Encouraging Philanthropy through Improved Tax Deductions

Minister for Families, Community Services and Indigenous Affairs, Mal Brough and the Minister for Revenue and Assistant Treasurer, Peter Dutton MP, today announced improvements to taxation deductibility provisions that affect fundraising charity dinners and events.

The changes to the ‘Minor Benefits Measure’ were considered by the Government in consultation with the Prime Minister’s Community Business Partnership, as part of its ongoing commitment to provide further support to encourage greater philanthropy in the community.

The Minor Benefits Measure seeks to permit a tax deduction for a payment to a charity where a benefit is received by the taxpayer provided that the value of the benefit received does not exceed the designated percentage of that payment. Deductions allowed under this measure are separate to deductions currently allowed for gifts.

The changes will reduce the minimum contribution threshold to $150 (previously $250), which will allow a greater number of charities to use the measure for fundraising. The value of the minor benefit allowed will be increased to 20 per cent of the gift – or ticket price – but not exceeding a value of $150 (previously 10% not exceeding $100).

The changes to the Minor Benefits Measure will apply from 1 January 2007.

An example of the operation of the measure is where a ticket to a fundraising dinner cost $200. The market value of the benefit (say the value of the plate) could be up to $40 and participants would be entitled to a tax deduction of the balance of approximately $160.

“The Government considered that the cost structures even of basic fundraisers were likely to exceed the existing limits. Additionally, we were concerned to ensure that smaller charities with lower ticket prices could get more benefit because the previous threshold at $250 was too high for many local charity fundraisers,” Mr Brough said.

“The change will improve the ability of the charitable sector to attract donors and demonstrates the Howard Government’s ongoing support for charitable work and philanthropy at all levels,” Mr Dutton said.

The Chairman of the Philanthropy and Taxation Working Group of the Partnership, Mr David Gonksi AO welcomed the change saying, “this positive measure will be helpful to charities and assist raising further funds for the community.”

As with the existing measure these provisions will apply to specific one-off fundraising events held by deductible gift recipients.

Information regarding the changes to Deductions for contributions with Associated Minor Benefits will be incorporated on the Partnership and Australian Taxation Office websites (www.ato.gov.au) after 1 January 2007.

The Prime Minister’s Community Business Partnership is a group of eminent Australians from both the business and community sectors who have been invited to advise the Government on improving philanthropy and building better relations between business and the community sector.