Bills Digest no. 55 2015–16
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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.
Kali Sanyal
Economics Section
24 November 2015
Contents
Glossary
Purpose of the Bill
Background
Financial implications
Committee consideration
Statement of Compatibility with Human Rights
Key issues and provisions
Date introduced: 12
November 2015
House: House of Representatives
Portfolio: Treasury
Commencement: The
day of Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can
be found on the Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
Table 1 Abbreviations
ITAA 1997
|
Income Tax Assessment Act 1997
|
DGR
|
Deductible gift recipient
|
NFP
|
Not-for-profit
|
The Bill amends the Income Tax Assessment
Act 1997 (ITAA 1997)[1]
to update the list of specifically listed deductible gift recipients (DGRs). It
adds two entities to the list of DGRs, thereby generally allowing for donations
of $2 or more to these entities to be tax deductible for the donor.
A DGR is an organisation that is entitled to receive
income tax deductible gifts and deductible contributions. There are two methods
of gaining DGR status, by either:
- applying
to the Commissioner of Taxation for endorsement as a DGR or
- having
the organisation listed by name in Division 30 of the ITAA 1997 or in
the Income Tax Assessment Regulations 1997.[2]
Taxpayers who make gifts of $2 or more to an organisation
which is a DGR are able to deduct those amounts from their taxable income.
Treasury estimated the annual cost to the budget of tax deductibility for gifts
to DGRs at around $1.09 billion in 2013–14, and $1.10 billion in 2014–15.[3]
As at 31 October 2014, there were in total 28,100 entities
with DGR status, including 190 entities specifically named in the ITAA 1997,
and 10,827 DGR funds.[4]
In the 2012–13 income year individual claims for deductions were made in
respect of a total of 4.6 million gifts valued at almost $2.3 billion.[5]
Recent reforms to DGR status
In 2012, the Labor Government announced the formation of
the Not-For-Profit Tax Concession Working Group to ‘consider ideas for better
delivering the support ... provided through tax concessions to the not-for-profit
(NFP) sector’.[6]
The terms of reference stated that the ‘Working Group will identify whether
there are fairer, simpler and more effective ways of delivering the current
envelope of support provided through tax concessions to the NFP sector’.[7]
The Working Group released a discussion paper in November 2012, which included
a history of DGR concessions as well as discussion of the DGR framework. [8]
Subsequently it published a final report with recommendations for reform,
including extending DGR status to all charities, changes in the threshold, and
a number of other options.[9]
The Working Group’s final report was made public by the
Treasury in response to a request for access under the Freedom of
Information Act 1982[10]
on 21 February 2014.[11]
The report is dated May 2013, but had not been previously released. The Working
Group recommended that:
Except in the most exceptional circumstances, DGR status
should be limited to charities and charitable-like government entities... The
current minimum of $2 for deductible gifts is an anachronism and could be
removed with few consequences.[12]
The Working Group also rejected other options to modify
the DGR system such as a replacing deductibility with a tax offset for
donations.[13]
There has since been no statement from the Government
regarding the release of the report.
Proposed changes to the list of
deductible gift recipients
In the 2015–16 Budget, the Government announced that the
following organisations, which are currently not listed as DGRs, would be
listed as DGRs:
- International
Jewish Relief Limited and
- National
Apology Foundation.[14]
Information about the activities of each of the entities
is set out in the Explanatory Memorandum.[15]
This material is summarised in Table 2, with links to each of the
entities’ websites.
Briefly, the International Jewish Relief Limited was
incorporated on 10 September 2013. The company is now registered with the
Australian Securities and Investments Commission (ASIC). The business is
recorded as an Australian Public Company, and its registered business location
is in Melbourne.[16]
The National Apology Foundation was created by Mr Kevin
Rudd, the former Prime Minister, on 7 February 2014.[17]
The purpose of the foundation is to sustain the spirit of apology to indigenous
Australians[18]
that Mr Rudd, as Prime Minister of Australia, expressed through his ‘Apology
Speech’ on 13 February 2008.[19]
Taxpayers will be entitled to claim back an income tax
deduction for gifts of money or property to these DGRs on or after 1 January
2015.[20]
Table 2 Deductible Gift Recipients (DGRs) of the Bill
DGR type
|
DGR name
|
Conditions
|
Summary of activities as outlined in the Explanatory
Memorandum
|
Link to website
|
International affairs
|
International Jewish Relief
Limited
|
The inclusion of the
listing of the International Jewish Relief Limited applies to gifts made to
this organisation on or after 1 January 2015.
|
The International Jewish
Relief Limited is a charitable entity with objectives of helping impoverished
Jews and struggling Jewish communities around the world. The activity also
includes strengthening response to worldwide humanitarian crises and
disasters.
|
The International Jewish Relief Limited[21]
|
Other recipients
|
The National Apology Foundation
Ltd
|
The inclusion of listing of
the National Apology Foundation Ltd applies to gifts made to this
organisation on or after 1 January 2015.
|
The National Apology
Foundation Ltd is a charitable entity with an aim to sustain the spirit and
substance of the National Apology to Indigenous Australians for future
generations of Australians.
|
The National Apology Foundation Ltd[22]
|
Source: Explanatory Memorandum, Tax Laws Amendment (Gifts) Bill 2015, p. 6.
The revenue implication of this measure is an estimated
tax expenditure of $2.1 million over the forward estimates period.
Table 3 Financial impact of including the entities in the
DGR list, $m
Organisation
|
|
|
|
|
The International Jewish Relief Limited
|
-
|
‒ $0.3
|
‒ $0.3
|
‒ $0.3
|
National Apology Foundation Ltd
|
-
|
‒ $0.4
|
‒ $0.4
|
‒ $0.4
|
Source: Explanatory Memorandum, Tax Laws Amendment
(Gifts) Bill 2015, p. 3.
Senate Standing Committee for the
Scrutiny of Bills
At the time of writing this Bills Digest, Senate Standing
Committee for the Scrutiny of Bills had not considered the Bill.
Senate Standing Committee for Selection
of Bills
On its meeting on 12 November 2015, the Selection of Bills
Committee deferred consideration of the Bill.[23]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[24]
Parliamentary
Joint Committee on Human Rights
At the time of
writing this Bills Digest, the Parliamentary Joint Committee on Human Rights had
not considered the Bill.
Division 30 of the ITAA 1997 sets out the rules for
working out deductions for certain gifts or contributions. In particular, Subdivision
30-B contains tables of recipients of deductible gifts, divided into a number
of categories.
Item 1 of Schedule 1 of the Bill amends the
table in subsection 30‑80(2) of the ITAA 1997, which specifies entities
that have DGR status as ‘international affairs recipients’, to include International
Jewish Relief Limited. Item 2 of Schedule 1 amends the entry in
the table in section 30-105 of the ITAA 1997, which specifies entities
that have DGR status as ‘other recipients’, to include the National Apology
Foundation Ltd.
The effect of both amendments is that gifts made on or after
1 January 2015 to the International Jewish Relief Limited and the National
Apology Foundation Ltd are tax deductible (gifts made prior to 1 January 2015
will not be tax deductible).[25]
Items 3 and 4 amend the index in
Division 30 of ITAA 1997 to include International Jewish Relief Limited
and National Apology Foundation Ltd respectively, to reflect the DGR status
accorded to these entities by the amendments made by items 1 and 2.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Income Tax Assessment
Act 1997 (Cth), accessed 18 November 2015.
[2]. Ibid.,
sections 30-17 and 30-120; Income Tax Assessment
Regulations 1997, accessed 19 November 2015.
[3]. Treasury,
‘Chapter 2: tax expenditures’, Tax
expenditures statement 2014, The Treasury, Canberra, 30 January 2015,
p. 28, accessed 18 November 2015.
[4]. Australian
Taxation Office (ATO), ‘Deductible
gift recipients’, ATO website; ATO, ‘Charities
– table 3: deductible gift recipients, number of deductible gift recipients as
at 31 October 2015’, Taxation statistics 2012–13, data.gov.au
website, 8 April 2015, both accessed 24 November 2015.
[5]. ATO,
‘Charities
– Table 5: charities and deductible gifts, individuals’ gifts claimed, by
state/territory and amount claimed, for the 2012–13 income year’, Taxation
statistics 2012–13, data.gov.au website, 9 April 2015, accessed 19 November
2015.
[6]. M
Butler (Minister for Social Inclusion) and M Arbib (Assistant Treasurer), Not-for-profit
sector tax concession working group, media release, 12 February
2012, accessed 19 November 2015.
[7]. Ibid.
[8]. Not-For-Profit
Sector Tax Concession Working Group (NFPSTCWG), Fairer,
simpler and more effective tax concessions for the not-for-profit sector,
Discussion paper, The Treasury, Canberra, November 2012, pp. 18–34, accessed 18
November 2015.
[9]. NFPSTCWG,
Fairer,
simpler and more effective: tax concessions for the not-for-profit sector:
final report, The Treasury, Canberra, May 2013, p. 5, accessed 19
November 2015.
[10]. Freedom of Information
Act 1982 (Cth), accessed 18 November 2015.
[11]. Treasury,
‘FOI
disclosure log’, Treasury website, accessed 18 November 2015.
[12]. NFPSTCWG,
Fairer, simpler and more effective: tax concessions for the not-for-profit
sector: final report, op. cit., p. 5.
[13]. NFPSTCWG,
Fairer, simpler and more effective: tax concessions for the not-for-profit
sector: final report, op. cit., p. 5.
[14]. Australian
Government, Budget
measures: budget paper no. 2: 2015–16, p. 28, accessed 23 November 2015.
[15]. Explanatory
Memorandum, Tax Laws Amendment (Gifts) Bill 2015, p. 6, accessed 18
November 2015.
[16]. Australia
Company List, ‘The
International Jewish Relief Limited’, Australia Company List website,
accessed 24 November 2015.
[17]. C
Atfield, ‘Kevin
Rudd announces National Apology Foundation’, Sydney Morning Herald,
(online edition), 7 February 2014, accessed 19 November 2015.
[18]. K
Rudd, Annual
Address to National Apology Breakfast, speech, 4 March 2014, accessed 19 November
2015.
[19]. K
Rudd (Prime Minister), Apology
to Australia’s indigenous peoples, speech, 13 February 2008, accessed
19 November 2015.
[20]. Australian
Government, Budget
measures: budget paper no. 2: 2015–16, p. 28, accessed 18
November 2015.
[21]. Australia
Company List, ‘The
International Jewish Relief Limited’, op. cit.
[22]. ABN
Check, ‘The National Apology
Foundation Ltd’, ABN Check website, accessed 24 November 2015.
[23]. Senate
Selection of Bills Committee, Report,
14, 2015, The Senate, 12 November 2015, p. 4, accessed 19 November 2015.
[24]. The
Statement of Compatibility with Human Rights can be found at page 6 of the
Explanatory Memorandum to the Bill.
[25]. Explanatory
Memorandum, Tax Laws Amendment (Gifts) Bill 2015, op. cit., pp. 5–6.
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