The Australian government scraps the $2 minimum tax deduction threshold to boost philanthropy for Australian communities.
This move, recommended by the Productivity Commission, is expected to unlock a wave of increased charitable giving across the nation.
Encouraging small donations
The $2 threshold, a relic from the 1960s, has long been seen as a barrier to small-scale giving. By removing this hurdle, the government aims to encourage more Australians to donate, even in small amounts. This could include rounding up purchases at the checkout or donating a few dollars online.
Boosting the impact of giving funds
The government has also announced reforms to giving funds, formerly known as ancillary funds. These funds play a vital role in facilitating charitable giving by connecting donors with worthy causes.
To enhance the effectiveness of giving funds, the government will:
- Extend distribution periods: Allow giving funds to spread their annual distributions over three years, providing greater flexibility for funding long-term projects and capital works.
- Increase annual distribution rates: Empower giving funds to distribute a larger portion of their assets to charities, maximising their impact.
A step forward with more to be done
While these reforms are a positive step, the philanthropic sector is eager for further progress. Philanthropy Australia CEO Maree Sidey has highlighted the importance of addressing the deductible gift recipient (DGR) system, a significant recommendation from the Productivity Commission’s report.
Sidey expressed concerns about the potential impact of increasing the minimum distribution rate for giving funds. She emphasised the crucial role of these funds in encouraging and facilitating charitable giving.
A Brighter Future for Australian Philanthropy
By simplifying the process of giving and encouraging more people to donate, the government’s reforms are poised to strengthen the Australian philanthropic landscape. These changes, coupled with ongoing efforts to boost the capacity and capability of community organisations, will empower charities to make a greater impact on society.
Also read: ACOSS says Social security boost and tax reform needed in federal budget
