A Deductible Gift Recipient, otherwise known as a DGR, is an organisation that is entitled to receive income tax deductible gifts such as financial donations and deductible contributions such as the purchase of a ticket to attend a fundraising event. Although not all charities are able to be DGR’s as there are several requirements for the endorsement as a DGR. It is the Australian Taxation Office (ATO) who decides upon these endorsements depending on whether an organisation satisfies the requirements provided in the Income Tax Assessment Act 1997 (Cth) (otherwise referred to as the “Tax Law”).
In this short Blog we will be discussing whether your organisation may be successful in becoming a DGR, the different categories of DGR’s and then a short overview of the application process.
Requirements for endorsement as a DGR
If you are a charity and are seeking to obtain DGR status for your organisation then the requirements provided in the Tax Law must be met. The ATO provides a useful distillation of the requirements, in addition to a more detailed explanation of what is required in each of the specified elements here. For a simpler outline here is a checklist of the DGR requirements:
- Does the organisation have an Australian Business Number (ABN)?
- Does the organisation fall within a DGR category described in the Tax Law (outlined in the next section)? This can occur in two ways;
- The organisation as a whole may fall within a category; or
- Part of the organisation may fall within a category;
- Does the organisation (or part thereof if only part falls within the relevant category) exist and operate within Australia?
- Is there rules within the organisations constitution for the transfer of remaining gifts and contributions upon winding up? And;
- Does the organisation maintain a gift fund if endorsement is being sought for a part only of the organisation to have DGR status?
If you are able to answer with the affirmative for each of these questions then your organisation satisfies the requirements for endorsement.
Types of DGR Categories
To meet all of the requirements and for DGR status to be awarded an organisation must be able to show that it as a whole, or part of it, falls within one of the recognised categories which are listed in the Tax Law.
The categories included are as follows:
- Welfare and rights;
- The family;
- International affair;
- Sports and recreation;
- Cultural organisations;
- Fire and emergency services;
- Ancillary funds;
Each of the above categories also contain subheadings, where more specific categories are listed. The ATO has prepared a tabulated version of these subcategories which can be accessed in the link here.
An important step to consider is identifying, in accordance with the organisations purposes listed in its constitution, the subcategory that fits most appropriately with the type of fund it holds, and the program(s) that it organises.
Some DGR categories listed will have additional requirements specific to that type of fund, such as being registered with the Australian Charities and Not-for-Profits Commission (ACNC).
If you wish to obtain a DGR endorsement, you believe the organisation satisfies all requirements and is therefore entitled to this endorsement, then do not hesitate to contact us at Tri-meridian and we can help you through the application process.
This Process requires an Application Form to be lodged accompanied by a supporting Schedule.
The Application Form requires the following from the organisation:
- Legal name and postal address;
- Indication of purposes for applying;
- The category number under which the organisation or part of the organisation falls;
- The date from which the organisation should be DGR endorsed;
- The completed schedule relevant to the category the organisation identifies as relevant to it;
- A declaration as to the accuracy of the information provided.
The accompanying Schedule that needs to be submitted with the application form is determined by the type of category which the entity identifies itself or part of itself as falling under. Once the selection is made, the entity can make the selection from the schedule templates provided here on the ATO website.
If you require any assistance, whether it be in determine whether your organisation satisfies the requirements for DGR endorsement; identifying a relevant category or in undertaking the application process, feel free to contact us at Tri-meridian and we can assist you in applying to become a Registered Deductible Gift Recipient.
For further information, please contact the author.
This article is posted in Adelaide, South Australia by Tri-meridian Corporate & Commercial Law and is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. We do not accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your professional adviser.