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Consistency with year-end tax credit system

Submission

(35 – PricewaterhouseCoopers)

Differences between the end-of-year donation tax credit scheme and the proposed payroll-giving scheme should be kept to a minimum. Individuals who are able to participate in payroll giving will be in a better position than those who are not able to do so because of the time value of money. To address this difference, those individuals who are unable to participate in payroll giving should be allowed to claim tax credits on their donations on a monthly or quarterly basis.

Comment

Officials agree that the differences between the end-of-year tax credit scheme and the payroll-giving scheme should be kept to a minimum. However, we acknowledge that there will be some differences because of the specific design features of each scheme.

We do not support allowing individuals to claim the end-of-year donation tax credit throughout the year either on a monthly or quarterly basis because:

  • the donation tax credit applies to donations up to an individual’s taxable income for the year in which the donations are made; and
  • there would be significant administrative costs associated with allowing tax credit claims during the year.

Recommendation

That the submission be declined.