As part of the changes brought by the Treasury Laws Amendment (Refining and Improving our Tax System) Act 2023 (Cth) which came to effect from 1 January 2024, the eligibility criteria and application process for deductible gift recipient (DGR) endorsement for environmental organisations and cultural organisations categories have changed.
This article describes the changes. For more detail on the specific process and requirements for DGR registration under these categories you can visit our article on DGR environmental organisations and our article on cultural organisations.
What is DGR endorsement?
In general terms, organisations (or funds) with DGR endorsement are permitted to receive gifts of money or property from donors and issue a tax-deductible receipt. This allows a donor to claim certain donations as a deduction when filing a personal income tax return and can therefore help attract more donations. DGRs may also be eligible to receive funds from a number of philanthropic bodies (such as ancillary funds) which are restricted to only donating to certain types of DGRs.
For more information on DGR endorsement and how to become endorsed, click here to read our article: Could your organisation be endorsed as a deductible gift recipient?
Changes to the environmental organisation DGR category
Prior to 1 January 2024, eligible environmental organisations could become DGR endorsed by being listed on the Register of Environmental Organisations (REO) together with a named public fund. The REO was administered by the Department of Climate Change, Energy, the Environment and Water.
From 1 January 2024, administrative responsibility for assessing and administering the DGR category for environmental organisations under item 6.1.1 of section 30-55 of the Tax Act has been transferred to the ATO.
The associated eligibility criteria and application process for environmental organisation have also changed. The key changes include:
It must be an institution registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC) or be an Australian government agency established and maintained to advance the requisite environmental purpose.
It must now operate a ‘gift fund’ and is no longer required to establish and operate a ‘public fund’ – making administration a little less onerous.
There is no longer a minimum membership requirement.
Statistical information about gifts made during an income year no longer need to be provided to the Environment Secretary. The ACNC and ATO receive the necessary information via other mechanisms, i.e., reporting through the ACNC’s Annual Information Statement process.
The organisation, now being endorsed as a whole, must have the requisite winding up and DGR revocation provisions within its constitution.
Changes to the cultural organisation DGR category
Similarly, prior to 1 January 2024, eligible cultural organisations could become DGR endorsed by being listed on the Register of Cultural Organisations (ROCO) together with their named public fund. The ROCO was administered by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts.
From 1 January 2024, administrative responsibility for assessing and administering the DGR category for cultural organisations under item 12.1.1 of section 30-100 of the Tax Act has been transferred to the ATO.
The associated eligibility criteria and application process for cultural organisation have also changed. The key changes include:
It must be an institution registered as a charity with the ACNC or be an Australian government agency established and maintained to promote one or more of the specified cultural forms.
It must now operate a ‘gift fund’ and is no longer required to establish and operate a ‘public fund’ – making administration a little less onerous.
Statistical information about gifts made during an income year no longer need to be provided to the Arts Secretary. The ACNC and ATO receive the necessary information via other mechanisms, i.e., reporting through the ACNC’s Annual Information Statement process.
The organisation, now being endorsed as a whole, must have the requisite winding up and DGR revocation provisions within its constitution.
How can we help?
If you would like to find out more about DGR endorsement, establish a DGR endorsed organisation or ensure you are currently compliant with your DGR requirements, please get in touch with our specialist Charities and Social Sector lawyers.