Changes to the Tax Rebates for Charitable Donations

• The old cap on tax rebates for charitable donations does not apply from 1 April 2008.
• This means that people who give above $160 each month can afford to increase their monthly giving and still end up in exactly the same post-tax position as they had under the old tax rules. Doing so means St Luke's is better off while givers in effect pay no more than they have already been paying.
• For example, if you have been giving $200/month, then under the new rules you can give $220/month and be no better or worse off in post-tax terms (at $300/month the comparable new figure is $370/month.)
• If your monthly giving is below $160/month then your ongoing giving is very much appreciated, but you will not be able to give any more while remaining in the same post-tax position.
• These figures are just a guide, so please get tax advice if in doubt!

For example (note that this approach works if your annual giving is $1,920 or more):

• Suppose your annual giving has been $3,000 per year.
• Under the old rebate rule the cost to you, after the tax rebate, was $3,000 less the maximum rebate of $630 = $2,370.
• Under the new rebate rule the same giving costs you $3,000 less the uncapped rebate of 1/3 x $3,000 = $2,000.
• The difference is $2,370 - $2,000 = $370.
• This means under the new rules you can give an extra $370 multiplied by a factor of 1.5 = $555, i.e. a total per year of $3,555, and still face the same post-rebate cost.
• To check this: under the new rule $3,555 costs you $3,555 - 1/3 x $3,555 = $2,370, i.e. same post-rebate cost as $3,000 per year under the old rule.
• (Note: the reason why you increase the difference of $370/year by a factor of 1.5 is that you get a rebate on the extra giving as well.)

Click here to download (PDF format) an example which illustrates the extra giving potential under the new tax rebate rules for a range of different giving levels.