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Thursday, 9 December 1999
Page: 11614

Senator McLUCAS —My question is to Senator Kemp, the Assistant Treasurer. Can the minister confirm that if the Royal Children's Hospital, for example, receives a $100,000 donation from an individual and then, in appreciation, the hospital names a ward after that individual, that gift then loses its character as a donation and becomes a sponsorship? If so, does that mean that the $100,000 then becomes GSTable sponsorship and the Howard-Lees GST will take a 10 per cent bite out of that $100,000? Why do the coalition government and the Democrats want to punish people for supporting worthwhile causes such as providing hospital services for sick children?

The PRESIDENT —Questions ought not to be hypothetical, but if there is anything in the question that the minister wishes to deal with, I will call Senator Kemp.

Senator KEMP (Assistant Treasurer) —I just want to make it clear that the general principle is that a donation is GST free. If it is in the nature of a sponsorship, it can be subject to GST. That is a matter where the tax office would have to look at the specifics of the matter. If the hospital wishes to raise this issue—

Senator Schacht —Is this your clear answer?

Senator KEMP —No, the question is whether—

Senator Schacht —You said it was a clear answer, but it has been nothing but waffle.

The PRESIDENT —Senator Schacht, you would not have heard it: you have been talking all the time.

Senator KEMP —If it is a donation, it is GST free. I am not sure whether the senator is saying it is a donation or a sponsorship. That is a matter that would have to be determined. I would suggest that, if the hospital is concerned about it, it is a matter which it should raise with the tax office. Senator, I do not know whether this is a question that the hospital has put to you or whether it is just you going around, joining your colleagues and trying to create scare and fear. Frankly, the Labor Party has got a bit of a serve on the radio for its performance on these issues over the last couple of days.

Senator Schacht —How much did you pay Alan Jones?

Senator KEMP —I invite you to read the comments that Mr Wirth made on the radio today about the behaviour of the Labor Party and the way the Labor Party is going around attempting to scare people. The fact of the matter is that we are bringing in a new tax system which we believe will be of great benefit to charities, of great benefit to non-profit bodies and of great benefit to families. As for the specifics, the general view is that donations are GST free. But if you are saying it is not a donation, it is a sponsorship, then in that case it is a different issue. The facts of the matter would have to be determined by the tax office.

Senator McLUCAS —Madam President, I ask a supplementary question. I would just like to get this clear: under the new tax regime, does the mere recognition of a person's contribution by naming a hospital ward after them constitute the provision of a right for GST purposes? Can the minister also confirm that, if such a donation is determined to be a sponsorship, the donation is no longer tax deductible? If so, does this not mean that the Howard-Lees GST will act as a distinct disincentive to the private philanthropy so proudly promoted by the Prime Minister?

Senator KEMP (Assistant Treasurer) —The Prime Minister has proudly promoted philanthropy, and he is dead right. In fact, we have just passed some bills through this parliament today which are giving effect, despite the blocking attempts of the Labor Party, to attempts to improve the capacity for philanthropy in this country. That is what we are trying to do. If there is any specific issue that the senator wants the government to examine, we will look closely at it. But the truth of the matter is that a donation is typically made with no strings attached and, in that case, it is not subject to GST. I do not know whether strings are attached to the grant or not; that is a matter which would have to be determined. We believe that the hospitals, along with the other major institutions in this country, will be better off as a result of this tax system.