Philanthropy faces an unexpected hit as the Albanese government pushes ahead with a minimum 30% tax on capital gains and discretionary trusts that passes parliament this week.
Thousands of charities and not-for-profit organisations, including large groups such as The Salvation Army, Foodbank Australia and St Vincent de Paul Society, rely on these high-value gifts.
Tax specialists and philanthropy advisers only realised the exposure once they examined the rushed capital gains tax bill in detail.
Concern now centres on how quickly major donors may change behaviour.
Under existing rules, wealthy philanthropists often realise large capital gains and then donate the proceeds to deductible gift recipients, which include charities, religious institutions, medical bodies and education providers.
Those donations are structured so the capital gain is exempt from tax when passed to the DGR.
Donors also claim an income tax deduction for the amount they give, making large gifts more financially attractive.
That combination of tax-free gains and deductions has quietly underpinned many sizeable philanthropic contributions for years.
Advisers say the new minimum 30% tax will disrupt that long-standing structure by removing the favourable treatment that made these gifts so efficient.
Large donors who previously channelled windfall gains into charitable giving now face a significantly higher tax cost on those transactions.
Charities and other DGRs are likely to bear the financial fallout rather than government revenue.
The sector is bracing for a drop in big one-off donations if the legislation passes unchanged.
