The missing lens in the Budget debate

Philanthropy Australia recently wrote to the Federal Treasurer, Hon Dr Jim Chalmers MP, expressing concern about possible unintended consequences from two of the proposed tax changes announced in the federal budget: the introduction of a minimum rate of tax on capital gains, and a minimum tax on discretionary trusts. In this opinion piece, CEO Maree Sidey outlines how the planned policy changes carry real weight in shaping giving behaviour in Australia.

Protecting Generosity

While the post-Budget debate zeroes in on tax reform and who pays, an unintended consequence is being overlooked – policy settings that risk undermining charitable giving at a time Australia can least afford it. 

Proposed changes affecting capital gains tax and discretionary trusts are rightly being examined through fiscal, equity and productivity lenses. Yet for many in the philanthropic community, their cumulative impact raises concern.  

Charities are already managing a surge in demand driven by cost‑of‑living pressures, housing stress and entrenched wealth inequality. If recent and proposed changes make giving less attractive – even indirectly – we risk constraining that generosity at the moment when it is most needed. 

Australia’s culture of giving is weaker than it should be for a country with our wealth. Direct giving is in decline, many significant givers in this country fly under the radar, and most Australians don’t connect to the word ‘philanthropy’.  Our national modesty and tall poppy syndrome work together to inhibit a conversation on fostering and promoting giving - so legislation, incentivisation and regulation matter.  

The data tells a clear story. 

Australians give 0.73 per cent of their income, putting us at number 68 globally and behind some of the world’s lowest income countries. Just 28 per cent of taxpayers claimed a deductible donation in 2022–23, down from 35 per cent a decade earlier despite strong population and wealth growth. 

Against this backdrop, policy signals carry real weight because they shape behaviour, influence long‑term planning and send cues about what is valued. The 2026 World Giving Report data shows an alarming drop in the number of Australians agreeing that government encourages people to give to charity – from 48% in 2024 to 33% in 2025.  

In this context, the Government’s ongoing reluctance to progress long-discussed reforms to the Deductible Gift Recipient (DGR) system is troubling. For years, the sector has argued that the DGR framework is overly complex and increasingly outdated. It creates unnecessary barriers to giving and excludes high-impact organisations simply because they do not fit within rigid categories. Numerous reviews have recommended an overhaul. 

Reform is not about special treatment. It is about modernising a system and removing barriers so Australians can more easily support the causes they care about.  

Instead, we remain in a holding pattern.  

Tax settings are not the sole driver of their decisions, but they are part of the equation. If that equation becomes less favourable or more uncertain, some giving will simply not occur. Often it is the future gifts that are most at risk, the multi-year commitments that allow organisations to plan, innovate and respond to emerging need.  

This is not about prioritising philanthropy over other policy goals. Governments must manage the tax system in the national interest. But philanthropy should not be treated as peripheral. Across the world, governments are increasingly looking to philanthropy to play a crucial role in supporting civil society. It can take risks government cannot. It can respond quickly to emerging challenges. And it can support community-led solutions that sit outside traditional models.  

Australia should be looking to unlock this potential, not inadvertently constrain it. 

Attention and intent to achieve outcomes.

The Government should return to DGR reform with urgency, working with the sector to design a simpler, more enabling framework. At the same time, any regulatory changes that intersect with philanthropic behaviour should be assessed for their broader impact on giving.   

None of this requires dramatic increases to government spending, but it does require attention and intent. At a time when Australia faces complex and intergenerational challenges, that intention should be about creating a system that makes giving easier, not harder, and create a stronger culture of giving.  

PA invites feedback from our members on the CGT changes. If members have any questions or comments they should contact PA’s Executive Director, Policy and Sector Development, Krystian Seibert.