Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)Chapter 2 Deductible gift recipients
Outline of chapter
2.1 Schedule 2 to the Bill amends the ITAA 1997 to allow the following entities to be deductible gift recipients under the income tax law:
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- Australian Volunteers Support Trust; and
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- Community Rebuilding Trust.
Context of amendments
2.2 Beginning in the second half of 2019, and continuing into 2020, Australia has experienced widespread and severe bushfires with devastating consequences for many affected individuals and communities.
2.3 The income tax law allows income tax deductions for taxpayers who make gifts of $2 or more to a deductible gift recipient. Deductible gift recipients are entities that fall within one of the general categories set out in Division 30 of the ITAA 1997 or are specifically listed by name in that Division.
2.4 Deductible gift recipient status helps eligible organisations attract public financial support for their activities.
2.5 The Australian Volunteers Support Trust is a charity that provides support to:
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- families of any volunteer who tragically loses their life or suffers a serious injury through their volunteer work in relation to a disaster in Australia; and
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- volunteers who become seriously injured through their volunteer work in relation to a disaster in Australia.
2.6 The Community Rebuilding Trust is a charity that provides support for the rebuilding and re-establishing of communities affected by disasters in Australia.
2.7 All references to legislation in this Chapter are to the ITAA 1997 unless otherwise stated.
Summary of new law
2.8 Schedule 2 to the Bill amends the ITAA 1997 to allow the following entities to be deductible gift recipients under the income tax law:
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- Australian Volunteers Support Trust; and
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- Community Rebuilding Trust.
Detailed explanation of new law
2.9 Taxpayers may claim an income tax deduction for gifts made to the Australian Volunteers Support Trust (ABN 75 818 737 065) provided the gift complies with the existing requirements of the income tax law. This amendment ensures that the Australian Volunteers Support Trust receives appropriate support through the Commonwealth tax system for supporting volunteers affected by disasters in Australia and their immediate families. [Schedule 2, item 1, table item 4.2.45 in the table in subsection 30-45(2)]
2.10 Taxpayers may claim an income tax deduction for gifts made to the Community Rebuilding Trust (ABN 70 294 342 832) provided the gift complies with the existing requirements of the income tax law. This amendment ensures that the Community Rebuilding Trust receives appropriate support through the Commonwealth tax system for supporting the rebuilding of communities affected by disasters in Australia. [Schedule 2, item 1, table item 4.2.46 in the table in subsection 30-45(2)]
Consequential amendments
2.11 Schedule 2 to the Bill also amends the index for Division 30 to reflect the new listings. [Schedule 2, item 2, table item 27AAA in the table in section 30-315, and item 4, table item 34A in the table in section 30-315]
2.12 A minor consequential change is also made to numbering in the index for Division 30. [Schedule 2, item 3, section 30-315]
Application and transitional provisions
2.13 The amendments commence on the day after Royal Assent. [Clause 2]
2.14 The amendments apply to gifts made to the following entities for the 2019-20 income year and later income years:
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- Australian Volunteers Support Trust; and
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- Community Rebuilding Trust.
2.15 The amendments apply retrospectively. However, the amendments do not disadvantage affected parties as the changes are wholly beneficial to both the taxpayers making gifts to these entities of $2 or more, and the entities that receive those gifts.