Jul 28, 2023 / News

NFP Newsletter Edition 17 - Deductible-Gift Receipts

Streamlining DGRs

Deductible-gift-recipient status has been streamlined for organisations applying under four DGR registers. 

The ATO administers 48 of the 52 categories under which an organisation may be eligible for endorsement as a deductible-gift recipient. 

The four categories are environmental organisations, harm-prevention charities, cultural organisations, and overseas aid organisations. Their administration will be transferred from federal departments to the ATO as of 1 January.

The changes will mean all DGR categories will be administered similarly, reducing the regulatory burden imposed on endorsed organisations by streamlining the application process and aligning reporting requirements.

The reform is expected to reduce the time taken to obtain DGR status from up to two years to about a month.

Eligibility for DGR status is not intended to change because of the reforms. 

 

Community foundations get DGR status

Twenty-eight community foundations affiliated with Community Foundations Australia are slated to get deductible-gift-recipient status.

The federal government is consulting on the Treasury Laws Amendment (Measures for Consultation) Bill 2023: New class of deductible gift recipients to implement a decision to list them in DGR tax law for five years.

The 2023-24 federal budget removed the time period for DGR status, making it subject only to the ATO’s endorsement and compliance with ministerial guidelines.
The bill establishes:

• A new general DGR category in the Income Tax Assessment Act 1997 for ‘community charity funds’. The relevant minister may declare a ‘community charity fund’ where the registered charity has purposes consistent with existing general DGR categories
• A compliance regime in the Taxation Administration Act 1953 like that for ancillary funds. Under this regime, the minister must make guidelines for the operation of community charity funds, including administrative penalties in circumstances where trustees or directors’ fail to comply
• Only entities associated with the 28 community foundations subject to the budget measure will be considered for declaration in the first instance, and
• Declaration will not in or of itself confer DGR status, and organisations will be subject to endorsement by the taxation commissioner. Compliance with new ministerial guidelines will be a condition of endorsement.

The government will consult separately on the proposed ministerial guidelines.
 

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The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.