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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Taxation Laws
Amendment (Political Donations) Bill 1999
Date Introduced: 11 March 1999
House: House of Representatives
Portfolio: Treasury
Commencement: Royal Assent and the
amendments will apply to gifts or contributions made on or after 1
July 1998.
Purpose
The major
amendments proposed by the Bill:
-
- 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
-
- political parties registered under State or Territory
legislation, and
-
- increase the maximum deduction to $1 500 per year.
Background
This Bill replaces the Taxation Laws Amendment
(Political Donations) Bill 1998 which was introduced into the House
of Representatives on 28 May 1998 and which lapsed when the
election was called on 31 August 1998.
Prior to lapsing, the Bill was debated in the
House of Representatives where it was opposed by the Australian
Labor Party (ALP). Arguments advanced by the ALP for opposing the
Bill related primarily to the transparency of political
donations.(1)
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 (JSCEM) 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.(2)
While any 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.
Recommendation 78 of the JSCEM's 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.(3)
In relation to donations to independent Members
of Parliament, the JSCEM's 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.'(4) 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.(5)
The current disclosure rules will continue to
apply in respect of donations.
Main
Provisions
Part 1 of Schedule 1 of the
Bill will insert a new Subdivision 30-DA 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 12 of Schedule 1.
Application: To contributions or gifts made on
or after 1 July 1998 (item 18).
Endnotes
-
- See for example: Commonwealth of Australia - Parliamentary
Debates, Hansard, 3 June 1998, 4664-4690
- Joint Standing Committee on Electoral Matters, The 1996
Federal Election: 103.
- Ibid: 104.
- Ibid.
- Ibid.
Ian Ireland
15 March 1999
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ISSN 1328-8091
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