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9th May 2024 - Philanthropy and NFP’s
Giving can give you the satisfaction of making a positive impact. It can give you a stronger connection to communities.
It can also give you a tax benefit. And that tax benefit could be bigger this financial year than next.
Most Australians will be receiving lower tax bills after the Treasurer Jim Chalmers implements the stage three tax cuts from 1 July this year.
When it comes to philanthropy and giving, this means that for donations made this year, a higher tax deduction will be possible, in comparison to next year.
How can you take advantage of this opportunity?
For those who regularly give tax deductible donations to charity, this provides an opportunity to bring future years donations forward to this financial year, and take advantage of the higher rate.
Public ancillary funds (PuAFs) can help you to bring your giving forward.
PuAFs are charitable foundations that can receive tax deductible donations from the public, for the purpose of providing grants to DGR Item 1 Charities*. The Trustee has the ultimate decision power on which Charities can receive donations.
Deductions for donations to PuAFs can be spread over up to five income years, so you can defer your tax benefits if your income is less than expected in the 2024 financial year.
You can separate the decision to donate, from the decision about what charities you want to grant to, giving you time to think carefully about which charities and causes you wish to support. This means that you can bring your giving forward, but make your decisions on which charities to support later.
You can establish a sub-fund which is your own charitable giving account within the PuAF. The trustee will manage all of the operation and investment of the fund, so you can focus on the charities you want to support. You can involve your family, and share the enjoyment of giving back together.
PuAFs must donate at least 4% of their assets each financial year. The balance of the donations to the PuAF can be invested, with the objective of growing the capital over time, thereby giving far more to charity in the long term.
PuAFs are tax exempt, so investment returns are tax free, and eligible for full franking credit refunds, ultimately helping to further grow the amount available to give to charities you care about.
Using a PuAF is a strategy that is accessible for many Australians. Sub-funds in the Elston giving foundation can be established with as little as $25,000, though with low fees, this is an option that can be used with large balances as well.
To learn more about how you can bring your giving forward, and get ahead of the Stage 3 tax cuts, talk to your adviser, or get in touch with Susan Chenoweth from Elston Philanthropic Services.
References:
*DGR Item 1 refers you to lists of funds, authorities and institutions such as public hospitals, overseas aid funds and public museums (including entities listed by name). Deductible gift recipients | ABN Lookup (business.gov.au)
Gifts and donations | Australian Taxation Office (ato.gov.au)
Public ancillary funds | Australian Taxation Office (ato.gov.au)
This material has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this material is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice. Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a Product Disclosure Statement (“PDS”) relating to the product and consider the PDS before making any decision about whether to acquire the product. You will find further details of the service we provide and any cost to you within the Financial Services Guide. Any references to past investment performance are not an indication of future investment returns. Prepared by EP Financial Service Pty Ltd ABN 52 130 772 495 AFSL 325 252 (“Elston”). Although every effort has been made to verify the accuracy of the information contained in this material, Elston, its officers, representatives, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information.
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