DEDUCTIBILITY OF GIFTS TO CHARITY A CONSISTENT APPROACH

• Charity, like governments, serves public purposes. Charities have enjoyed the favour of the law since the Middle Ages because they are as much a part of the social fabric as any public institution. The law of charity has always had a public benefit test. • Unlike governments, charities do not raise funds by taxation but through donations and their own investment or trading income. • But just as governments cannot be, and are not, taxed (which would be self-contradictory), so charities, as public-serving bodies, should not be either. Unlike commercial companies, charities do not exist to pay dividends to private owners but to serve the public benefit. Their donations, income and funds are reserved for public benefit. Any comparison for a “level playing field ” in tax terms has to be with government itself. • Since charities do not tax, and must rely on voluntary donations, the tax system should free these funds from taxation by allowing deductibility and exemption to charities on a consistent basis. This is largely done in the USA, NZ, Denmark and the UK. • The Federal Government has commendably broadened deductibility for philanthropic gifts of property and has encouraged employers to offer payroll deduction for deductible gifts