Death and taxes: Labor’s vision to transform giving
Andrew Leigh wants you to think about death.
Not only is this good for your family, it can also make your community better off, says the economist who was appointed deputy minister of charities.
With more than $5 trillion expected to be passed down through wills and trusts over the next two decades, Dr Leigh hopes to make it easier for this money to be directed towards charitable projects where it can make a real difference.
“Growing wills requires culture, systems and trust,” he told the National Press Club on Wednesday.
“The cultural part starts with more Australians feeling able to talk about death, wills and inheritance. Families are better off when difficult conversations are had early. Communities are better off when planning replaces confusion.”
The Labor deputy minister, one of the party’s only MPs not affiliated with any faction, will outline a plan to encourage more Australians to leave their wills to charities.
“After the fires and floods, Australians are amazing. We donate, we cook, we row and we console. The question is how to bring some of that spirit into ordinary times,” he will say.
Dr Leigh will announce an extra $2 million to help the corporate registration and charities commission harmonize its systems to reduce the number of duplicate forms that not-for-profit organizations must complete.
He said the move would solve charities’ “paperwork problem” and enable them to focus more on helping communities.
He will also push for wills to become a normal part of estate planning and encourage lawyers, accountants, financial planners and wealth advisors to work with charities to encourage more Australians to leave bequests in their wills.
“A great transfer of wealth must translate into a great transfer of trust,” he will say, pointing to research by financial consultancy JBWere, which estimates that $5.4 trillion will change hands through real estate in the next 20 years.
Dr Leigh will confirm plans to increase the amount of “endowment funding” the federal government must pay out each year to six per cent of its total assets, which is expected to provide charities with an extra $60 million a year.
Such foundations, which benefit from special tax exemptions, are often used by wealthy donors to invest their money before gradually transferring it to charities.
Some philanthropists argued that the high donation rate would deplete their funds faster than the returns needed to replenish them, preventing them from operating the financial instrument indefinitely.
