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The Productivity Commission report recommends an overhaul of rules that govern which charitable donations attract a taxpayer-funded benefit (Productivity Commission)

Labor could face a backlash from religious voters if it curbs tax deductions for donations to faith-based institutions, and Catholic and Jewish leaders say such a move would be unfair and unwarranted. Source: Financial Review.

A draft report by the Productivity Commission has recommended an overhaul of deductible gift recipient status – the rules that govern which charitable donations attract a taxpayer-funded benefit.

The commission has proposed that activities to advance religion be excluded from the deduction rules, along with school building funds and some childcare and aged care organisations.

Its report said there was “no explicit policy rationale” to justify why some charitable activities attracted tax deductions and others did not. It also warned that there was potential for donors receiving the tax deduction to attract a private benefit from the outcome of donations.

The commission recommended a more transparent and consistent approach to regulating basic religious charities through the Australian Charities and Not-for-profits Commission, giving them the same governance obligations and reporting requirements as other organisations proportionate to their size.

Melbourne Archbishop Peter A Comensoli said the commission appeared not to understand that charitable works undertaken by religious groups benefited the whole community.

“Out of faith, they offer a vast range of services, including education, health, social care, affordable housing, youth and family support, and pastoral assistance,” he said.

“Explicitly excluding religious groups from deductible gift recipient status is unwarranted. The draft report appears to discriminate against religious organisations, and is at odds with the Government’s own objective to expand philanthropic giving.”

Peter Wertheim, co-chief executive of the Executive Council of Australian Jewry, said the draft recommendations were an attack on religious institutions, describing them as “puzzling and disturbing”.

Assistant Minister for Charities Andrew Leigh said the Albanese Government would listen to charities, donors and volunteers as it considered the commission’s final report, due to be completed early next year.


Tax deduction curbs ‘an attack on religious freedom’ (By Tom McIlroy, Financial Review)


Direct attack on faith communities by the Productivity Commission (NCEC)