What do the taxation statistics of giving reveal?

The Australian Taxation Office (ATO) has recently released its statistics for the financial year 2022-23, including gift tax deductions by claimed individuals, as well as the latest numbers on private and public Ancillary Funds. Both provide a backdrop for the potential implementation of recommendations from inquiries and the current Treasury consultation on ancillary fund distribution rates.

Giving by individual taxpayers

In 2022–23, the total amount donated and claimed as tax-deductible donations rose by $4.5 billion. The total reached $9.10 billion compared to $4.55 billion in the previous year. This is the highest annual increase on record.

It can be reasonably assumed that the generous gift by Andrew and Nicola Forrest of 220 million Fortescue Limited shares, valued at $5 billion, to the Minderoo Foundation made a significant contribution to this increase.

Looking at the median gift (being the middle number of all gift deductions ranked in numerical order), the median gift was $150 per taxpayer, which was just $2.00 higher than the previous year.

There was a slight increase in taxpayers claiming a gift, rising from 27.46 per cent to 27.81 per cent. The 2022-23 year is the fifth consecutive year in which fewer than 30% of taxpayers claimed a tax-deductible donation; however, it marks the first increase since the 2019– 20 year. The trend over the last decade in most OECD countries is for the participation rate of claiming gift deductions to decline.  Globally, it appears that fewer people are claiming gift deductions, but those who do give are giving more.

Of the 23,009 taxpayers who reported a taxable income over $1 million, just 10,846 (47.14 per cent) claimed a gift deduction. It is baffling that over 50 per cent of such taxpayers did not report a claim for a gift deduction. For this cohort, it seems less likely that a gift was made but not claimed as a deduction.

These $1 million taxpayers contributed 9.88 per cent of their taxable income, which is 62.18 per cent of all gift deductions. This rose from 24.08 per cent in the previous year, mainly due to the generous gift by the Forrests.

The ATO also provides the data by postcode. The highest median tax-deductible gift ($245) was from the ACT’s Barton, Deakin, Yarralumla, and surrounding suburbs.

NSW’s Greenethorpe had a median of $170, followed by Victoria’s Hawksburn and Toorak with $130, then Queensland’s Noosa, SA’s Norton Summit, WA’s Cottesloe and Peppermint Grove, and NT’s Katherine, all with a median gift of $120.  Tasmania’s Cleveland, Conara and Epping Forrest had a median of $103.

Private Ancillary Funds

During the 2022–23 financial year, 114 new Private Ancillary Funds were approved, bringing the total number to 2,196. They made distributions (often referred to as grants) of just under $800 million.

A total of $1.24 billion in donations was received, representing a 22.46 per cent decrease in donations from the 2021–22 financial year.  The Minderoo Foundation is not a Private Ancillary Fund.

The closing value of their net assets was $10,656.86 million, representing a 2.55 per cent increase from $9,923.43 million in the previous year.

In 2022–23, Private Ancillary Funds distributed $799.34 million, which was 8.06 per cent of their net assets of $9,923 million as at 30 June 2022. This represents an increase from the previous year, during which they distributed 7.53 per cent of their net assets. The highest recorded year for distributions was 2004–05, when PAFs distributed 17.30% of their net assets. The 8.06% distributed in 2022-23 was within the normal range, and across all PAFs, was comfortably over the required minimum distribution rate of 5%. 

The overall picture for Private Ancillary Funds is one of increasing numbers and net assets, while donations received and distributions (grants) made have decreased.

Public Ancillary Funds

In 2022–23, there were 1,445 Public Ancillary Funds, including 33 newly approved funds.

Over the last few years, there has been a steady exit of funds from the register, but new approvals have kept the net number of funds stable.

Donations received during the year ($1.93 billion) increased by 115 per cent from 2021–22, when donations received amounted to $897 million. A total of $487 million was distributed, leaving $4.7 billion in net assets.

Each financial year, Public Ancillary Funds must distribute at least 4% of the market value of their net assets (as at the end of the previous financial year) as set out in the Public Ancillary Fund Guidelines. In 2022–23, such funds made distributions (grants) totalling $487 million (11.51 per cent of net assets). This represents a 21.46 per cent increase from the previous year, when distributions totalled $401 million.

This average amount distributed has varied between $243,000 and $360,000 since records began in 2011–12. In 2022–23, such funds distributed $337,353 on average, a 21.88 per cent increase from the previous year (where distributions had decreased 36.54 per cent).

The overall picture for Public Ancillary Funds shows steady net numbers and increases in donations received, distributions made, and net assets.

So What?

In many other international jurisdictions, the priority questions for policy reform of philanthropic foundations and tax are preventing tax abuse involving donations to or distributions by foundations. In Australia, this is not the case, and we ought to acknowledge and celebrate this situation.

The prudent design of the ancillary fund approval process, annual reporting including audits, and transparent governance and accountability arrangements have contributed to ensuring that Australia is held up as a model regulatory regime to deter tax-abusive behaviour by foundations. The general attitude of Australians to tax-abusive behaviour involving giving and philanthropy has also contributed. Using philanthropic foundations to divert funds to family and self-interests, as shams, or a tax shelter with no public value, finds little acceptance at any level of Australian society, and rightly so.

The Productivity Commission Philanthropy Report has set out three principles for consideration when deciding the minimum annual distribution rate for Ancillary Funds:

• The purpose of giving funds is charitable. Investments are made to maximise the benefits available to Item 1 DGRs, not to maximise investment returns.
• There should be no guarantee that funds can exist in perpetuity in the absence of additional gifts to the fund. However, the distribution rate should not be set so high that it encourages high risk investment strategies by trustees seeking to maintain the value of a fund.
• Distributions should reflect the funding needs of Item 1 DGRs, which will include short term as well as longer term requirements.

We sense that the Australian regulatory ecosystem for foundations is in fair shape, and a blunt regulatory instrument approach should not be allowed to dampen or unsettle philanthropic giving.

In our judgment, Ancillary Funds do not generally lock up funds in perpetuity with no distributions to beneficiaries. Our sense of the cases that have come before state courts in the last decade is that moribund charitable trusts (not federally regulated ancillary funds) pose a greater regulatory challenge.

A more productive approach might be to use the nudging tools of regulatory behaviour to redirect philanthropic esteem values from the size of a foundation’s corpus to the amount and social/environmental impact of annual distributions. Politicians, bureaucrats, peak bodies, and the nonprofit sector should actively adopt and encourage a narrative that celebrates the impact of grants  from Ancillary Funds, rather than focusing on the amount of funds under management.

We would relish reporting the ATO’s statistics on the impact of Ancillary Fund disbursements (grants) in the future.

Electronic copies of the complete analysis of the ATO’s taxation statistics on giving are freely available from the QUT website at https://research.qut.edu.au/australian-centre-for-philanthropy-and-nonprofit-studies/research/an-examination-of-tax-deductible-giving/

McGregor-Lowndes, Myles; Balczun, Marie & Williamson, Alexandra (2025) Tax-deductible giving in 2022– 23. ACPNS Current Issues Information Sheet 2025/1. Australian Centre for Philanthropy and Nonprofit Studies, QUT, Brisbane. https://doi.org/10.5204/rep.eprints.258641

McGregor-Lowndes, Myles; Balczun, Marie & Williamson, Alexandra (2025) Ancillary Funds 2022–2023. ACPNS Current Issues Information Sheet 2025/2. Australian Centre for Philanthropy and Nonprofit Studies, QUT, Brisbane https://doi.org/10.5204/rep.eprints.258637