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A deductible gift recipient (DGR) is an organisation which can receive income tax deductible gifts and deductible contributions.
Some DGRs are listed by name in the tax law but most must apply to the Tax Office to be endorsed as DGRs.
DGR endorsement is the approval process for organisations that wish to be endorsed by the Tax Office as DGRs.
There are two types of DGR endorsement:
- where an organisation is endorsed as a whole, for example public hospitals and public universities, and
- where an organisation is endorsed for a fund, authority or institution that it owns or includes, for example school building funds and council libraries.
Endorsement as a DGR allows donors to claim tax deductions for most types of gifts or donations they make to your organisation.
To be entitled to this type of endorsement, your organisation must:
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have an Australian business number (ABN)
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be in a general DGR category set out in the income tax law
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be in Australia (with some exceptions), and
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be required – by a law, its constituting documents or rules governing its activities – to transfer the following assets to another DGR if the organisation is wound up  or its endorsement is revoked:
- surplus gifts and deductible contributions made for the principal purpose of the organisation, and
- money received by the organisation because of such gifts or contributions.
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To be entitled to this type of endorsement, your organisation must:
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have an ABN
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satisfy the gift fund requirements (unless endorsed as a DGR as a whole)
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and the fund, authority or institution your organisation owns or includes must:
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be in a general DGR category set out in the income tax law, and
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be in Australia.
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If your organisation does not have an ABN, you can apply for an ABN:
- electronically, through
- the Australian Business Register at www.abr.gov.au
- the Australian Government business website at www.business.gov.au where you can also attend to other government obligations
- on a paper form, available by phoning the Tax Office on 13 28 66, or
- through a tax agent, who will lodge your application using the electronic lodgment system.
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Remember to indicate on your ABN application form that you want to be endorsed as a deductible gift recipient.
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The income tax law sets out the general DGR categories.
There are currently more than 40 categories. Examples include:
- health promotion charities
- school building funds
- scholarship funds
- public benevolent institutions
- overseas aid funds
- registered cultural and environmental organisations, and
- public libraries, museums and art galleries.
To be in Australia, the organisation (or the relevant part of the organisation) must:
- be established in and operating in Australia, and
- have its purposes and beneficiaries in Australia.
Purposes or beneficiaries do not have to be in Australia if a fund is:
- an overseas aid fund
- a developed country disaster relief fund, or
- a public fund on the Register of Environmental Organisations.
For these funds, it is still necessary that the fund itself be established and operating in Australia.
A gift fund has these characteristics:
- it is a fund
- it is maintained for the principal purpose of the fund, authority or institution
- all gifts, and deductible contributions, of money or property for that purpose are made to it
- any money received by the entity, because of such gifts, or deductible contributions, is credited to it
- it does not receive any other money or property
- the fund is used only for the principal purpose of the fund, authority or institution, and
- the organisation is required – by a law, its constituent documents or governing rules – to transfer any surplus assets of the gift fund to another gift deductible fund, authority or institution when the fund, authority or institution is wound up or the DGR endorsement is revoked, whichever occurs first.
The requirement varies with the type of endorsement.
Entity endorsed as a whole
The organisation is required to transfer all remaining gifts, deductible contributions and any money received in respect of such gifts and contributions to another DGR on winding up or on revocation of endorsement, whichever occurs first. The organisation must be required to do this by a law, its constituent documents or governing rules.
Whilst DGRs endorsed as a whole are not required to maintain a gift fund, all gifts and deductible contributions made to such a DGR for its principal purpose must be used for that purpose. The DGR will need to maintain accounting records to identify the use of gifts and deductible contributions received and whether any surplus exists upon winding up or revocation of its DGR endorsement.
Entity endorsed for a fund, authority or institution it owns or includes
The organisation is required to transfer any surplus assets of the gift fund to another gift deductible fund, authority or institution when its fund, authority or institution is wound up or on revocation of endorsement. The organisation must be required to do this by a law, its constituent documents or governing rules.
Certain non-profit organisations can choose to treat separately identifiable sections of their organisations (non-profit sub-entities) as though they are entities for GST purposes. Sub-entities can have their own ABN.
However, a non-profit sub-entity cannot be endorsed as a DGR in its own right. The parent organisation must apply for endorsement on behalf of the non-profit sub-entity.
You apply for DGR endorsement on the form Application for endorsement as a deductible gift recipient (NAT 2948).
You will automatically be sent an application for DGR endorsement if you indicate you want to be endorsed as a deductible gift recipient on your application for an ABN.
If your organisation already has an ABN, you can obtain the DGR application form by phoning us on 1300 130 248, or download the form from our website.
For an entity that is to be endorsed in its own right, it uses its own ABN.
If an entity is seeking endorsement for a fund, authority or institution it operates, it uses its own ABN. There is no need for an extra ABN for endorsement of the fund, authority or institution.
If part of an entity has an ABN as a non-profit sub-entity for GST purposes, that ABN cannot be used for DGR endorsement. For example, a church applies for endorsement of a sub-entity welfare institution that it operates. The church must use its own ABN even if the institution has a separate ABN for GST purposes.
The application will ask you for the date from which you want your organisation to be endorsed.
The earliest possible date your organisation can be endorsed as a DGR is 1 July 2000 unless it is applying for endorsement under a DGR category added to the tax law after 1 July 2000. GiftPack for deductible gift recipients and donors (NAT 3132) includes a table of DGR categories and earliest possible dates of endorsement applicable after 1 July 2000.
Donors can claim income tax deductions for most types of gifts they make to your organisation from the date your endorsement starts and while you are endorsed.
Your organisation’s entry in the Australian Business Register will be updated to show it is a DGR. This information is publicly available on the register website at www.abn.business.gov.au
When your organisation issues a receipt for a tax deductible gift or contribution, it must include certain information on the receipt. If your organisation does not provide this information on its receipts, your endorsement may be revoked.
You must notify us in writing if your organisation’s circumstances change and it stops being entitled to DGR endorsement. Worksheets are provided in GiftPack for deductible gift recipients and donors (NAT 3132) to help you self-review your organisation’s entitlement to endorsement.
As a DGR, your organisation is required to keep adequate accounting and other records that record and explain all transactions that are relevant to its status as a DGR.
These records must also show that all gifts, deductible contributions and any money received in respect of such gifts and contributions are only used for the principal purpose of your fund, authority or institution. You are required to maintain these records for at least 5 years after the completion of the transactions or acts to which they relate. The penalty for not keeping proper records is twenty penalty units, currently $2,200 (20 x $110 per penalty unit).
We will send you written notification of the outcome of your application, to tell you whether your organisation has been endorsed or refused endorsement.
If your application for endorsement is refused, you can have the decision reviewed by us. You will need to put your full reasons in writing. If endorsement is refused after the review, you will be advised of further appeal rights.
If you believe we are too slow in notifying you about whether your organisation is endorsed, you can have your application treated as if it had been refused. The deemed refusal will trigger formal review rights.
The earliest you can notify us you wish your application to be treated as if it had been refused is the later of:
- the end of the 60th day after you made the application, or
- the end of the 28th day after the last day on which you gave us information or documentation that we had requested.
To have your application treated as if it had been refused, you must give us written notice that you want it treated in that way. Your application will be deemed to be refused on the day you give such notice.
We can revoke a DGR’s endorsement if:
- it is not entitled to be endorsed
- it has not provided information or documents within the specified time after a request from us, or
- it has not given the specified information on its receipts.
We will provide written notice of the revocation. The revocation has effect from a date specified by us and the date may be retrospective.
If your organisation is dissatisfied with the revocation of its DGR endorsement, it can lodge an objection against the revocation. It must do this in writing to us, giving the grounds for the objection.
DGR endorsement is separate from income tax exemption. A DGR that is a charity will need to apply separately for endorsement as a tax concession charity. A DGR that is not a charity should check whether it may be considered as another kind of income tax exempt entity.
Footnote
- Winding up clauses are not required if the entity is established by an Act of the Commonwealth Parliament which does not provide for the winding up or termination of the entity.
Last Modified: Thursday, 6 September 2007
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