House of Representatives

Treasury Laws Amendment (2020 Measures No. 5) Bill 2020

Explanatory Memorandum

(Circulated by authority of the Minister for Housing and Assistant Treasurer, the Hon Michael Sukkar MP.)

Chapter 3 - Deductible gift recipients

Outline of chapter

3.1 Schedule 3 to the Bill makes Neighbourhood Watch Australasia a deductible gift recipient.

Context of amendments

3.2 The income tax law allows income tax deductions for taxpayers who make gifts of $2 or more to a deductible gift recipient. Deductible gift recipients are entities that fall within one of the general categories set out in Division 30 of the ITAA 1997 or are specifically listed by name in that Division. Legislative references in this Chapter are to the ITAA 1997 unless otherwise specified.

3.3 Deductible gift recipient status helps eligible organisations attract public financial support for their activities.

3.4 Neighbourhood Watch Australasia is a registered charity that promotes community safety through education, awareness and resources to prevent crime, create social cohesion and engagement. Neighbourhood Watch Australasia works in partnership with police and the community with the objective of improving safety and security.

Summary of new law

3.5 Schedule 3 to the Bill amends the ITAA 1997 to make Neighbourhood Watch Australasia a deductible gift recipient under the income tax law.

Detailed explanation of new law

3.6 Taxpayers may claim an income tax deduction for gifts made to Neighbourhood Watch Australasia provided the gift complies with the existing requirements of the income tax law. This amendment ensures that Neighbourhood Watch Australasia receives appropriate support through the Commonwealth tax system for supporting the creation of safer, connected and inclusive communities. [Schedule 3, item 1, table item 4.2.48 in the table in subsection 30-45(2)]

Consequential amendments

3.7 Schedule 3 also amends the index for Division 30 of the ITAA 1997 to reflect the new listing. [Schedule 3, item 2, table item 79A in the table in section 30-315]

Application and transitional provisions

3.8 The amendments commence on the first day of the quarter following Royal Assent. [Clause 2]

3.9 The listing of Neighbourhood Watch Australasia applies to gifts made to it after 30 June 2019. [Schedule 3, item 1, column 3 of the table item 4.2.48 in subsection 30-45(2)]

3.10 The amendments apply retrospectively. This ensures that a gift made to the entity after 30 June 2019 qualifies for an income tax deduction provided the gift complies with all requirements of the income tax law. The changes are wholly beneficial both to taxpayers making a gift of $2 or more to the entity, and to the entity that receives the gift.

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