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Abbott's tax hit on charities and universities

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Campaign Media Release

Campaign Spokesperson Penny Wong


Charities, universities and foundations will be hit with a new tax hike to pay for Tony Abbott’s unfair and expensive $22 billion paid parental leave scheme.

While it’s been widely reported that retirees and shareholders will be double-taxed $1.6 billion a year to help pay for Mr Abbott’s scheme, it’s emerged today that not-for-profits and other charities also stand to be big losers under Mr Abbott’s plan.

ATO statistics show that imputation credits are a significant and growing source of revenue for charities, universities and medical research institutes. Charities and universities were refunded more than $800 million in 2011-12, up by around 54 per cent from 2010-11.

In submissions to Not-For-Profit Sector Tax Concession Working Group, organisations said any change to franking arrangements would have a significant impact.

Universities Australia’s submission discussed the significance of limiting imputation credits:

“Limiting franking credit refunds would cause significant income losses for universities and cause large economic inefficiencies.

Australian Association of Medical Research Institutes said previously it would limit ability to fund core research and medical equipment such as MRIs:

“Currently MRIs are eligible to receive refunds for franking credits due to their income tax exempt and DGR status, and many have investment portfolios to optimise the returns on endowment funds. This income is often used to fund the core activities of MRIs, including activities for which it is difficult to attract funding from other sources (e.g. administration costs and overheads). Others re-invest the refunds from franking credits in long-term endowment funds set up to ensure the long term survival of MRIs in times of future funding cuts or shortages.”

Philanthropy Australia (peak body for philanthropy) said previously that limiting imputation credits would reduce the financial capacity of charities to help our community:

“Charities which have investment portfolios built up over the years from bequests would face a similar reduction in income. This would reduce the financial capacity of charities at a time when the demand for their services continues to rise. It is especially significant for those charities which use the income from investments to fund their core activities which do not attract funds from the donating public and grantmakers, such as professional development of staff, maintenance, infrastructure replacement, administration and the other costs of running an organisation.”

The Australian Conservation Foundation said previously:

“ACF would be financially disadvantaged by any change to remove franking credits on dividends received.”

Why should Australia’s charities and universities have to pay for Mr Abbott’s unfair and expensive PPL scheme?

Every day, Australians are finding out a little bit more about Mr Abbott's hidden cuts. What else has Mr Abbott got in store?

Even with Mr Abbott’s double-tax slug on retirees, superannuation holders, charities and universities, he's still billions of dollars short to pay for his PPL scheme.

It's time Mr Abbott released all his costings from the Parliamentary Budget Office in full so Australians can what's still to come.

Refundable franking credits, by amount refunded, 2010-11 and 2011-12 financial years for the Not-For-Profit Sector

Amount refunded

2010-111 2011-121

Claims $m Claims $m

Under $10,000 2,968 8.1 2,420 -9.9

$10,001 - $100,000 1,493 48.9 1,672 58.5

$100,001 - $500,000 294 63.8 464 104.6

$500,001 - $1,000,000 51 34.5 83 56.8

Over $1,000,000 30 364.5 63 590.7

Total2 4,836 519.9 4,702 800.8