Coalition says no to DGR reform

Posted on 09 Jan 2024

By Greg Thom, journalist, Institute of Community Directors Australia

Thumbs down reject

The federal Opposition has attacked one of the key reforms proposed in the Productivity Commission's draft report into philanthropy.

It has urged the Albanese government to rule out adopting changes to deductible gift recipient (DGR) status, claiming it would “rip funding” from non-government schools and charities.

Handed down in November, the 338-page Future Foundations for Giving interim report made a raft of recommendations in line with Canberra’s pledge to double charitable giving by 2030.

The commissioners described the current DGR tax rules – which allow eligible organisations to accept tax deductible donations – as “not fit for purpose.”

Their report recommended adopting a “principles based” assessment approach to determine DGR eligibility as a way of directing charitable support to where it was needed most.

The report said if adopted, the changes would boost the number of organisations eligible to claim DGR status by 60% from 25,000 to 40,000.

However, the report also called for the withdrawal of DGR status for as many as 5,000 charities that related to school building funds or that provided religious education in government schools.

As many as 20,000 organisations engaged in activities such as advancing religion and industry and some childcare and education charities would also remain outside the DGR system.

The Opposition also slammed the report’s recommendation to end “basic religious charity” status, alleging such a move would increase red tape for almost one in five Australian charities – including those that support schools and religious education.

The Coalition described the recommendation as a “slap in the face” for the non-government sector at a time when more Australians hit by the cost-of-living crisis were turning to religious charities and organisations for support.

“When we ask an independent body like the Productivity Commission to conduct an inquiry, it’s important that we respect their independence and let them complete the process.”
Charities Minister Andrew Leigh.
PC fact sheet 1
PC fact sheet 2

Shadow Treasurer Angus Taylor said the proposed changes could devastate non-government schools, which have enjoyed DGR support for 70 years.

“At a time when Labor is taxing Australians at record levels, [federal Treasurer] Jim Chalmers’ own review is calling to increase taxes on non-government schools,” he said.

“This will just pass on costs to families struggling with the cost of living and leave non-government schools deprived of vital infrastructure.”

Shadow Education Minister Sarah Henderson said if adopted, the recommendations would be “catastrophic” for low-fee-paying non-government schools that depend on their DGR status to construct new school buildings and other vital infrastructure.

“The government has a responsibility to protect the funding mechanisms which are critical to the viability of low-fee-paying schools, particularly in regional and remote Australia where student numbers are reduced and capital is scarce,” she said.

Deductible Gift Recipient (DGR) status, which allows organisations to accept tax deductible donations, has become a contentious topic in the charity sector.

Charities Minister Andrew Leigh, however, said it was typical of the Liberals that while the Albanese government was working to strengthen the charity sector, they were spreading misinformation and fear.

Charities Minister Andrew Leigh.

“At this time of year, with charities front and centre in responding to natural disasters and providing seasonal support to the vulnerable and the lonely, we have daily reminders of the sector’s vital work and the need for a boost to giving,” said Mr Leigh.

He said having been ministers themselves, Angus Taylor and Sarah Henderson knew the Productivity Commission was an independent body and its recommendations were not government policy.

“When we ask an independent body like the Productivity Commission to conduct an inquiry, it’s important that we respect their independence and let them complete the process,” said Mr Leigh.

“The Productivity Commission has not made any final recommendations as it is midway through its work.”

The Productivity Commission inquiry analysed charitable giving trends and proposed recommendations in line with Canberra’s pledge to double philanthropic giving by 2030.

Its report found that while the overall amount donated to charities has been increasing, fewer people are donating.

The Productivity Commission has invited feedback on the interim draft report recommendations before it delivers its final report in February.

Mr Leigh said he would encourage all charities to engage with the ongoing inquiry process so the Productivity Commission could reflect community views in its final recommendations.

“Religious organisations are anchors in our communities and their voices will be important when the time comes to consider the Productivity Commission’s suggestions on how we can double giving in Australia.”

More information

DGR tax rules “not fit for purpose”: Productvity Commission

High-profile charities academic slams lack of DGR reform

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