Dean Smith (WA, Liberal Party, Shadow Assistant Minister to the Shadow Treasurer) | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Wong. Labor's new trust tax is forecast to rip $4½ billion from Australians, and religious leaders are now warning it could strip vital funding from charities that feed the hungry, house the homeless and care for the vulnerable. Will the Prime Minister guarantee that distributions from discretionary trusts to registered charities and tax-exempt not-for-profits, including faith based charitable groups, will be exempt from Labor's 30 per cent tax?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

I thank the senator for the question, and I thank him for the opportunity to confirm that the government will continue to consult in relation to a range of implementation details around the minimum tax on trusts, and that includes the appropriate arrangements for donations and distributions to charities and other tax exempt entities, including religious groups. It is a good practice for these sorts of implementation details to be the subject of consultation. That is what the government is engaging in, and the government is working through the feedback in the usual way.

I would make the point that the overarching purpose of the government's tax reforms are to deliver real change, to make the tax system fairer for working Australians and to help more young people realise the dream of homeownership. As I have outlined to this chamber previously, the tax reforms are designed to better align the treatment of income earnt from work compared to income derived from assets. That is because we understand that the vast majority of Australians make a living through the work that they do, the labour they provide to the economy. That is how they provide for their family. That is how they put food on the table. And we believe it is important to better align the tax treatment of income generated from work as compared to income derived from assets.

I acknowledge that the issues you have raised in relation to charities have, I think, been publicly reported, and I'm sure that the Treasury will work through that in consultation. (Time expired)

Sue Lines (President) | Link to this | Hansard source

Senator Smith, first supplementary?

Dean Smith (WA, Liberal Party, Shadow Assistant Minister to the Shadow Treasurer) | Link to this | Hansard source

While the government consults, the Albanese government is already banking $4½ billion from this tax but has not disclosed how much it will strip from charitable giving. How much funding will charities lose, and who does the Prime Minister expect will feed, shelter and care for vulnerable Australians when those donations disappear?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

Senator, there are quite a few assertions in that question with which I don't agree, about the consequences of these tax changes. I would say to you that I am advised that the government has made amendments to ensure deductible gifts and donations reduce capital gains that are subject to the minimum tax to maintain tax incentives in relation to charitable giving. I'm also advised that, when it comes to trusts, the budget itself made clear the minimum tax would not apply to charitable trusts. In addition, donations to organisations with DGR—that is, deductible gift recipient—status will continue to be tax deductible for discretionary trusts. This means that those arrangements continue in the tax deductible way that they have previously. So I would encourage the senator not to make assertions which are not correct. (Time expired)

Sue Lines (President) | Link to this | Hansard source

Senator Smith, second supplementary?

Dean Smith (WA, Liberal Party, Shadow Assistant Minister to the Shadow Treasurer) | Link to this | Hansard source

Minister, Principal Lawyer Mark Fowler of Fowler Charity Law has estimated Labor's changes could cost charities and not-for-profits $2.9 billion over five years. That is money that would otherwise be used to feed families, shelter the homeless and care for vulnerable Australians. Why is Labor prepared to take food off people's tables and strip support from vulnerable Australians simply because these charities helping them are faith based?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

That is not the case, and I refer you to the answer I gave in relation to your previous question. I would encourage you, and those you are advocating for, to engage with the consultation process in relation to implementation, but recognise that the government has made clear that its position in relation to deductible gifts and donations continues. We are big believers in the important work of Australian charities and we are backers of this sector. And I would make the point that, under this government, we are making it easier for more organisations to get deductible gift recipient status, with a new community charity category and a streamlined system so eligible charities get tax deductible status in months instead of years. These are changes that the government has made, and I'd encourage you not to make assertions which are not correct.