Senator The Hon. Zed Seselja
Assistant Minister for Finance, Charities and Electoral Matters
Date: Wednesday, 6 May 2020
The Liberal-National Government values the essential role charities play, and the important role our philanthropic sector have in supporting the work of our charities, particularly when great challenges face Australians.
Today Assistant Minister for Finance, Charities and Electoral Matters, Senator the Honourable Zed Seselja, announced the Government is creating an incentive for philanthropic funds to give more support to charities at a time when they need it most.
“We know that many Australians are facing hard times as a result of COVID-19, and that the role charities play in supporting those doing it tough is as important as ever,” Assistant Minister Seselja said.
“I have been in constant contact with the sector as the Government has responded to the COVID-19 pandemic, listening to their concerns, and ensuring charities are supported in the work they do as part of the Government response.”
“We know charitable giving is likely to decrease over the months ahead at a time when demand for charitable services is increasing,” Assistant Minister Seselja said.
A recent report by JBWere estimated the impact COVID-19 may have on charitable giving, seeing donations decrease by 7.1% in 2020, and by a further 11.9% in 2021.
“We have seen philanthropy do many great things in Australia, and I am pleased the Government is partnering with the philanthropic sector to support their great work by providing this incentive for ancillary funds to increase their distributions to charities at a time when they are seeing an increased demand for their services.”
“I will be amending the ministerial guidelines for public and private ancillary funds to provide a credit for funds that make total distributions in 2019-20 and 2020-21 that are at least four percentage points above the minimum required distributions. The credit – equal to half the percentage points by which the distributions exceed the minimum – may be used to reduce the minimum distribution by up to one percentage point in 2021-22 and future financial years until the credit is exhausted,” Assistant Minister Seselja said.
“I’m pleased to be able to make this announcement with the support of Australia’s philanthropic sector, in the same week as the global launch of #GivingTuesdayNow. Giving Tuesday is a global campaign encouraging people to give back to their local communities and support local charities.”
Sarah Davies, CEO of philanthropy’s peak body Philanthropy Australia, welcomed today’s announcement.
“Philanthropy Australia welcomes this announcement from the Australian Government, which will encourage ancillary funds to increase their granting during this time of immense need,” Ms Davies said.
“We also appreciate and recognise the collaborative dialogue we’ve had with the Assistant Minister and the Australian Government over ways we can support the work of the not-for-profit sector during this challenging time.”
Professor Glyn Davis AC, CEO of Australia’s largest philanthropic foundation, the Ramsay Foundation said, “In this unprecedented time, the board of the Paul Ramsay Foundation has committed to extend its giving. Now is the time for philanthropy to support Australians in distress.”
“We welcome initiatives from Assistant Minister Zed Seselja and the Australian Government to encourage continued investment by all public and private funds.”
Assistant Minister Seselja today also declared the COVID-19 pandemic across Australia a disaster for the purpose of establishing Australian disaster relief funds as DGRs, allowing these funds to receive tax deductible donations.
The COVID-19 pandemic began on 18 March 2020 and has caused widespread injury and death across Australia.
“This declaration will allow funds that are established for the relief of people affected by the COVID-19 pandemic to receive tax-deductible donations, and greater assist their communities,” Assistant Minister Seselja said.
Donations to Australian disaster relief funds, established to provide relief from the COVID-19 pandemic, will be tax deductible when made within two years of the day specified in this declaration as the first day of the event.
Disaster relief funds will need to apply for formal endorsement as a DGR fund with the Australian Taxation Office (ATO). This requires charity registration with the Australian Charities and Not-for-profits Commission (ACNC). The ACNC and ATO are available to assist funds in this process. Organisations seeking to establish a DGR are encouraged to phone the ATO’s Not-for-Profit advice line on 1300 130 248 between 8:00am and 6:00pm AEST, Monday to Friday, or emailing email@example.com outside of these times.
Cassandra Choake: 0427 839 164 OR (02) 6247 6444
Notes for background
Ancillary funds are trusts that act as an intermediary between donors and Deductible Gift Recipients (DGRs). Donations and transfers to these funds are tax deductible, subject to the funds distributing a minimum amount each year to DGRs (4 per cent of the value of net assets for public ancillary funds and 5 per cent for private ancillary funds).
The Government considers it important ancillary funds maintain or increase distributions given the increased demand on the services of many DGR endorsed organisations arising from the COVID-19 pandemic. Assistant Minister Seselja expects the Tax Commissioner would use his discretion to reduce the minimum distribution for a fund sparingly, and only where absolutely necessary to ensure the ongoing viability and compliance of the fund.