The tax year 2015-16 saw a decrease in tax deductible gifts of $221 million (or 7.2%) from the previous income year. However, the previous year had a spike in giving of $464 million (or 15%) over its previous year. The spike was largely due to the income wealthy, with those having a taxable income over $1 million claiming an average tax-deductible donations of $98,324.68 (up from $51,978.72 in previous year). This year the average fell back to a little below the 5 year trend line at $50, 128.01.
So it was the taxpayers in the upper bracket which largely caused the decrease, but why?
I am not sure, further research is needed. There are a number of possibilities that previous research has indicated as factors.
We know that those in the top tax brackets tend to tighten their giving in uncertain financial times. The 2015-16 financial year was difficult for investors with:
- a close and messy federal election,
- a bear market in most share markets,
- record low bond yields,
- financial issues in Greece,
- a 49% plunge for a period in Chinese shares,
- numerous IS related terrorist attacks;
- a “surprise” vote by the UK to Leave the European Union setting off fears that there will be a domino effect of countries seeking to leave the Eurozone: and
- the election of Donald Trump.
Also there were no ATO declared Australian natural disasters for the period and that might have some bearing.
