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Note: This document forms part of our publication GiftPack.
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Political parties are not deductible gift recipients (DGRs). However, contributions and gifts to political parties and independent candidates and members may be claimed as income tax deductions.
Contributions before 22 June 2006
For contributions made before 22 June 2006, the tax law allows a non-corporate taxpayer to deduct a contribution (which includes a membership subscription as well as a gift) of $2 or more to political parties registered under Part XI of the Commonwealth Electoral Act 1918. The total deductions allowable to the taxpayer are subject to a maximum level of $100 in an income year.
Contributions and gifts on or after 22 June 2006
For contributions and gifts made on or after 22 June 2006 to be deductible, the contribution or gift must meet several requirements:
- the recipient must be
- a political party registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding state or territory legislation, or
- an individual who is or was an independent member of or who is an independent candidate for the Commonwealth Parliament, a State Parliament, the Legislative Assembly of the Northern Territory or the Legislative Assembly for the Australian Capital Territory, and
- the contribution or gift must be $2 or more and be of
- money, or
- property that the contributor or donor purchased during the 12 months before making the contribution or gift.
Contributions or gifts made to an independent candidate in an election must be made in the period from the time the candidates for the election are officially declared or announced until the result of the election is officially declared or announced (or, in the rare situation of an election wholly failing, until the candidates are officially declared or announced for the replacement election).
For an independent member, the contribution or gift must be made:
- when the individual is an independent member (starting when the individual’s election is officially declared or announced), or
- after the individual ceases to be an independent member because
- the parliament, a House of the parliament or the Legislative Assembly is dissolved or has reached its maximum duration, or
- the individual comes up for election
Testamentary contributions and gifts, that is, those made under a will, are not deductible.
A tax deduction for a contribution or gift is claimed in the tax return for the income year in which the contribution or gift is made.
The most that contributors or donors (including companies) can claim in an income year is:
- $1,500 for contributions and gifts to political parties, and
- $1,500 for contributions and gifts to independent candidates and members.
Example
During the 2006–07 income year, John contributes $500 and $1,500 respectively to two registered political parties. He also gifts $200, $600 and $1,100 respectively to two independent candidates and one independent member.
John may claim a tax deduction of $3,000 in his 2006–07 income tax return:
- $1,500 in relation to the $2,000 contributed to political parties, and
- $1,500 in relation to the $1,900 gifted to the independent candidates and the independent member.
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The amount of the deduction for a contribution or gift of property is the lesser of the market value of the property on the day that the contribution or gift was made and the amount paid by the taxpayer for the property.
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The deduction for a gift or contribution cannot add to or create a tax loss. See Gifts and tax losses.
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Independent candidates
An independent candidate is one whose candidature is not endorsed by a political party registered under the Commonwealth Electoral Act 1918 or under corresponding state or territory electoral legislation.
An endorsed candidate of an unregistered political party will be regarded as an independent candidate.
Independent members
An independent member is one who is not a member of a political party that is registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding state or territory legislation.
A member belonging to an unregistered political party will be regarded as an independent member.
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A list of political parties registered under the Commonwealth Electoral Act 1918 is available on the Australian Electoral Commission website at www.aec.gov.au
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Last Modified: Monday, 11 February 2008
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