
Schedule 1 also extends the periods for which gifts are
deductible for four existing DGRs: the Bowral Vietnam Memorial Walk
Trust Inc; Dunn and Lewis Youth Development Foundation Ltd; St Paul
s Cathedral Restoration Fund; and Yachad Accelerated Learning
Project Limited.(4)
Schedule 2 makes a number of technical
corrections and amendments to taxation laws. The most significant
change is contained in items 17-19, which transfer
power from the Prime Minister to the Treasurer to appoint a person
to act as the Commissioner for Taxation or the Second Commissioner
for Taxation, during a vacancy in, or absence from, either office.
According to the EM, in practice the Treasurer usually exercises
this power on authorisation of the Prime Minister. The transfer of
power will remove the unnecessary inconvenience of the Prime
Minister s authorisation.(5)
-
Australian Taxation Office internet site: Deductible gift
recipients listed by name in the tax law, available at:
http://www.ato.gov.au/nonprofit/content.asp?doc=/content/31654.htm
, accessed 5 December 2006.
-
ibid.
-
Hon. Peter Costello MP, Explanatory Memorandum for the Tax
Laws Amendment (2006 Measures No. 6) Bill
2006, p. 8.
-
ibid.
-
ibid.
Bronwen Jaggers
5 December 2006
Bills Digest Service
Parliamentary Library
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ISSN 1328-8091
© Commonwealth of Australia 2006
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Published by the Parliamentary Library, 2006.
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