Charities and DGR Status

If you see a Charity that advertises along the lines of “donations over $2.00 are tax deductible” this means that the Charity has been endorsed by the ATO as a Deductible Gift Recipient.

A Charity with DGR status has the following benefits:

• An incentive for people to donate because people who make donations can claim the donation as a tax deduction when filing their income tax return; and
• The ability to receive funds/donations from other not for profit organisations which have DGR status.

To receive DGR status, your organisation must meet all of the following requirements:

• It must fall within a category of DGR as set out in the income tax law. This can occur in two ways:
• your organisation itself may fall in a category as a whole – examples are public hospitals or public universities; or
• a part of your organisation may fall in the description of a fund, authority or institution covered in a category – examples are school building funds owned by schools or public libraries operated by local councils.
• It must have an Australian Business Number (ABN);
• Have an appropriate dissolution/revocation of endorsement clause;
• Maintain a gift fund (if seeking endorsement for the operation of a fund, authority or institution); and
• Established and operated in Australia, (with some exceptions).

In addition to the above requirements, each DGR category has its own set of conditions that need to be satisfied before endorsement can be achieved.General DGR categories cover the following core areas:

Health
Education
Research
Welfare and rights
Defence Environment
The family
International affairs
Sports and recreation
Cultural organisations
Fire and emergency services
Ancillary funds
Explanation of terms

Under each of these core areas, there are specific types of organisation that would be eligible for DGR endorsement. For example, under the ‘health’ category, you will find Hospitals and Research Institutes as examples of DGR endorsed entities; whereas under the ‘education’ category, you will find generally find Schools, Universities and School Building Funds.

If you are thinking of setting up a Charity we suggest you come speak with one of us who can assist you with setting up the most appropriate legal structure to operate your Charity, advise you on what tax exemptions your Charity may be eligible for, whether you should apply for DGR status and advise you on the general legal compliance required of a not-for-profit organisation.