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by Cinden Lester

New tax incentives from 1 July 1999 offer promising opportunities for Australia's cultural sector. The Cultural Gifts Program, which has attracted gifts to the value of $170 million over the last 20 years, will be enhanced by two changes.

• Gifts of cultural heritage items under the Cultural Gifts Program will be exempt from capital gains tax.

The program will now be even more attractive to donors, as benefits have been eroded when much of the appreciated gain through the deduction is cancelled out by the capital gains tax provisions.

• Donors will be able to apportion their deduction for a gift under the Cultural Gifts Program over a period of up to five years.

This change assists donors currently unable to realise the full benefit of their deduction, if their assessable income in a financial year is less than the value of the deduction. It removes an impediment to donations by people with insufficient income to offset a considerable donation.

Other more general changes will also benefit the cultural sector.

• Tax deductions will be available for the market value of gifts of property, such as real estate, regardless of when that property was acquired, with a threshold of $5 000 applying to the general provision.

This will assist cultural organisations, including those on the Register of Cultural Organisations, which may be offered gifts of land, equipment or shares.

The $5 000 threshold will not apply to the Cultural Gifts Program.

• Bequests to charitable organisations and institutions will no longer be subject to capital gains tax.

The donor's estate was liable for the tax on the capital gain of an asset willed to a tax exempt organisation or institution. The change removes this disincentive to bequeath assets.

Together with the Cultural Bequests Program - which encourages private collectors to bequeath nationally significant cultural items by offering tax benefits to the donor's estate - this change enhances the options available for cultural organisations and donors.

• A new category of private funds will be allowed to have tax deductibility status.

This removes the existing disincentive to establish private charitable foundations, as current arrangements for tax deductibility require that donations be received from the public. Such foundations could be major providers of grants to the charitable sector including some cultural organisations.

The changes are a result of the Prime Minister's Round Table on Business and Community Partnerships and the Taxation Working Group chaired by David Gonski.

The Cultural Gifts and Cultural Bequests programs are managed by the Committee on Taxation Incentives for the Arts, and the Department of Communications, Information Technology and the Arts.

Contact

Liz Penhallurick, Cultural Sponsorship 02 6271 1654 or email liz.penhallurick@dcita.gov.au

• Document ID: 11451 |
• Last modified: 5 February 2008, 6:04pm