The Coalition election win has left many Australians feeling wealthier due to the ‘wealth effect’, despite there being no real change in their true financial situation. This is likely to lead to an increase in charitable giving, adding further to the usual end of financial year rush, says Emma Sakellaris, executive general manager of Australian Unity Trustees.
“Australians’ concerns over franking credits, capital gains tax and negative gearing changes have been alleviated with the Coalition win, and this has left many feeling more confident in their financial future and able to turn their minds to giving back to communities.
“The end of financial year is already a time when people tend to consider charitable giving – both as a tax minimising measure, as well as a way to assist those in need – and we are expecting there to be a further increase in these giving intentions this financial year.”
Key EOFY factors
Ms Sakellaris said there are some key factors to remember as the end of financial year approaches.
“With June 30 falling on a Sunday this year it will be important for those who are giving to charity to ensure that the contributions are received by the charity before that date, ie by Friday 28 June. It is not the date that the donation is made, but the date that it is received that is important for tax deductibility,” she said.
“It is also essential that the charity you are donating to has a deductible gift recipient (DGR) status. Without this status, donors are unable to receive a tax deduction for their donation.
“Generally speaking a tax benefit is available for donations of greater than $2 made to a DGR recipient. Individuals who donate by June 30 secure a tax deduction for their tax return, while also contributing to the work and community value of the charity.
“For individuals who prefer the idea of a formal and structured giving commitment and the establishment of a philanthropic legacy, to avoid a last minute EOFY rush and to provide a meaningful charitable donation, thought could be given into the establishment of a sub-fund in a charitable trust.
“Unlike ad hoc donations or even recurring donations, charitable trusts are designed to grow capital over time, whilst generating sustainable income for granting distributions.
“Significant wealth is not necessary to establish such a structure. Instead, an initial donation of $20,000 is required, and the tax deduction can then be spread over a five year period.
“The advantage of a structured philanthropic legacy is that it allows individuals and their families to give back to the community, now and into perpetuity, not just through ad hoc donations.
“Fundamentally many Australian communities still have a significant gap in the standard and availability of critical services and support, such as health, housing and access to reliable and good quality food.
“By establishing a charitable trust, and creating a ‘philanthropy loop’ – connecting those who can afford to give with those who need to receive – donors are helping make communities a better place for all."
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Australian Unity Trustees provides a range of trustee services to all Australians including: estate planning; executor appointments and estate administration; financial attorney; financial and legal administration; and the establishment and management of personal, native title, community and charitable trusts. It is the first traditional trustee financial services licence issued since the establishment of a national licensing framework for traditional trustee activities.
Australian Unity is a national health, wealth and living mutual company providing services to almost one million Australians, including 270,000 members. Australian Unity’s history as a trusted mutual organisation dates back to 1840. It has grown organically—by continually evolving to provide the services and products needed by the communities it serves—as well as through successful mergers and diversification in to new business activities.
This information has been provided by Australian Unity Trustees Limited ABN 55 162 061 556, of Level 8/90 Collins St Melbourne, VIC 3200, AFSL, 483220. Any advice in this publication is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. Before making any decisions, you should obtain financial advice relevant to your circumstances and refer to our Financial Services Guide and Fee Schedule. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing in this publication represents an offer or solicitation by Australian Unity Trustees Ltd in relation to securities or investments in any jurisdiction. Australian Unity Trustees Limited does not warrant the accuracy or completeness of any information included in this publication which was contributed by a third party. Whilst every care has been taken in the preparation of this information, it may not remain current after the date on which it is published and Australian Unity Trustees Limited and its related bodies corporate make no representation as to its accuracy or completeness. Australian Unity Trustees Limited accepts no liability for any loss or damage suffered as a result of reliance on this information.