If you are wondering what deductible gift recipient (DGR) endorsement is all about, then go no further!
Over three parts, this guide will:
Part one focuses mostly on what DGR endorsement is, why organisations like to have it and other general background information that will help you get a better understanding of Australia's rather complicated DGR regime. Painting the landscape I suppose you might say!
Part two looks at the different types and categories of DGR and why you might not need it after all, while part three focuses more on the practical side of things and gives more detail on applying for DGR endorsement and explains why you might not be successful and what to do about it if your application is declined.
This guide will give you a good grounding in what this DGR thing is all about. But as you will come to see, it is a rather complicated area of the charity world. So, please treat this as a thorough intro, rather than the complete story!
Initial Note: it is the Australian Taxation Office (ATO) that will assess your application for DGR endorsement, even if the information is collected by or filtered through another government agency such as the Australian Charities and Not-for-profits Commission (ACNC).
Tip: We strongly recommend you spend some time reading up on DGR before launching into an application for endorsement. Time spent on learning and preparation can help boost the chances of success. A good place to start is the ATO's not-for-profit pages found by visiting www.ato.gov.au/nonprofit, in particular, the ATO publication entitled 'Gift Pack for deductible gift recipients and donors'. It is the ATO after all that will be assessing the application, so why not see what it has to say about it?!
Tip: Like with many things, you can save time and effort, and maybe even increase your chances of success, by asking someone else to help you with your application for DGR endorsement. But make sure that those helping you are suitably experienced in the laws and regulations relating to charities and to DGR in particular and are up to date with regulatory reform in this space. One DGR category or another, or even the whole DGR regime, comes under review reasonably often and so it is important to be up to date with the most recent changes. If you have any questions about achieving DGR endorsement, feel free to reach out to our charities experts here.
Before reading on, please note:
Important note: The ACNC opened its doors on 3 December 2012. As part of the ushering in of this new regulator of charities, certain transitional arrangements were put in place to give DGR endorsed organisations time to make whatever changes may have been required to comply with the amendments to some DGR general categories. This transition period expired in late 2013, so this 'get out of gaol (or is it jail) free card' has well and truly expired!
If you are unsure of whether your organisation still complies with the particular requirements associated with the particular DGR category under which it is endorsed, we strongly recommend you conduct a self-audit/review as soon as possible. The ATO recommends that you self-review your organisation as follows:
Step 1: Find your organisation's notice of DGR endorsement and note the number advised at 'Item(s) in Subdivision 30-B of the Income Tax Assessment 1997' on the notice.
Step 2: Check that your organisation meets the description of the item number in the DGR table in the ATO's Gift Pack including any requirement for the fund, authority or institution to be either:
Failure to comply with the applicable DGR requirements could result in the loss of DGR endorsement.
If you would like some help with a DGR audit/review, just contact us and we will be happy to help.
Right, so, now let's get on with it!
DGR is often heralded as an absolute necessity, a deal breaker the holy grail, for not-for-profit organisations. But what exactly is DGR?
DGR is the abbreviation for deductible gift recipient. In very broad terms, organisations with DGR endorsement can, as the name suggests, receive tax deductible gifts. That is, people who donate to the DGR can deduct the value of the gift from their own personal income, and thereby reduce their income tax liability. You know, you see it all the time, "any donation of $2 or more is tax deductible ...".
But beware, it is not quite that simple. There are strict rules about what is and what is not tax deductible.
To become DGR endorsed you must be more than a not-for-profit and more than a registered charity. You must be endorsed as such by the Australian Taxation Office (ATO) or be specifically listed as a DGR in the income tax law, but more about that later.
2.2 Why is DGR desirable?
Before going on to explain how to apply for DGR endorsement, it is important to understand why this endorsement is so highly sought after. An organisation will usually seek DGR endorsement for one or more of the following reasons:
So, now that you know about what DGR is, jump to part two for more information on the different types and categories of DGR and to learn why you might not even need DGR after all.