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:
- in almost all cases the applicant needs to be registered as a charity with the ACNC in order to be eligible for DGR endorsement. There are exceptions, aren't there always!, but this is a good rule of thumb. For more on how to register as a charity, keep an eye out for our article on registration. In the meantime, you can also visit the ACNC website here for more information.
- being endorsed as a DGR does not give your organisation access to income tax and fringe benefits tax (FBT) concessions – a separate process is required to access these concessions and we'll be posting an article on that soon. In the mean time, you can visit the ACNC website here and the ATO non-profit website here for more information.
- even if your organisation is endorsed as a DGR, you will, in most cases, still require a charitable fundraising authority if the organisation wishes to engage in charitable fundraising activities take a look at our article on fundraising, the relevant Fair Trading or Consumer Affairs body in each state and territory for more information).
- if your organisation wishes to conduct raffles, lotteries or other games of chance, you may require a license to do so regardless of whether your organisation is a DGR (check out our article on DGRs here), the relevant gaming and racing authority in each state and territory for more information.
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:
- an Australian government agency; or
- a charity or part of a charity registered with the ACNC.
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!