QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS

Senator DARMANIN (Victoria—Deputy Government Whip in the Senate) (15:24): Maybe I can help to continue to answer your questions, Senator Scarr, on discretionary trusts and, more broadly, the tax reform changes that we brought in. The reforms that we brought in were all about making the tax system fairer by better aligning the tax rate on trust income with taxes paid by workers and will help fund income tax cuts for workers.

Creating a fairer tax system is at the heart of what we are trying to do here and is a key aim of our ambitious tax reform package, along with making it easier for people to buy their first home and cutting income taxes for workers. There has been a whole lot of consultation and, as we've heard today, there will continue to be more consultation on these questions.

As we know, discretionary trusts do allow some people to plan their tax affairs in a way that isn't available to most Australians. From 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts. The minimum tax on discretionary trusts won't change or limit the use of the trusts for legitimate reasons but will more closely align the tax rates for trusts with tax rates paid by workers and families who earn a living from wages.

Over 90 per cent of active small businesses won't be affected by this change. As Senator Wong said in answer to a question earlier, when it comes to trusts, the budget clearly outlined that the minimum tax would not apply to charitable trusts. Donations to organisations with deductible gift recipient status will continue to be tax deductible for discretionary trusts.

Donations to sports clubs or other community and environmental groups without DGR status can still be made from those trusts and by individuals as they always have. We are consulting on a range of implementation details around the minimum tax on trusts, and that includes the appropriate arrangements for donations and distributions to charities and other tax-exempt entities.

We believe in charities and we are big backers of the sector. Let's contrast that with this confected outrage around charities from those opposite. When we came to office, many charities were reeling from the former government's war on charities which had seen three open letters from the sector to successive Liberal prime ministers asking them to back off on their attacks on charities.

Now they are standing up for them, but they were attacking them previously for many, many years. Charitable advocacy was under fire, with environmental, legal and social welfare charities being told to keep quiet. The Australian Charities and Not-for-profits Commission was led by a well-known charity critic.

Since coming to office, as demonstrated in a range of measures, we have chosen a different path, engaging respectfully with Australia's great charity sector. We will continue to consult them with on these measures. Perhaps nothing better illustrates this than the fact that the grouping known as Hands Off Our Charities under the former government has rebranded as the Stronger Charities Alliance.

I have had the pleasure of meeting with them, as have many on this side. I'm not sure about on theirs. Finally, we've also lifted the minimum distribution to six per cent of net assets, which is expected to see an extra $60 million a year flow to charities.

At the same time, we are allowing funds to smooth distribution over three years. This means that a fund can help a charity build something really substantial, rather than just being forced into a pattern of small annual grants. We back our charities.

Treasury analysis shows that a fund receiving market returns and distributing six per cent per year could keep supporting charities for decades, even without further contributions to its assets. We back charities; I'm not sure about those opposite.