Money
Issue No. 21 - February/March 2005
Tax Incentives to promote philanthropy
Prescribed Private Funds
by John Rawson
Traditionally, business and philanthropy have not shared a close association in Australia.
Unlike the United States, for example, Australian business has generally been reluctant to support philanthropic causes - except in some isolated cases.
Five years ago, the Federal Government took steps to overcome this gap, announcing a series of taxation measures in response to a report on philanthropy by the Business and Community Partnerships Working Group.
These measures are ultimately expected to increase the level of annual business donations by between $50 million and $60 million per annum.
A quick snapshot of trends in the US and the UK, compiled by Philanthropy Australia, make for some interesting reading.
Australia, for example, has an estimated 2000 trusts and foundations while the United States has 88,500 and the UK 10,900.
Estimated annual disbursements by the Australian not-for-profit sector are between $500 million and $1 billion, while in the US it's more than $A35 billion, and the UK, $A5 billion.
Philanthropy Australia estimated that in 2001, total Australian business sector gifts and sponsorship to the private sector amounted to $1.4 billion.
The Australian tax measures unveiled in recent years are aimed at lifting business philanthropy from its current level.
In summary, some of the tax concessions
apply to:
- Gifts of property at more than $5000
- Apportionment of deductions over a maximum five-year period
- Capital gains tax exemption for certain gifts of property
- Preservation of donation deductions notwith-standing minor benefit; and
- Deductions for gifts to prescribed private funds
While other countries have long encouraged, and benefitted from philanthropic contribution, Australia has been relatively slow to offer the appropriate tax incentives.
It was only in 1963 that the Tax Act was amended to allow deductions to 'pub...
