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Thursday, 26 May 1983
Page: 1106

Question No. 4

Dr Klugman asked the Treasurer, upon notice, on 3 May 1983:

Is he able to supply any estimates of taxation rates foregone by (a) the Commonwealth, (b) the States and (c) local government because of exemptions available to (i) religious institutions (including schools) and (ii) donors to religious institutions.

Mr Keating —The answer to the honourable member's question is as follows:

As regards taxation exemptions available to religious institutions (including schools):

Statistics that would enable an estimate to be made of the cost to Commonwealth revenue of exempting religious institutions from income tax or pay-roll tax are not available. Sales tax is payable on goods purchased by religious institutions but goods bought for use, but not for sale, by schools, including those owned by religious institutions, are exempt from sales tax. Estimates of the revenue involved are not available. Wages and salaries paid by religious institutions, including those paid by certain non-government schools, are exempt from pay-roll tax in the ACT. The cost of exempting from pay-roll tax wages and salaries paid by schools controlled by religious institutions in the ACT is not known but is estimated to be less than $1m annually.

No information is available which would enable estimates to be made of taxation revenue forgone by the States, the Northern Territory and local government.

In the Australian Capital Territory, there are at present 110 properties which receive a concession under the Rates Ordinance 1926 resulting from their classification as Religious Institutions.

Under Section 6 of the Rates Ordinance, these properties are exempt from General Rates and as such no valuations are made in respect of these properties. The Valuation Section of the Australian Taxation Office advises that these sites would be extremely difficult to value without an alternative use being specified . It is, therefore, not possible to estimate the amount of general rates forgone with any degree of accuracy.

Under Section 6 (d) (i) of the ACT Sewerage Rates Ordinance 1968 the abovementioned properties are defined as Class 4, which are ratable at the full rate for the first two flushing units, and half rate for any additional flushing fixtures. The amount of revenue forgone for the 1982-83 rating year in regard to sewerage rates (58(d)), for the 100 properties is $84,734.50.

Under Section 6 (b) (ii) of the ACT Water Rates Ordinance 1959, religious institutions received a concession of half the rate payable for water consumed in excess of the basic allowance of 455 kilolitres. The concessional rate applicable to these institutions during 1981-82 was 9c. The amount forgone for the 1981-82 rating year in regards to excess water rates for the 110 properties is $32,586.75.

As regards donors to religious institutions, the position is that generally income tax deductions are not allowable for gifts to religious institutions. Gifts made by religious institutions which can be shown to be in the nature of business expenses may, however, be deductible as outgoings necessarily incurred in gaining assessable income. Estimates of the amounts involved are not available. Statistics are available, however, of gifts by individual taxpayers to school building funds, which in many cases relate to schools operated by religious institutions. The cost of income tax revenue for individuals in respect of the 1980-81 income year (the latest for which information is available) of gifts to school building funds has been estimated at about $18m.