House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)

Chapter 2 - Deductible gift recipient

Outline of chapter

2.1 Schedule 2 to this Bill amends the ITAA 1997 to include the CERI as a DGR. This allows members of the public to make tax deductible donations to the CERI.

Context of amendments

Deductible gift recipient status

2.2 The income tax law allows income tax deductions for taxpayers who make gifts of $2 or more to a DGR. DGRs are entities which 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.

2.3 DGR status helps eligible organisations attract public financial support for their activities.

Centre for Entrepreneurial Research and Innovation

2.4 The CERI is based in Western Australia. It is a registered charity that works with universities, research institutes, government, private enterprise and industry to promote the entrepreneurial mindset and commercialise innovative ideas in Australia. The CERI encourages innovators to create start-ups that are based in Australia, instead of moving overseas.

2.5 The CERI's activities include:

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encouraging cross-collaboration between researchers in universities, research institutes and the private sector;

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working with researchers to assist in proof of concept and commercialisation; and

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assisting start-up companies by providing access to investors, as well as facilities at the CERI's offices.

Summary of new law

2.6 Schedule 2 adds the CERI as a DGR under the income tax law, enabling members of the public to make tax deductible gifts to it.

Detailed explanation of new law

2.7 Taxpayers can claim a tax deduction for gifts made to the CERI, provided the gift complies with the existing requirements of the income tax law. [Schedule 2, item 1, item 3.2.15 of the table in subsection 30-40(2) of the ITAA 1997]

2.8 This amendment ensures that the CERI receives appropriate support through the Commonwealth tax system for its goal of promoting entrepreneurship and commercialising innovative ideas in Australia.

Consequential amendments

2.9 Schedule 2 also amends the index for Division 30 of the ITAA 1997 to reflect the specific listing of the CERI. [Schedule 2, item 2, item 29A of the table in section 30-315 of the ITAA 1997]

Application and transitional provisions

2.10 The listing of the CERI applies to gifts made after 1 January 2017, and before 31 December 2021.

2.11 This is beneficial for taxpayers, as they will be able to claim a deduction for any gifts made to the CERI during that period.

2.12 The amendments commence the first day of the first quarter after the Bill receives the Royal Assent. [Clause 2]