Andrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Productivity, Competition, Charities and Treasury) Share this | Hansard source

I'm speaking today in my capacity as assistant minister for charities about schedule 1 of the Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026. It is a measure which removes the $2 threshold for deductions of gifts or contributions. This threshold has a long and strange history. It goes back to 1915, when a minimum income tax deduction for giving was introduced. It was at that time relatively high—five pounds for donations to the war effort and 20 pounds for other charitable donations. In 2022 dollars, those figures are $578 and $2,313, respectively. In 1927, the threshold was reduced to one pound, which is $100 in today's money, and it hasn't changed in nominal terms since then. In 1966, of course, one pound became $2, and the $2 deduction threshold remained. But even in 1966 it was worth $30 in today's money, and today, of course, it has been eroded.

Entities with deductible gift recipient status are not required to provide receipts for donations, which means that there is a challenge for people who are claiming small-threshold donations. The Future foundations for giving report from the Productivity Commission notes that there have been past recommendations. The Henry tax review thought the threshold should be taken up from $2 to $25, and the Not-for-profit Sector Tax Concession Working Group recommended removing it for simplicity, as did the Industry Commission report in 1995. Consultations by the Productivity Commission produced varied responses, with many supporting the removal of the $2 donation threshold.

One of the things that we have seen, however, is a growth in round-up donations. Round up donations are a simple way in which people can support a cause that they care about through providing spare change to support that cause. Woolworths allowed customers at the till to round up for charity and, in a single month, raised $770,000 for Foodbank. Myer often partners with local community organisations such as The Family Co, an organisation which helps people escape family violence. Some platforms are set up to encourage round-up for charity. Rounda is a microdonation app that lets you choose your charity and securely link cards to contribute. The difference allows users to automatically donate change from everyday purchases and includes a 'round-up for change' approach. GoGive is a tool that charities can add to their websites, allowing supporters to set up round-up deductions. ING's Everyday Round Up allows customers to round up purchases to the nearest $1 or $5, with the amount going to charity.

The challenge at the moment, though, is that round-up for charity isn't tax deductible, even though, over the course of a year, people may find themselves giving quite a considerable amount to charity. That's the advantage of what the government is doing today. Organisations that consolidate somebody's giving would be able to produce an end-of-year tax-deductible statement which would allow people to claim all of those 19c, 37c and 57c donations they'd made through the course of the year, which might, by the end of the year, add up to hundreds or even thousands of dollars. By encouraging microdonations, we're helping to achieve the government's goal of making it easier to give. My three principles for giving are that we need to have evidence, we need to have enthusiasm and we need to make it easy to donate, and this is one way, alongside simplifying donations through workplace giving and simplifying bequests, that the government is supporting the charity sector. It is a recommendation of the Productivity Commission's Future foundations for giving report that the government remove the $2 threshold for tax-deductible donations to entities with deductible gift recipient status, and this will help form part of the government's response to that report and to the blueprint report.

We have set a goal of doubling philanthropy by 2030, not because we believe government should step back but because we believe that many of Australia's biggest challenges can only be dealt with through the collaboration of the government and the community sector working together. We've put in place a host of positive reforms to support charities: ensuring that we don't have gag clauses and that we celebrate the role of charities in public advocacy; creating a new community charity category; streamlining the deductible gift recipient system by returning four key categories to the tax office; putting in place a charities commissioner widely respected across the sector and an expanded and more representative ACNC Advisory Board; and lifting distributions from giving funds to six per cent to get more philanthropic funds to existing charities sooner. This government is a fast friend to charities, and we will continue to support the charity sector and the important work that they do to build social capital and build a stronger and more connected Australian community.

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