Would you be more inclined to round up your grocery shopping total to the nearest dollar for charity, if you could claim the donation on tax? Currently, Australians can claim a tax deduction when giving $2 or more to organisations with deductible gift recipient status. But the Productivity Commission has called for the federal government to scrap the $2 threshold for tax-deductible donations to those with the status as part of a reform package proposed in response to an inquiry into philanthropic giving. In its draft report, the commission has stated while the amount donated to charities has been growing, fewer people were donating. The commission said the $2 threshold was "a product of history". "When income tax deductions for giving were introduced in 1915, the minimum threshold was relatively high - £5 for donations to the war effort and £20 for charitable donations ($578 and $2,313 respectively in 2022 dollars)," it stated in the report. Years later, that threshold dropped to $2 and the currency has since fallen in value. Earlier, some reviews called for the sum to be raised to "reduce the reporting burden for donors through needing to retain fewer receipts". But the commission said more recent "advances and increases in uptake of technology have reduced the costs of generating and keeping receipts". It believes the change could incentivise more people to give. "Given the rise of new giving approaches, such as 'round-up' donations at the supermarket checkout, removing the threshold may possibly provide a small additional incentive to make such 'micro-donations' if a donor is aware that they could then claim them as a deduction," the commission said. In 2021, more than $13 billion was donated to charities nationally. Some $4.4 billion in donations took the form of tax-deductible donations in 2020-21, the report said. The commission has also proposed overhaul of the deductible gift recipient system, stating that the system that determines which charities can receive tax-deductible donations is "poorly designed" and "not fit for purpose". As an example, the commission said that a charity preventing illnesses in children would be eligible to receive tax-deductible donations but a charity that tries to prevent injuries in children would not be. "A charity with a general focus on social wellbeing can miss out because its activities are too broad to be considered poverty relief," it said in a statement. "The report proposes a simpler, fairer and more transparent process for determining which charities can receive tax-deductible donations." Furthermore, the commission also recommended the government also support the development of an independent philanthropic foundation for and by Aboriginal and Torres Strait Islander communities. The move would "enhance the arrangements linking philanthropic and volunteer networks and funding to Aboriginal and Torres Strait Islander organisations", the commission said.