Political donations and tax deductions in Aotearoa New Zealand and Australia

Abstract

This study examines the different approaches to tax concessions for political donations in Australia and Aotearoa New Zealand (NZ). In Australia, a tax deduction may be claimed for a moderate donation to a political party. Conversely, in NZ no tax concessions are available for donations to political parties. The study concludes that while there are several benefits of using the tax system to facilitate political donations, the two different policies align with the two countries general approaches to using the tax system to influence behaviour. An analysis of tax expenditures is used to support this argument. Reference to tax expenditures in Australia shows a longer timeline of acceptance of tax expenditures, alongside a more comprehensive regime of included activities. In NZ, the absence of tax concessions for political parties is aligned with NZ’s general approach to using the tax system to change behaviours, which is minimal state intervention.