GiftPack (current to 30 June 2003)
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Gifts, Charities and Non-profit Organisations
GiftPack is a comprehensive guide on tax deductible gifts. It has been prepared by the Australian Taxation Office (ATO) to help organisations and donors understand the new arrangements for tax deductible gifts.
How will this guide help you?
For recipients of gifts, GiftPack explains how they can become and remain deductible gift recipients (DGRs). It also gives information for DGRs on:
- income tax exemption
- the Australian Business Number (ABN)
- goods and services tax
- fringe benefits tax, and
- State and Territory government taxes.
For donors, GiftPack provides information on how to claim deductions, the types of gifts that are deductible, and how to check that recipients are DGRs.
What is DGR endorsement?
From 1 July 2000, DGRs need to be endorsed by the ATO. If they are not endorsed, donors cannot claim tax deductions for their gifts. GiftPack explains how to get endorsed - see Endorsement.
The only DGRs that don't need to be endorsed are those specifically listed by name in the income tax law - see DGR table - listed by name in chapter 2.
What about organisations previously accepted by the ATO?
For these organisations:
- they will still have to apply for DGR endorsement - see Endorsement.
- they will need to regularly check if they are still entitled to endorsement - see Self-review.
- there is a new requirement about details to be put on receipts - see receipts, and
- they can check any other details about tax deductible gifts applying to them in DGR table - general categories in chapter 2.
What about new organisations that want to become DGRs?
New organisations can check whether they fall in any of the categories of DGR - see DGR table - general categories in chapter 2. The table also shows any other requirements the organisation will have to meet to be a DGR (including endorsement), and the types of tax deductible gifts they could receive.
What if a DGR is listed by name in the income tax law?
For these DGRs (see DGR table - listed by name in chapter 2):
- there is no need to be endorsed by the ATO
- there is a new requirement about details to be put on receipts - see receipts, and
- there is the continuing requirement to be in Australia - see In Australia.
What about income tax exemption?
DGRs are not automatically exempt from income tax. DGRs that are charities will need to apply for endorsement as an income tax exempt charity (ITEC) - see the publication CharityPack (see description). Other DGRs that are associations, societies or clubs can check if they are exempt by reading the publication ClubPack (see description).
How does GiftPack help donors?
For donors, this guide:
- lists deductible gift recipients (DGRs) and types of DGRs - see DGR table.
- notifies donors about using the Australian Business Register web site www.business.gov.au to check whether a recipient is a deductible gift recipient, and
- explains how to claim for different types of gifts - see Donors and gifts.
The New Tax System supports deductible gift recipients and donors by:
- enhancing certainty about who can receive tax deductible gifts
- helping donors to find the recipients of tax deductible gifts on the internet and in this guide
- providing comprehensive information to organisations that want to receive tax deductible gifts
- making non-commercial supplies by gift deductible entities GST-free
- refunding GST paid on inputs by gift deductible entities that are registered for GST, and
- giving $65 million to help charities make the transition to GST.
Need more information?
If you have any questions after reading this guide, or if you need more information, please contact the information sources on the back cover of this guide.
Publications about taxation & the non-profit sector
CharityPack is for charities.
CharityPack:
- helps you work out if you are a charity
- explains the new endorsement arrangements
- tells you how to apply for endorsement as an income tax exempt charity (ITEC), and
- outlines ABN, GST, PAYG, FBT and other taxes and obligations for charities.
ClubPack is for clubs, societies and associations which are not charities.
ClubPack:
- helps you work out if your organisation is exempt from income tax
- explains your obligations if your organisation is not income tax exempt, and
- outlines ABN, GST, PAYG, FBT and other taxes and obligations for clubs, societies and associations.
GiftPack is for organisations that wish to receive income tax deductible gifts.
GiftPack explains:
- who can receive tax deductible gifts
- the new endorsement arrangements
- what sorts of gifts are deductible, and
- what donors have to do to claim deductions for their gifts.
Additional publications:
The information in this guide is current at May 2000.
Please get help from the ATO or a professional tax practitioner if you feel this guide does not fully cover your circumstances. We regularly revise our publications to take account of changes to the law and you should make sure that this edition is the latest. Any changes or developments occurring between editions will be explained in updates which you should request from the ATO.
As part of our commitment to producing accurate publications, a taxpayer will not be subject to penalties if it is demonstrated that a tax claim is based on wrong information contained in this guide. However, interest could be payable depending on the circumstances of the case.
Ensuring tax deductible gifts for deductible gift recipients and donors |
Only deductible gift recipients (DGRs) can receive tax deductible gifts. DGRs are either specifically listed by name in the income tax law or they fall within a general category. |
Funds and organisations that are in one of the general categories have to apply to the Australian Taxation Office (ATO) for endorsement as a DGR. They can apply if they have an Australian Business Number (ABN), maintain a gift fund, and are in Australia. |
DGRs listed by name do not have to be endorsed but they must meet other conditions. They will need an ABN to be recorded in the Australian Business Register as a DGR. |
Donors can only claim certain types of gifts made to a DGR. Donors can check if an organisation is a DGR by searching the Australian Business Register. |
Organisations and funds seeking endorsement as a DGR must first obtain an ABN. This is the new single identifier for your dealings with the ATO in relation to the goods and services tax, Pay As You Go and other elements of The New Tax System. |
Most DGRs are charities and need to apply for a separate endorsement as an income tax exempt charity (ITEC) to be income tax exempt. DGRs that are not charities need to check their income tax status. |
It is important that you review your entitlement to endorsement regularly. If nothing has changed to affect your status, you should still conduct a review at least once a year. |
Deductible Gift Recipients
Who can receive tax deductible gifts?
Certain organisations can receive income tax deductible gifts. They are called deductible gift recipients (DGRs). The income tax law determines which organisations and types of organisations can qualify.
Some DGRs are listed by name in the income tax law. They include organisations like Amnesty International, Landcare Australia Limited and The National Nurses' Memorial Trust. There are currently fewer than 150 of these. They are set out in DGR table - listed by name. Other requirements for these DGRs are explained in this chapter.
While these DGRs are not required to have an Australian Business Number (ABN) for gift deductibility purposes, most will have an ABN for other reasons. Having an ABN will ensure they are listed on the Australian Business Register (ABR) which DGRs and donors can search at www.business.gov.au.
For other organisations to be DGRs, they must fall within a category set out in the income tax law. Examples are public benevolent institutions, public universities, public hospitals, school building funds and public libraries. There are more than thirty of these categories. They are set out in DGR table - general categories.
If you have not previously been accepted by the Australian Taxation Office (ATO) as gift deductible, you should first check if you fall in a general DGR category. If you have been previously accepted, you will not need to go through a full review but you will need to apply for endorsement.
As well as falling in a general DGR category, there are further conditions to be a DGR.
These are the 'in Australia' condition and the need to be endorsed by the ATO. These conditions and other requirements are explained in detail in this chapter.
Registered political parties are entitled to receive tax deductible contributions in much the same way as DGRs can receive tax deductible gifts. These are explained in Registered political parties.
Who can claim deductions?
Deductions for gifts are claimed by the person or organisation that makes the gift (the donor). A donor can be an individual, company, trust or other type of taxpayer.
Donors can claim deductions for most gifts they make to DGRs. When a donor makes a tax deductible gift, it reduces the donor's taxable income but cannot create or add to a tax loss.
EXAMPLE
Donors can find out whether a particular organisation can receive tax deductible gifts from 1 July 2000 by phoning the ATO on 13 24 78 or by searching the ABR at www.business.gov.au.
What types of gifts are deductible?
Most, but not all, types of gifts are tax deductible. There are various limits depending on the type of DGR, valuation and other factors. These are summarised in the DGR table in chapter 2 and explained in detail in chapter 3 - Donors and gifts.
Other conditions for DGRs
As well as falling in a general DGR category or being listed by name as a DGR, there are other requirements. They are:
- endorsement
- receipts
- self-review, and
- in Australia.
The chart below summarises who the conditions apply to and their requirements.
The 'endorsement' condition applies if the organisation is not listed by name as a DGR in the income tax law. It means that, from 1 July 2000, endorsement by the ATO is necessary for gifts to be tax deductible.
If the recipient of a gift is not endorsed and is not listed by name, the gift will not be tax deductible. To be endorsed, an entity will need to have an Australian Business Number (ABN), maintain a gift fund and apply for DGR endorsement.
The 'receipts' condition applies to all DGRs whenever they issue receipts for tax deductible gifts. Certain details must be provided on the receipts. If the details are not included, DGR endorsement can be revoked.
The 'self-review' condition applies to DGRs that are endorsed by the ATO. These DGRs must tell the ATO if they cease to be entitled to DGR endorsement. They should carry out regular self-reviews to check whether they are still entitled.
The 'in Australia' condition applies to all DGR categories except ancillary funds. This condition means that the fund, authority or institution covered by the DGR category must be in Australia. If it is not, gifts are not tax deductible.
Who does the condition apply to? | What does the condition require? | |
Endorsement | All general DGR categories (that is, not DGRs listed by name in the income tax law) | Endorsement by the ATO as a DGR |
Receipts | All DGRs - that is, endorsed DGRs and DGRs listed by name - when they issue a receipt for a tax deductible gift | The DGR must include certain details on receipts |
Self-review | The endorsed DGR must: tell the ATO if it ceases to be entitled to DGR endorsement, and provide information to the ATO when requested | |
In Australia | All DGR categories including DGRs listed by name, but not ancillary funds | The fund, authority or institution covered by the DGR category must be in Australia |
Endorsement
QUICK REFERENCE
- the entity is endorsed as a DGR in its own right, and
- the entity is endorsed as a DGR only for a fund, authority or institution that it operates.
- have an Australian Business Number (ABN)
- maintain a gift fund, and
- apply to the ATO for DGR endorsement.
The 'endorsed' condition applies to all DGR categories (except DGRs listed by name in the income tax law). These organisations must be endorsed by the ATO. If you are not endorsed, donors cannot claim income tax deductions for the gifts they make to you on or after 1 July 2000.
The pre-requisites to endorsement are that you fall in a DGR category and you are in Australia (unless you are an ancillary fund).
Introduction
To be endorsed, an organisation must have an ABN. The ABN registration form will ask the applicant about being a deductible gift recipient. Applicants who answer 'yes' to this question will automatically be sent an Application for endorsement as a deductible gift recipient. Entities should apply for DGR endorsement on this form using the accompanying instructions.
An organisation should only lodge the form if it has worked out that it is entitled to endorsement. Entitlement is explained in this guide and in the instructions that accompany the application form.
DGRs that already have an ABN and did not indicate their DGR status on the ABN application form will need to contact the ATO to obtain a DGR endorsement application form.
If an organisation has previously received written confirmation from the ATO that it is gift deductible, it must still apply for endorsement. It can check previous confirmation by writing to the ATO. This information will help streamline the application process.
For other organisations, the ATO may carry out a review of their entitlement before deciding whether to endorse them.
Once an application has been processed, the ATO will send a written notice of endorsement.
Two types of endorsement
There are two types of endorsement:
- where an entity falls within a DGR category, and
- where a fund, authority or institution that is operated by an entity falls within a DGR category.
If an entity falls within a DGR category in its own right, it is the entity that can be endorsed. Entities for these purposes include corporations, unincorporated associations, trusts, partnerships and government entities.
EXAMPLE
EXAMPLE
The second type of endorsement applies if a fund, authority or institution is part of an entity. For this type of endorsement, it is the entity that must be endorsed, but it is only endorsed for the particular fund, authority or institution.
EXAMPLE
EXAMPLE
For the second type of endorsement, the endorsement does not make the entity into a DGR in its own right. Only gifts made to the fund, authority or institution can be deductible.
EXAMPLE
If an entity operates more than one fund, authority or institution, it will need a separate endorsement for each.
EXAMPLE
The second type of endorsement does not apply if an entity establishes another entity.
EXAMPLE
The requirements for endorsement
- have an Australian Business Number
- maintain a gift fund, and
- apply to the ATO for endorsement as a DGR.
Australian Business Number
For an entity to be endorsed as a DGR, it must have an Australian Business Number (ABN). If an entity does not have an ABN, it cannot be endorsed.
The ABN is a new single identifier for your business dealings with the ATO and for future dealings with other government departments and agencies. The Registrar of the Australian Business Register (who is currently the Commissioner of Taxation) administers the Register.
You can apply for an ABN on an application form available from the sources listed on the back cover of this guide. How to apply for an ABN is explained further - Australian Business Number.
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.
The requirement for an ABN only applies to DGR categories that need endorsement. DGRs that are listed by name in the income tax law do not need an ABN for gift deductibility, however most will have an ABN for other reasons.
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.
NOTE
Gift fund
A pre-requisite to DGR endorsement is that the entity maintains a gift fund. If the entity is seeking endorsement in its own right, the gift fund must be for the entity as such. If it is seeking endorsement for a fund, authority or institution it operates, the gift fund must be only for that fund, authority or institution.
A gift fund has these characteristics:
- it is a fund
- it is maintained for the principal purpose of the entity or of the fund, authority or institution
- all gifts of money or property for that purpose are made to it
- any money received by the entity because of such gifts is credited to it
- it does not receive any other money or property
- the fund is used only for the principal purpose of the entity or of the fund, authority or institution, and
- the entity is required - by a law, its constituent documents or governing rules - to transfer any surplus assets of the fund to another gift deductible fund, authority or institution when the fund is wound up or the DGR endorsement revoked, whichever is earlier.
Setting up a gift fund
A gift fund should be set up as part of the entity or of the fund, authority or institution. It may have its own rules or constitution, or they may be part of the governing documents of the entity or of the fund, authority or institution.
The rules or governing documents should provide evidence of the gift fund's existence, name, purpose and operations.
If the DGR category is a fund (for example, a school building fund or necessitous circumstances fund), it must maintain a separate fund as its gift fund. However, this will not apply if the fund itself satisfies the gift fund requirements.
EXAMPLE
EXAMPLE
If an entity operates more than one fund, authority or institution, it must maintain a separate gift fund for each. For example, a school operating a school building fund and a public library would need to maintain separate gift funds for each.
EXAMPLE
Purpose of a gift fund
The gift fund must be maintained for the principal purpose of the entity or of the fund, authority or institution.
EXAMPLE
If the fund is operated only for some minor purpose, it will not satisfy the gift fund requirement.
EXAMPLE
Operating a gift fund
Maintaining a gift fund entails banking money separately and specifically identifying items of property. The money and property of the gift fund must be clearly separate from that of the rest of the entity and accounted for accordingly.
EXAMPLE
Money or property received by a gift fund
The amounts that must be credited to a gift fund are:
- all gifts of money or property made for the principal purpose. This includes testamentary gifts and gifts that are not tax deductible for the donor. It also includes distributions from charities or other DGRs (if made for the principal purpose), and
- money received because of these gifts, including proceeds from the sale of gifted property, and investment returns from gifted money or property that continues to be part of the gift fund.
Amounts that are not gifts are not to be credited to a gift fund. They include:
- receipts from sponsorships or commercial activities, and
- proceeds of raffles, charity auctions, dinners and the like.
If money or property is incorrectly received, it is to be removed from the gift fund as soon as practicable, with the accounts adjusted and noted accordingly. The gift fund will need procedures to ensure only and all the proper amounts are credited to it.
Uses of a gift fund
The gift fund must only be used for the principal purpose of the entity or of the fund, authority or institution.
EXAMPLE
- transferring money or property to the entity or to the fund, authority or institution for its current and continuing use
- purchases of property or services for use by the entity or the fund, authority or institution
- reasonable costs of managing the gift fund (for example, bank charges, stationery, accounting and audit fees relating expressly to the gift fund)
- professional fees for fund raising, and
- investment, if it is consistent with carrying out of the principal purpose of the entity or of the fund , authority or institution.
EXAMPLE
EXAMPLE
Winding up a gift fund
An entity must be required - by a law, its constituent documents or governing rules - to transfer any surplus assets of the fund to another gift deductible fund, authority or institution on the earlier of:
- the fund being wound up, or
- the DGR endorsement being revoked.
EXAMPLE
If an entity is a DGR in relation to more than one fund, authority or institution it operates, the transfer may be made to another of its gift funds.
Consequences of not maintaining a gift fund
If an entity is not maintaining a gift fund, it cannot be endorsed as a DGR.
If an entity that is endorsed as a DGR stops maintaining a gift fund, it ceases to be entitled to endorsement. It must then notify the ATO so that the ATO can revoke its endorsement.
However, if the failure is merely an administrative error and not intentional, and is rectified in a short time, endorsement will not be withdrawn.
EXAMPLE
Applying for endorsement
You can apply to the ATO for endorsement if you:
- have an ABN
- fall in a DGR category or operate a fund, authority or institution that falls in a DGR category (see table in chapter 2)
- maintain a gift fund, and
- are in Australia, or your fund, authority or institution, is in Australia (unless you are an ancillary fund).
The relevant application form is called an Application for endorsement as a deductible gift recipient. If you have an ABN, you can obtain one of these forms by contacting the ATO on 13 24 78.
How to apply
The application will ask you to verify that you meet the conditions to be entitled to endorsement. It will also ask whether the ATO has previously accepted you as being gift deductible.
Organisations previously accepted by the ATO
If you have previously been accepted by the ATO as being gift deductible, the application will ask for your 'DGR number'. You can find this on the letter you received from the ATO stating that you were gift deductible. The letter would have asked you to state the number on receipts. It will be a nine digit number beginning with the numerals 900 or a six digit number. If you have lost the letter or your letter does not give a 'DGR number', write to the ATO and we will send it to you.
EXAMPLE
EXAMPLE
Putting the 'DGR number' on the application means that the ATO should not need to re-establish your status and should be able to process your application without further query.
Organisations not previously accepted by the ATO
If you have not previously received confirmation of gift deductible status from the ATO, we may need to do some further checking. If the ATO decides that more information is needed, we will contact you. Do not send any supporting material with your application.
Applying for a fund, authority or institution you operate
If you are applying for endorsement for a fund, authority or institution you operate, the application will ask for details of it. This sort of endorsement is explained here.
If there is more than one fund, authority or institution for which you want endorsement, use a separate application for each.
If you are seeking endorsement for yourself and also for a fund, authority or institution you operate, use separate applications for the different endorsements.
EXAMPLE
When does endorsement commence?
The application will ask you for the date from which you want to be endorsed.
The earliest possible date is 1 July 2000. From that date, donors can only claim income tax deductions for the gifts they make to you while you are endorsed.
EXAMPLE
EXAMPLE
Notification of endorsement
The ATO will advise each applicant of the outcome of an application. Notification will be in writing, confirming the ATO has either:
- endorsed the applicant, or
- refused endorsement.
If there are delays in notification
If you believe the ATO is too slow in notifying you about whether you are 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 the ATO of your wish to have your application 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 the ATO information or documentation that it had requested.
To have your application treated as if it had been refused, you must give the ATO 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.
You then have a right to lodge an objection to the deemed refusal and have the decision reviewed.
Review rights
If endorsement is refused, the ATO will provide you with a clear explanation of its decision. At your request, we will review any of our decisions or actions affecting you and try to resolve any problems quickly and informally. If you want us to do this, you should contact the person handling your case or the Tax Office where the decision was made or action was undertaken.
You also have the right under the income tax law to ask the ATO for a review by lodging an objection against the refusal, or deemed refusal. Your objection must be in writing and addressed to the Tax Office that made the decision. Your letter should explain what you think is wrong and why. This will enable us to consider all the facts when conducting the review.
We will advise you in writing of our decision on your objection and provide reasons for the decision.
If you are dissatisfied with the ATO's decision in relation to your objection, you may have the right to a review by the Administrative Appeals Tribunal or you can appeal to the Federal Court. Our letter that accompanies the notice of decision on your objection will explain the steps you need to follow to exercise your rights of review or appeal.
Receipts
QUICK REFERENCE
- All DGRs - whether they are endorsed or listed by name in the income tax law - must provide specified information when they issue receipts for tax deductible gifts.
- Endorsement can be revoked if a DGR fails to give specified information on receipts.
When a DGR gives a receipt for a tax deductible gift, the income tax law specifies the information that must be included on it. The receipt must state:
- the name of the fund, authority or institution to which the gift has been made
- the DGR's ABN (if any), and
- the fact that the receipt is for a gift.
This requirement does not only apply to endorsed DGRs, it also applies to DGRs that are listed by name in the income tax law. The only DGRs that do not have to include their ABN on receipts are those DGRs listed by name in the income tax law that do not have an ABN.
If an endorsed DGR does not provide the above information on its receipts, its endorsement may be revoked.
EXAMPLE
- 'ZXC School Building Fund'
- the ABN of ZXC School, and
- that the receipt is for a gift.
The other information commonly included on receipts which will help donors make their claims for income tax deductions includes:
- the amount of money donated
- a description of any gifts of property, and
- the date of the gift.
Self-review
QUICK REFERENCE
- Endorsed DGRs need to regularly review whether they are entitled to endorsement, including whether they are still maintaining a gift fund.
- A DGR must tell the ATO if it ceases to be entitled to endorsement.
- Endorsement can be revoked if a DGR is not entitled to endorsement, fails to maintain a gift fund, does not give specified information on receipts, or does not provide information when requested.
Endorsed DGRs must tell the ATO if they cease to be entitled to endorsement. Things that can affect entitlement are changes to purpose and operations, maintaining a gift fund, the 'in Australia' requirement and the gift receipts you issue. This obligation means that you will need to carry out regular reviews of your status.
The income tax law does not require any particular intervals between self-reviews, but the ATO recommends a yearly review. There should also be a review when there is a major change in your structure or operations.
To help you carry out a self-review, we have provided worksheets at the back of this guide. You will only need to complete the worksheet that applies to you and it will take you through the essential points.
If you go through the worksheet and find you are no longer entitled to endorsement, you must tell the ATO. You must do this before entitlement ceases or as soon as practicable afterwards. Failure to notify us of the loss of entitlement may result in prosecution. If you cease to be entitled because you cease to have an ABN, you do not have to tell the ATO.
If you have gone through the worksheet and find you are still entitled, you do not have to contact the ATO and your status continues unchanged.
A log to record your reviews has also been included at appendix 3 to give you a snapshot of the reviews you have carried out over the years. It will help future office-bearers of your organisation and will also help if the ATO conducts a review of your status.
ATO review
As part of its general administration of taxation laws, and to ensure only genuine entities or funds receive DGR concessions, the ATO will carry out reviews of endorsed DGRs.
The reviews will help establish if DGRs are in fact entitled to endorsement.
The ATO may request that you provide information and documents that are relevant to your entitlement to endorsement. You will be given at least 28 days to provide the information and documents. Failure to comply can lead to endorsement being revoked, and to prosecution.
Revoking endorsement
The ATO 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 by the ATO, or
- it has not given the specified information on receipts.
The ATO will provide written notice of the revocation. The revocation has effect from a date specified by the ATO. The date may be retrospective.
If an entity is dissatisfied with the revocation of its DGR endorsement, it can lodge an objection against the revocation. It must do this in writing to the ATO, giving the grounds for the objection.
In Australia
QUICK REFERENCE
- The 'in Australia' condition applies to all DGR categories (except ancillary funds).
- This generally requires:
- establishment and operation in Australia, and
- purposes and beneficiaries in Australia.
The 'in Australia' condition applies to all DGR categories (except ancillary funds). This means that the organisation must be in Australia.
If it is not in Australia, it cannot be a DGR.
Funds
If the DGR category is a fund (for example, a school building fund or necessitous circumstances fund), the fund itself must be established and operated in Australia.
EXAMPLE
For most funds, the purposes or beneficiaries of the fund must also be in Australia.
EXAMPLE
The purposes or beneficiaries of a fund do not have to be in Australia if the fund is in one of these DGR categories:
- overseas aid funds
- public funds on the register of environmental organisations, or
- DGRs listed by name in the income tax law if the Government of the day (when they were listed) approved overseas purposes or beneficiaries.
For these funds, it is still necessary that the fund itself is established and operated in Australia.
Institutions and authorities
DGR categories that are not funds are institutions or authorities. Examples are public benevolent institutions, public libraries and approved research institutes. For institutions and authorities to be in Australia, they must:
- be established and operated in Australia (including control, activities and assets), and
- have their purposes and beneficiaries in Australia.
EXAMPLE
EXAMPLE
If the overseas activities are merely incidental to its Australian operations or minor in extent and importance, an institution or authority can still meet the 'in Australia' requirement.
EXAMPLE
The purposes and beneficiaries of an institution or authority do not need to be confined to Australia if it is listed by name in the income tax law and the Government of the day (when it was listed) approved overseas purposes or beneficiaries.
Need more information?
If you have any questions after reading this guide, or if you need more information, please contact the information sources at the end of this guide.
The DGR Table
The DGR table lists the various types of deductible gift recipients (DGRs). It will help you to work out:
- the requirements an organisation must satisfy to be a DGR
- the types of tax deductible gifts a DGR can receive, and
- a DGR's ongoing obligations.
The table will refer you to other parts of GiftPack to fully explain the requirements that apply.
The parts of the DGR table
There are two main parts to the DGR table.
DGR table - general categories
The first part of the table lists all the general categories of DGRs (for example, public universities, school building funds and public benevolent institutions).
The second part lists the DGRs that are listed by name in the income tax law (for example, Amnesty International and Landcare Australia Limited). These organisations are listed as they appear in the income tax law.
Both parts have the following components:
- DGR group
DGRs are sorted into the following groups:- health
- education
- research
- welfare and rights
- defence
- environment
- industry, trade and design
- the family
- international affairs
- sports and recreation
- philanthropic trusts
- cultural organisations, and
- other recipients.
- DGR category
There are various categories of DGRs within each group. Depending on which part of the table you are in, this will be either a general category description or the actual name of an organisation.
- Item number
The income tax law lists DGR categories under item numbers. The table shows the item number relevant to the DGR category.
- Explanation of terms
Some DGR category descriptions are explained further in Explanation of terms in the table. Where a DGR category description refers you to an explanation, you must also meet the additional descriptions in the explanation.
- Other conditions
An organisation may need to satisfy other conditions to be a DGR. These are explained in chapter 1. The other conditions are:- endorsement
- receipts
- self-review, and
- in Australia.
- Types of gifts
Only certain types of gifts to particular DGRs are tax deductible to donors. Types of gifts are explained in chapter 3. The types are:- $2 or more (money)
- property<12 mths (property purchased during the 12 months before the gift was made)
- trading stock
- cultural gifts
- cultural bequests, and
- National Estate
- Gift condition
For some DGRs, the income tax law adds further conditions relating to the gifts they can receive. For example, gifts may only be tax deductible between certain dates or for a particular purpose. The table shows the gift conditions, if any, for each DGR category.
How to use the DGR table
The DGR table will help you find out whether an organisation is a DGR and the types of gifts it can receive. We suggest you follow the steps outlined in the example below when using the table.
Example
XYZ Agency could fall under the health or research groups. You may have to search both these areas to locate the category under which XYZ Agency falls.Step 2
As XYZ Agency is not listed by name under either health or research, you will have to locate the general description that suits the Agency's purpose. Public authority for research (item 1.1.4) and Approved research institute (item 3.1.1) are categories of DGRs engaged in research. If it has not been approved as an Approved research institute, the description of Public authority for research (item 1.1.4) may still apply.Step 3
Item 1.1.4 has a reference to 'public authority' in the Explanation of terms in the table. XYZ Agency will have to satisfy the description of 'public authority' as well as the description in step 2.Step 4
XYZ Agency must meet the following 'other conditions' - it must be endorsed, issue receipts correctly, conduct self-reviews and be in Australia.Step 5
The following types of tax deductible gifts can be made to XYZ Agency - gifts of $2 or more, property <12 months, and trading stock. These terms are explained in chapter 3.Step 6
XYZ Agency has a gift condition. That is, for gifts to XYZ Agency to be tax deductible to donors, they must be made to XYZ Agency for the purpose of research into the causes, prevention or cure of disease in human beings, animals or plants.These steps are explained again in the diagram below.
DGR table - general categories
DGR table - general categories | Item Number | Other conditions | Type of gift |
Health | |||
Public hospital | 1.1.1 |
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Non-profit hospital - a hospital carried on by a society or association otherwise than for the purposes of profit or gain to the individual members of the society or association. A 'hospital' is an institution in which patients are received for continuous medical care and treatment for sickness, disease or injury. Providing accommodation is integral to a hospital's care and treatment. Clinics that mainly treat ambulatory patients who return to their homes after each visit are not hospitals. However, day surgeries that provide beds for patients to recover after surgery may be hospitals. Homes providing nursing care in respect of feeding, cleanliness and the like are not hospitals. However, nursing homes for persons suffering from illness are accepted as hospitals. Hospices for the terminally ill will generally be hospitals. Minor out-patient and nursing care will not prevent an institution being a hospital. A society or association will be non-profit if it is prevented, by law or its governing documents, from distributing profits and its actions are consistent with the prohibition. The hospital may be carried on to make a profit but those profits must not find their way, directly or indirectly, to the individual members of the society or association. It is not necessary that the hospital is carried on for the general public. Examples are hospitals run by churches and religious orders. | 1.1.2 |
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Public fund for public and non-profit hospitals --a public fund established before 23 October 1963 and maintained for the purpose of providing money for a public hospital or a non-profit hospital (covered by items 1.1.1 or 1.1.2) or for the establishment of such hospitals. 'public fund' is explained here.
| 1.1.3 |
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Public authority for research - a public authority engaged in research into the causes, prevention or cure of disease in human beings, animals or plants. 'Public authority' is explained here. The activities of the public authority do not need to be limited to such research. It may engage in other activities. Gift condition: a gift will only be tax deductible if it is made to the public authority for research into the causes, prevention or cure of disease in human beings, animals or plants. | 1.1.4 |
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Public institution for research - a public institution engaged solely in research into the causes, prevention or cure of disease in human beings, animals or plants. Such an institution will be a public institution if:
The activities of the public institution must be confined to research into the causes, prevention or cure of disease in human beings, animals or plants. | 1.1.5 |
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Education | |||
Public university | 2.1.1 |
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Public fund for the establishment of a public university 'public fund' is explained here. | 2.1.2 |
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Higher education institution - a higher education institution within the meaning of the Employment, Education and Training Act 1988. The higher education institutions are listed in Schedule 1 to that Act. They include University of South Australia, Central Queensland University, Monash University, Southern Cross University and Batchelor College. |
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Residential educational institution - a residential educational institution affiliated under statutory provisions with a public university. The affiliation with the public university must be under the university's statutory provisions. It is the residential educational institution that must be affiliated rather than a building it uses. Examples include residential colleges established under public universities statutes. | 2.1.4 |
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Commonwealth residential educational institution - a residential educational institution established by the Commonwealth. Affiliated residential educational institution - a residential educational institution that is affiliated with a higher education institution within the meaning of the Employment, Education and Training Act 1988. The higher education institutions are discussed at item 2.1.3. Examples include residential colleges of the higher educational institutions. | 2.1.5 |
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Affiliated residential educational institution - a residential educational institution that is affiliated with a higher educational institution within the meaning of the Employment, Education and Training Act 1988. | 2.1.6 |
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TAFE - an institution that the Minister for Education, Training and Youth Affairs has declared, by signed instrument, to be a technical and further education institution within the meaning of the Employment, Education and Training Act 1988. Gift condition: gifts must be for:
| 2.1.7 |
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Public fund for religious instruction in government schools - a public fund established and maintained solely for the purpose of providing religious instruction in government schools in Australia. 'public fund' is explained here. | 2.1.8 |
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Roman Catholic public fund for religious instruction in government schools - a public fund established and maintained by a Roman Catholic archdiocesan or diocesan authority solely for the purpose of providing religious instruction in government schools in Australia. 'public fund' is explained here. | 2.1.9 |
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School building fund School building funds are explained here. | 2.1.10 |
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Public fund for rural school hostel building - a public fund established and maintained solely for providing money for the acquisition, construction or maintenance of a rural school hostel building. 'public fund' is explained here. The building must be used, or going to be used, principally as residential accommodation for students:
The costs of the school must be solely or partly funded by the Commonwealth, a State or a Territory. The residential accommodation must be provided by:
| 2.1.11 |
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Life Education company - a company that conducts life education programs under the auspices of the Life Education Centre. The company must be:
Gift condition: the gift must be for the conduct of such programs. |
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Research | |||
Approved research institute - an approved research institute is:
as an approved research institute for the purposes of section 73A of the Income Tax Assessment Act 1936 for undertaking scientific research which is or may prove to be of value to Australia. Guidelines on approved research institutes may be obtained from: CSIRO Gift condition: only gifts for the purposes of scientific research in the field of natural or applied science are deductible. | 3.1.1 |
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The Commonwealth Gift condition: only gifts made for the purposes of research in the Australian Antarctic Territory will be deductible. | 3.2.3 |
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Welfare and rights | |||
Public benevolent institution - a non-profit institution whose dominant purpose is the direct relief of poverty, sickness, destitution, suffering or misfortune and for the benefit of the community, or a section of it. 'Public benevolent institution' is explained further here. | 4.1.1 |
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Public fund for public benevolent institutions - a public fund established before 23 October 1963 and maintained for the purpose of providing money for public benevolent institutions or for the establishment of public benevolent institutions. 'public fund' is explained here. 'Public benevolent institution' is explained here. | 4.1.2 |
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Public fund for persons in necessitous circumstances - a public fund established and maintained for the relief of persons in Australia who are in necessitous circumstances. 'public fund' is explained here. The other requirements are explained here. | 4.1.3 |
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Defence | |||
The Commonwealth or a State Gift condition: only gifts made for the purposes of defence will be deductible. | 5.1.1 |
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Public institution or public fund for members of the armed forces - a public institution or public fund established and maintained for the comfort, recreation or welfare of members of the armed forces of any part of Her Majesty's dominions, or of any allied or other foreign force serving in association with Her Majesty's armed forces. 'public fund' is explained here. Such an institution will be a public institution if:
| 5.1.2 |
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Environment |
| ||
Public fund on the register of environmental organisations - a public fund that is on the register of environmental organisations kept by the Department of the Environment and Heritage (also known as Environment Australia). Contact details for finding whether a public fund is on the register: International and Coordination Branch Telephone Facsimile (02) 6274 1858 E-mail reo@ea.gov.au Web site www.environment.gov.au If an organisation wants to be registered on the Register of Environmental Organisations, it must meet several requirements, including:
The Treasurer and the Minister for the Environment and Heritage will decide whether to register the organisation and its public fund. This decision is not made by the ATO. For full information on applying to be registered, contact the Department of the Environment and Heritage. Gift condition: the public fund must be listed on the Register of Environmental Organisations when the gift is made. | 6.1.1 |
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The family | |||
Public fund for an approved marriage guidance organisation - a public fund established and maintained solely for the purpose of providing money to be used in giving or providing marriage education under the Marriage Act 1961, or family and child mediation or family and child counselling under the Family Law Act 1975, to persons in Australia. 'public fund' is explained here. The services must be given or provided through a voluntary organisation (or its branch or section). The organisation (or its branch or section) must be approved by the Attorney-General under section 9C of the Marriage Act 1961 or section 13A or 13B of the Family Law Act 1975. Applications for approval by the Attorney-General should be forwarded to: The Assistant Secretary Family Relationships Branch | 8.1.1 |
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International affairs | |||
Overseas aid fund - a public fund that the Treasurer has declared, by notice in the Gazette, to be a relief fund. Contact details for finding whether a public fund has been declared a relief fund are: The Director Telephone (02) 6206 4950 For a fund to be a relief fund, it must meet several requirements:
For full information on applying to be a relief fund, contact AusAID. Gift condition: the Treasurer's declaration must be in force at the time the gift is made. | 9.1.1 |
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Sports and recreation | |||
Guides branch - an institution that is known as a State or Territory branch of Guides Australia Incorporated. |
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Scout branch - an institution that is known as a State or Territory branch of the Scout Association of Australia. |
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Philanthropic trusts | |||
There are no general DGR categories for this DGR group. | N/A | N/A | N/A |
Public fund on the register of cultural organisations - a public fund maintained by an organisation that is on the Register of Cultural Organisations kept by the Department of Communications, Information Technology and the Arts (formerly Communications and the Arts). Contact details for finding whether a public fund is on the register are: The Manager Telephone (02) 6271 1640 If an organisation wants to be registered on the Register of Cultural Organisations, it must meet several requirements, including:
The Treasurer and the Minister for Communications, Information Technology and the Arts will decide whether to register the organisation and its public fund. This decision is not made by the ATO. For full information on applying to be registered, contact the Department of Communications, Information Technology and the Arts. Gift condition: the public fund must be listed on the Register of Cultural Organisations when the gift is made. | 12.1.1 |
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Public library | 12.1.2 |
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Public museum | 12.1.3 |
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Public art gallery | 12.1.4 |
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Institution consisting of a public library, public museum and public art gallery or of any 2 of them | 12.1.5 |
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Ancillary fund | N/A |
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DGR table - listed by name
DGR table - listed by name | Item Number | Other conditions | Type of gift |
Health | |||
The Royal Australian and New Zealand College of Obstetricians and Gynaecologists | 1.2.1 |
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the Australian College of Occupational Medicine | 1.2.2 | As Above | As Above |
the Australian Postgraduate Federation in Medicine | 1.2.3 | As Above | As Above |
the College of Radiologists in Australasia | 1.2.4 | As Above | As Above |
the New South Wales College of Nursing | 1.2.5 | As Above | As Above |
the Royal Australian and New Zealand College of Psychiatrists | 1.2.6 | As Above | As Above |
the Royal Australian College of General Practitioners | 1.2.7 | As Above | As Above |
the Royal Australasian College of Physicians | 1.2.8 | As Above | As Above |
the Royal Australasian College of Surgeons | 1.2.9 | As Above | As Above |
the Royal College of Pathologists of Australasia | 1.2.10 | As Above | As Above |
the Australian Regional Council of the Royal College of Obstetricians and Gynaecologists | 1.2.11 | As Above | As Above |
the Royal College of Nursing, Australia | 1.2.12 | As Above | As Above |
the Australian and New Zealand College of Anaesthetists | 1.2.13 | As Above | As Above |
Education | |||
The Academy of the Social Sciences in Australia Incorporated | 2.2.1 |
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The Australian Academy of Science | 2.2.2 | As Above | As Above |
the Australian Academy of the Humanities for the Advancement of Scholarship in Language, Literature, History, Philosophy and the Fine Arts | 2.2.3 | As Above | As Above |
the Australian Academy of Technological Sciences and Engineering Limited | 2.2.4 | As Above | As Above |
the Australian Administrative Staff College | 2.2.5 | As Above | As Above |
the Australian and New Zealand Association for the Advancement of Science | 2.2.6 | As Above | As Above |
the Australian Ireland Fund | 2.2.7 | As Above | As Above |
the Life Education Centre (see also item 2.2.9 in The DGR table - general categories) | 2.2.8 | As Above | As Above |
the Council for Christian Education in Schools | 2.2.10 | As Above | As Above |
the Council for Jewish Education in Schools | 2.2.11 | As Above | As Above |
H.R.H. The Duke of Edinburgh's Commonwealth Study Conferences (Australia) Incorporated. | 2.2.12 | As Above | As Above |
the Lionel Murphy Foundation | 2.2.13 | As Above | As Above |
the Marcus Oldham Farm Management College
| 2.2.14 | As Above | As Above |
the Constitutional Centenary Foundation Incorporated | 2.2.15 | As Above | As Above |
the Polly Farmer Foundation (Inc) | 2.2.16 | As Above | As Above |
The Australian Council of Christians and Jews | 2.2.17 | As Above | As Above |
the Sir William Tyree Foundation of The Australian Industry Group | 2.2.18 | As Above | As Above |
Research | |||
the Centre for Independent Studies | 3.2.1 |
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the Ian Clunies Ross Memorial Foundation | 3.2.2 | As Above | As Above |
The Commonwealth | 3.2.3 | As Above | As Above |
The Menzies Research Centre Public Fund | 3.2.4 | As Above | As Above |
Welfare and rights | |||
Amnesty International | 4.2.1 |
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the Child Accident Prevention Foundation of Australia | 4.2.2 | As Above | As Above |
the National Foundation for Australian Women Limited | 4.2.3 | As Above | As Above |
the National Safety Council of Australia | 4.2.4 | As Above | As Above |
the Pearl Watson Foundation Limited | 4.2.5 | As Above | As Above |
the Royal Society for the Prevention of Cruelty to Animals New South Wales | 4.2.6 | As Above | As Above |
the Royal Society for the Prevention of Cruelty to Animals (Victoria) | 4.2.7 | As Above | As Above |
the Royal Queensland Society for the Prevention of Cruelty | 4.2.8 | As Above | As Above |
the Royal Society for the Prevention of Cruelty to Animals (South Australia) Incorporated | 4.2.9 | As Above | As Above |
the Royal Society for the Prevention of Cruelty to Animals Western Australia (Incorporated) | 4.2.10 | As Above | As Above |
the R.S.P.C.A.(Tasmania) Incorporated | 4.2.11 | As Above | As Above |
the Society for the Prevention of Cruelty to Animals (Northern Territory) | 4.2.12 | As Above | As Above |
the Royal Society for the Prevention of Cruelty to Animals (A.C.T.) Incorporated | 4.2.13 | As Above | As Above |
the R.S.P.C.A Australia Incorporated | 4.2.14 | As Above | As Above |
The Business Against Domestic Violence Reserve | 4.2.15 | As Above | As Above |
Katherine District Business Re-establishment Fund | 4.2.16 | As Above | As Above |
Defence | |||
The Commonwealth or a State | 5.1.1 |
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Shrine of Remembrance Restoration and Development Trust | 5.2.1 | As Above | As Above |
Australian National Korean War Memorial Trust Fund | 5.2.6 | As Above | As Above |
The National Nurses' Memorial Trust | 5.2.7 | As Above | As Above |
Mount Macedon Memorial Cross Restoration, Development and Maintenance Trust Fund | 5.2.8 | As Above | As Above |
Environment | |||
the Australian Conservation Foundation Incorporated
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Greening Australia Limited | 6.2.2 | As Above | As Above |
Landcare Australia Limited | 6.2.3 | As Above | As Above |
the National Parks Association of New South Wales | 6.2.4 | As Above | As Above |
the Victorian National Parks Association | 6.2.5 | As Above | As Above |
Trust for Nature (Victoria) | 6.2.6 | As Above | As Above |
the National Parks Association of Queensland | 6.2.7 | As Above | As Above |
The Nature Conservation Society of South Australia Incorporated | 6.2.8 | As Above | As Above |
the National Parks Foundation of South Australia Incorporated | 6.2.9 | As Above | As Above |
the Western Australian National Parks and Reserves Association Incorporated | 6.2.10 | As Above | As Above |
the Tasmanian Conservation Trust Incorporated | 6.2.11 | As Above | As Above |
the National Parks Association of the Australian Capital Territory Incorporated | 6.2.12 | As Above | As Above |
6.2.13 |
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The National Trust of Australia (Victoria) | 6.2.14 | As Above | As Above |
The National Trust of Queensland | 6.2.15 | As Above | As Above |
The National Trust of South Australia | 6.2.16 | As Above | As Above |
The National Trust of Australia (W.A.) | 6.2.17 | As Above | As Above |
the National Trust of Australia (Tasmania) | 6.2.18 | As Above | As Above |
The National Trust of Australia (Northern Territory) | 6.2.19 | As Above | As Above |
the National Trust of Australia (AC T.) | 6.2.20 | As Above | As Above |
the Australian Council of National Trusts | 6.2.21 | As Above | As Above |
the World Wide Fund for Nature | 6.2.22 |
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AAP Mawson's Huts Foundation Limited | 6.2.23 | As Above | As Above |
Industry, trade and design | |||
the Industrial Design Council of Australia | 7.2.1 |
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the Productivity Promotion Council of Australia | 7.2.2 | As Above | As Above |
the Work Skill Australia Foundation Incorporated | 7.2.3 | As Above | As Above |
The family | |||
the Nursing Mothers' Association of Australia | 8.2.1 |
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the Stolen Children's Support Fund | 8.2.2 | As Above | As Above |
International affairs | |||
the Australian Institute of International Affairs | 9.2.1 |
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the Australian National Travel Association | 9.2.2 | As Above | As Above |
The Foundation for Development Cooperation Ltd | 9.2.3 | As Above | As Above |
Australian American Education Leadership Foundation Limited | 9.2.4 | As Above | As Above |
Sydney Talmudical College Association Refugees Overseas Aid Fund | 9.2.5 | As Above | As Above |
United Israel Appeal Refugee Relief Fund Limited | 9.2.6 | As Above | As Above |
the Asia Society AustralAsia Centre | 9.2.7 | As Above | As Above |
Sports and recreation | |||
the Australian Sports Foundation | 10.2.1 |
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Guides Australia Incorporated | 10.2.2 | As Above | As Above |
the Scout Association of Australia | 10.2.4 | As Above | As Above |
the Australian Games Uniform Company Limited | 10.2.6 | As Above | As Above |
Philanthropic trusts | |||
the Connellan Airways Trust | 11.2.1 |
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The Friends of the Duke of Edinburgh's Award in Australia Incorporated | 11.2.2 | As Above | As Above |
the Herbert Vere Evatt Memorial Foundation Incorporated | 11.2.3 | As Above | As Above |
the Playford Memorial Trust | 11.2.4 | As Above | As Above |
The Sir Robert Menzies Memorial Foundation Limited | 11.2.5 | As Above | As Above |
the Queen Elizabeth II Silver Jubilee Trust for Young Australians | 11.2.6 | As Above | As Above |
the Winston Churchill Memorial Trust | 11.2.7 | As Above | As Above |
Cultural organisations | |||
Artbank - The Commonwealth (for the purposes of Artbank) | N/A |
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The Australiana Fund | 12.2.1 |
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Australia Foundation for Culture and the Humanities Ltd. | 12.2.2 |
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The Centenary of Federation Trust Fund | 12.2.3 | As Above | As Above |
Other recipients | |||
St Patrick's Cathedral Parramatta Rebuilding Fund |
Proposed DGR Categories
The income tax law is sometimes changed to add new DGR categories. If an organisation or type of organisation is not listed in the table, you can contact the ATO to confirm their gift deductible status.
The Government has recently announced the addition of more DGR categories. These additions had not become law at the time GiftPack was prepared. The Government intends to introduce legislation to allow deductions for gifts of $2 or more to:
- Shrine of Remembrance Restoration and Development Trust: deductibility extended to cover gifts made from 1 July 1999 to 30 June 2005.
- Australian National Korean War Memorial Trust Fund: deductibility extended to cover gifts made from 2 September 1999 and before 2 September 2000.
- The National Nurses' Memorial Trust: deductibility extended to cover gifts made from 4 September 1999 and before 4 January 2000.
- Community Disaster Relief (Sydney Hail Storm Assistance) Fund: for gifts made after 14 April 1999 and before 15 April 2001.
- The Global Foundation: for gifts made from 3 November 1999.
- The Linton Trust: for gifts made after 2 December 1998 and before 3 December 2000.
- Foundation for Rural and Regional Renewal Public Fund: for gifts made from 29 March 2000.
- United Hellenic Earthquake Appeal: for gifts made after 6 September 1999 and before 7 September 2000.
- Australian Ex-Prisoners of War Memorial Fund: for gifts made after 19 October 1999 and before 20 October 2001.
- The Foundation for Gambling studies: for gifts made after 8 March 2000.
- St Patrick's Cathedral Parramatta Rebuilding Fund: deductibility extended to cover gifts made after 24 February 2000 and before 25 February 2002.
Registered political parties
Political parties are not DGRs, however contributions to them, including membership fees, may be claimed as income tax deductions. The recipient must be a political party that is registered under Part XI of the Commonwealth Electoral Act 1918.
The most a contributor can claim in an income year is $100.
The contribution must be:
- money, or
- property that the contributor purchased during the 12 months before making the contribution.
Some contributions cannot be claimed as deductions:
- contributions of value of less than $2
- contributions made by companies, and
- testamentary contributions, that is, contributions made under a will.
Legislative changes affecting contributions and gifts to registered political parties have been proposed to apply from 1 July 1998. The proposals had not become law at the time GiftPack was prepared. If you would like to check the status of these proposals, please phone 13 63 20.
Explanation of terms in the table
Term
Public authority
Public fund
Public benevolent institution
Necessitous circumstances fund
School building fund
Public library, public museum and public art gallery
Ancillary fund
Public Authority
Several DGR categories require that the recipient of gifts be a public authority.
A public authority is an agency or instrument of government exercising power or command for the public advantage. It has governmental authority for doing so. It possesses powers which are exceptional compared to ordinary individuals, but not necessarily coercive powers.
EXAMPLE
Public fund
Various DGR categories require that the recipient of gifts is a public fund.
A government fund will be a public fund where it is established and controlled by a governmental or quasi-governmental authority.
A non-government fund will be a public fund where:
- it is the intention of the promoters or founders that the public will contribute to the fund and they invite such contributions
- the public or a significant part of it does, in fact, contribute to the fund, and
- the public participates in the administration of the fund. This condition will be satisfied where the fund is administered or controlled by persons or institutions who, because of their tenure of some public office or their position in the community, have a degree of responsibility to the community as a whole. Church authorities, school principals, judges, clergy, solicitors, doctors and other professional persons, mayors, councillors, town clerks and members of parliament would satisfy this requirement.
The objects of the fund must be clearly set out and reflect the purpose of the fund. For a fund to be under one of the DGR categories, its objects must conform with the requirements of that particular category.
The fund must have an acceptable dissolution clause: that is, one which provides that on winding-up, any surplus money or other assets must be transferred to some other gift deductible fund maintained by a DGR.
EXAMPLE
The fund must operate on a non-profit basis: that is, monies must not be distributed to members of the managing committee or trustees of the fund except as reimbursement for out-of-pocket expenses incurred on behalf of the fund or as proper remuneration for administrative services.
Gifts to the fund must be kept separate from any other funds of the sponsoring organisation (if there is one). A separate bank account and clear accounting procedures are required.
The fund must invite, and actually receive, contributions from the public.
EXAMPLE
Checklist - am I a public fund?
- are you a fund and not an institution?
- was the intention of the promoters or founders of the fund that the public will contribute to it?
- does the public, or a significant part of it, in fact contribute to the fund?
- is the fund administered or controlled by persons or institutions who, because of their tenure of some public office or their position in the community, have a degree of responsibility to the community as a whole?
- is the fund operated on a non-profit basis, with suitable non-profit and dissolution clauses in its constituent or governing documents?
If you are a public fund, go back to the table to check that you also meet the other requirements to fall within the DGR category that applies to you.
If you are not a public fund, go back to the table to check whether you fall within another DGR category.
Need more information?
Public funds are explained in detail in Taxation Ruling TR 95/27 available from the sources listed at the end of this guide.
Public benevolent institution
A public benevolent institution (PBI) is a non-profit institution organised for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness.
EXAMPLE
- hostels for the homeless
- disability support services
- hospitals and medical clinics
- disaster relief organisations, and
- refugee relief centres.
The characteristics of a PBI are:
- it is set up for needs that require benevolent relief
- it relieves those needs by directly providing services to the people suffering from them
- it is carried on for the public benefit
- it is non-profit
- it is an institution, and
- its dominant purpose is providing benevolent relief.
Needs requiring benevolent relief
The condition or misfortune relieved by a PBI must be such poverty, sickness, suffering, distress, misfortune, disability or helplessness as arouses pity or compassion in the community.
EXAMPLE - PBIs
- Providing hostel accommodation for the homeless.
- Treating sufferers of disease.
- Providing home help for the aged and the infirm.
- Transporting the sick or disabled.
- Rescuing people who are lost or stranded.
Not all degrees of distress or suffering would necessarily have such an effect. For example, the emotional stress and pain encountered in normal daily life associated with such things as failure, deception, loss of status and reputation, and bereavement are not normally the needs for which PBIs cater.
EXAMPLE - non-PBI
Needs to be met by education or training will not normally be such as to arouse community compassion. This includes needs satisfied by vocational training or apprenticeship schemes. However, there will be circumstances where education or training may be among the services provided to alleviate the effects of poverty or helplessness.
EXAMPLE
Relief of need
Organisations that serve people who are in need will only be PBIs if they relieve those needs.
EXAMPLE - non-PBI
The services of some organisations are too broad and not sufficiently focused on meeting such needs to be considered PBIs.
EXAMPLE - non-PBI
The fact that an organisation charges fees will not prevent it from being benevolent. However, the type and level of charges, in light of the services provided, may indicate that an organisation is not a PBI. The waiving of charges for those in financial need can assist to characterise an organisation as a PBI.
Direct provision of services
PBIs provide their services directly to persons in need of relief.
EXAMPLE - PBI
- Medical clinics treating the sick.
- Hostels providing accommodation for the homeless.
- Emergency services rescuing people in peril.
If an organisation exists to promote social welfare in the community generally, it will lack the required direct benevolence. For example, organisations for lobbying, advocacy, research and policy studies and disseminating information are not PBIs.
Organisations which merely play a general role in the field of benevolent relief will not be PBIs. Similarly, an organisation that merely provides information on welfare and/or similar services to the community is not a PBI.
EXAMPLE - non-PBI
- give information and advice to the public on preventing a disease or ailment
- conduct research, training or advocacy about a need or condition, and
- provide equipment and facilities to PBIs and other bodies that help people in need.
Coordinating bodies formed by PBIs to help them provide part of their benevolent services can be PBIs. However, the fact that a body provides services to PBIs is not enough.
EXAMPLE - non-PBI
Public
PBIs operate for the public. They confer relief on an appreciable needy class in the community. An organisation does not have to be controlled or funded by government to operate for the public.
Organisations will not be public in the required sense if:
- benefits are not provided for the public but are provided on such grounds as, for example, personal relations, employment, membership of a voluntary association which can arbitrarily exclude potential applicants (for example, a trade union or cultural association), or
- benefits are provided on a discriminatory basis and not primarily because of need.
EXAMPLE - non-PBI
Limits on who can benefit are acceptable if they are merely to better enable the PBI to provide its public benevolent relief.
Non-profit
A PBI operates on a non-profit basis. That is, its assets or profits are not distributed to members, owners or particular persons, except as reimbursement for out-of-pocket expenses incurred on behalf of the organisation or as proper remuneration for administrative services.
We accept an institution as being non-profit if, by operation of law (for example, a statute governing the institution's activities) or by its constituent documents, it is prevented from distributing its profits or assets among its members while it is functional and on its winding-up. The institution's actions must be consistent with the prohibition.
EXAMPLE
'The assets and income of the organisation shall be applied solely in furtherance of its above mentioned objects and no portion shall be distributed directly or indirectly to the members of the organisation except as bona fide compensation for services rendered or expenses incurred on behalf of the organisation.'Dissolution clause
'In the event of the organisation being wound up, any surplus assets remaining after the payment of the organisation's liabilities shall be transferred to another organisation in Australia which is a public benevolent institution for the purposes of any Commonwealth taxation Act.'
Institution
An institution can have different legal forms. It may be a trust established by will or instrument of trust. It may have the legal structure of an unincorporated association or a corporation. However, incorporation is not enough, on its own, for an organisation to be an institution. What it does - activities, size, permanence, recognition - is also relevant.
EXAMPLE
An organisation that is established, controlled and operated by family members and friends would not normally be an institution.
An entity will not be an institution if it is a trust that merely manages trust property, and/or holds trust property to make distributions to other entities or persons. In contrast, an institution mainly carries out its own activities.
EXAMPLE
Predominantly for benevolent relief
The dominant purpose of a PBI is the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness. Other purposes and activities must be incidental to that purpose. They will be minor in extent and importance.
EXAMPLE
Organisations that provide benevolent services but only as part of broader purposes or operations are not PBIs. For example, if the benevolent services are part of propagating religion, providing general social services or promoting cultural objectives, the organisation will not be a PBI.
EXAMPLE
Deciding whether an organisation is predominantly for the provision of benevolent relief is a matter of fact and degree. It is an objective question which will involve the weighing of all relevant factors. Both the organisation's constitution and activities will be relevant.
If there are changes in an organisation's constitution or operations, its status may change. An organisation's character upon foundation will not be determinative. However, the foundation, history and proposed future directions may all be relevant.
Checklist - am I a PBI?
- who are you set up to help?
- why do these people need help?
- what aid or services do you provide to them?
- how do you choose who will receive your services?
- from your day-to-day operations, annual reports, financial statements and promotional material, etc, can you conclude that your dominant activity is providing direct relief of poverty, sickness, suffering, distress, misfortune, disability, or helplessness?
- do your constituent documents (for example, memorandum and articles of association, rules, constitution, trust deed) clearly show that your dominant purpose is providing benevolent relief?
- do you limit the people to benefit only on the basis of being better able to provide benevolent relief?
- are you an institution that is non-profit?
Working through this checklist, you will be a PBI if you are a non-profit institution and your dominant purpose is the direct relief of poverty, sickness, suffering, distress, misfortune, disability, or helplessness. PBIs must meet other conditions to be entitled to receive tax deductible gifts, as shown here.
If you are not a PBI, go back to the table in chapter 2 to check whether you are entitled to endorsement as a DGR under a different DGR category.
Examples of PBIs and non-PBIs
The following list shows common types of organisations and whether they are PBIs. You must use the examples in conjunction with the checklist.
EXAMPLES
Necessitous circumstances fund
A necessitous circumstances fund is a public fund established and maintained for the relief of persons in Australia who are in necessitous circumstances.
The public fund requirement is explained here. The other issues are:
- what are necessitous circumstances?
- how can a public fund provide relief to persons who are in necessitous circumstances?
- to what extent does a public fund have to be for the purpose of relieving persons in necessitous circumstances?
- must the persons receiving relief be in Australia?
What are necessitous circumstances?
The expression 'necessitous circumstances' refers to financial necessity. It does not extend to needs generally. Accordingly, the needs of the sick, incapacitated, aged, etc will not, on their own, constitute necessitous circumstances. Necessitous circumstances involves some degree of poverty, though it may be less than abject poverty or destitution. Necessitous circumstances does not extend to the absence of merely desirable advantages.
EXAMPLE
A person will be in necessitous circumstances where his or her financial resources are insufficient to obtain all that is necessary, not only for a bare existence, but for a modest standard of living in the Australian community.
A strong indicator of this would be where a person's level of income is such that they are eligible to receive income-tested government benefits. Other indicators are health needs (such as sickness or disability) and family responsibilities. Such non-financial needs can cause financial necessity.
EXAMPLE
The death of a family member or the loss of an asset or a business will not necessarily place a person in necessitous circumstances. Other sources of income or assets (including superannuation, insurance, compensation etc) will be relevant.
EXAMPLE
The particular circumstances giving rise to financial necessity will not necessarily be permanent. For example, cyclones, floods and other disasters can cause people to be in financial need in the short term.
Relieving necessitous circumstances
The common method of relieving necessitous circumstances is by direct distributions of money or goods to the person.
Where services go beyond distributions of money or goods, the organisation is more likely to be an institution rather than a fund. In this case, the organisation may be a public benevolent institution. Public benevolent institutions are a DGR category, explained here.
A necessitous circumstances fund can distribute to other organisations provided the recipients care for persons in necessitous circumstances.
If a public fund distributes for various purposes, only one of which is the care of persons in necessitous circumstances, it may be an ancillary fund. Ancillary funds are a category of DGR. They are explained here.
Not only must a fund be for people in necessitous circumstances, it must also be for the relief of necessitous circumstances.
Not all funds directed towards people in necessitous circumstances are for the relief of necessitous circumstances.
EXAMPLE
Where a fund is maintained primarily for the relief of one individual, family or similar group, its constituent documents should make it clear that the fund is for the relief of the particular circumstances. It should not provide merely that the fund is held on trust for named individual(s).
EXAMPLE
Normally a necessitous circumstances fund will use an application form to get financial information from anyone applying for assistance. However, in some situations the financial need will be obvious. For example, immediately following a natural disaster, a fund would not normally need to check on the financial resources of each individual beneficiary. This would change once banks have reopened, insurance monies are paid and the immediate financial urgency has passed.
EXAMPLE
Predominantly for relieving necessitous circumstances
A fund must be exclusively, or at least chiefly, for the relief of persons in necessitous circumstances. If a fund provides benefits indifferently to persons who are and who are not in necessitous circumstances, it will not be a necessitous circumstances fund.
EXAMPLE
For people in Australia
The people whose necessitous circumstances are to be relieved must be in Australia.
EXAMPLE
It is acceptable for a fund to provide money for an Australian person to have an operation or treatment carried out overseas because it is unavailable in Australia.
EXAMPLE
Checklist - am I a necessitous circumstances fund?
- are you a fund rather than an institution?
- are you a public fund?
- who is the fund intended to help?
- why do these people need help?
- are the recipients of help selected on the basis that they suffer necessitous circumstances?
- does the help provided by the fund relieve necessitous circumstances?
- is it clear from the fund's constituent or governing documents that it is set up to relieve necessitous circumstances?
- does the fund limit its help to people who are in Australia?
If you are a necessitous circumstances fund, go here. It sets out the other conditions a necessitous circumstances fund must meet to be entitled to receive tax deductible gifts.
If you are not a necessitous circumstances fund, go back to the table of DGRs to check whether you fall within a different DGR category.
Need more information?
Necessitous circumstances funds are explained in further detail in a Taxation Ruling available from the sources listed at the end of this guide.
School building fund
The DGR category of school building fund covers funds with the following characteristics:
- the fund is a public fund
- the public fund is established and maintained solely for the acquisition, construction or maintenance of a building
- the building is used, or to be used, as a school or college, and
- the building is used for that purpose by:
- a government
- a public authority, or
- a non-profit society or association.
Public fund
Public funds are described here.
School or college
A school or college provides organised instruction or training on a regular and continuing basis. The instruction is generally provided in class form.
It includes people assembling for regular study of some area of knowledge or activity and extends to religious as well as secular instruction.
Factors that are relevant in deciding whether there is a school or college include:
- courses provided
- subjects taught
- method of assessment used and certificates awarded
- teaching qualifications required of the instructors, and
- number of pupils.
If the dominant function is not instruction or training, it is not a school or college.
EXAMPLES
- Sunday schools
- adult religious education centres
- bible study centres, and
- pre-school kindergartens which are not primarily for child-minding.
- Bodies that are not schools or colleges include:
- yoga schools, riding schools, woodturning centres, dressmaking, ceramics and cookery workshops where the primary activity is associated with recreational pursuits, and
- child care centres.
Building used as a school or college
The term building includes one building, a group of buildings, a part of a building or additions to a building.
The building should be a permanent structure, usually with walls and a roof.
EXAMPLE
- tennis courts, playing fields, covered play areas, carparks and landscaping
- land acquired for the purpose of providing recreational space, such as a sports ground, and
- furniture, training equipment and computers, unless they form an integral part of the building, that is, fixtures.
Fixtures are accepted as part of a building. They are affixed to a building and are unable to be detached without substantial damage to the item itself or that to which it is attached.
EXAMPLE
The building or group of buildings must be used for a purpose which is connected with the curriculum of the school or college.
EXAMPLE
- indoor swimming pool (surrounded by walls and roof) being an integral part of a building which is used as a school or college, and
- school or college assembly halls.
A multi-purpose building is taken to be used as a school or college if the primary and principal use of the building is as a school or college. More than 50 per cent of the time will satisfy this requirement.
EXAMPLE
What a school building fund can pay for
A school building fund is solely for providing money for the acquisition, construction or maintenance of the school or college buildings. It cannot be used for any other purpose. Expenditure on capital improvements and maintenance, as well as installation and maintenance of fixtures, are accepted outlays of a school building fund.
EXAMPLE
- purchase of land for which there are definite plans to construct a building to be used as a school or college
- construction or purchase expenses and associated financing costs
- painting and general maintenance of school buildings, and building insurance
- expenditure on carpets which are fixed to the floor of the school building, and
- administration costs of the fund, including bank fees, accounting costs and fundraising expenses.
Costs that cannot be paid by a school building fund include running expenses of the school, paying teachers, buying furniture and materials, and maintaining sports grounds and car parks.
A school building fund may invest or lend its money if this is a bona fide and temporary arrangement, and is consistent with achieving the fund's objects with all reasonable speed.
Checklist - am I a school building fund?
- are you a public fund?
- do your constituent or governing documents clearly show you were established solely to provide money for the acquisition, construction or maintenance of a building used, or to be used, as a school or college?
- is the building used, or to be used, as a school or college by a government, public authority or non-profit body?
- are the actual payments made by the fund only for the acquisition, construction or maintenance of the building (including fixtures and the fund's administration costs)?
If you are a school building fund, go here. It sets out the other conditions a school building fund must meet to be entitled to receive tax deductible gifts.
If you are not a school building fund, go back to the table of DGRs to check whether you fall within a different DGR category.
Need more information?
School building funds are explained in further detail in Taxation Ruling TR 96/8 available from the sources listed at the end of this guide.
Public library, public museum and public art gallery
The following are separate DGR categories:
- a public library
- a public museum
- a public art gallery, and
- an institution consisting of a public library, public museum and public art gallery or of any two of these.
Because they have common characteristics, these categories are explained here together. Each has the following features:
- it is owned or controlled by a government or quasi-government authority, or by persons or an institution having a degree of responsibility to the public
- its collection is made available to the public
- it is constituted as a library, museum or art gallery, other people recognise it as such, and it conducts itself in the ways that are consistent with such a character, and
- it is an institution.
Public ownership and control
Non-government institutions must be owned or controlled by persons or institutions who, because of their tenure of some public office or their position in the community, have a degree of responsibility to the community as a whole. Church authorities, school principals, judges, clergy, solicitors, doctors and other professional persons, mayors, councillors, town clerks and members of parliament would satisfy this requirement.
EXAMPLE
Available to the public
A public library, museum or art gallery makes its collection available to the public.
Limits that make a collection substantially available only to members of an association or employees of a particular employer are not acceptable.
EXAMPLE
If limits are in place only to improve availability, they can be acceptable.
EXAMPLES
A school library can be a public library if the school is open to the public. This includes primary and secondary schools run by government or religious bodies and TAFE colleges. It does not include schools run for the profit of their owners.
Purpose and function as a library, museum or art gallery
The terms library, museum and art gallery have their ordinary or everyday meanings. They have been described as:
- library: a place set apart to contain books and other literary material for reading, study or reference
- museum: building or place for the keeping, exhibition and study of objects of scientific, artistic or historical interest, and
- art gallery: building devoted to the exhibition of works of art; a collection of art for exhibition.
The constituent or governing documents of a public library, museum or art gallery must be consistent with its character. Also, an organisation's activities, acquisitions policy, staffing, advertising and membership will be relevant.
The ways an organisation collects, preserves, maintains and makes its collection available must be consistent with how a library, museum or art gallery operates.
EXAMPLE
Possessing things that could form the collection of a public library, museum or art gallery is not sufficient.
EXAMPLE
Institution
A public library, museum or art gallery will be:
- a separate legal entity, such as a corporation or trust, or
- a part of a legal entity where that part has a separate institutional character.
For a part of an entity to be a public library, museum or art gallery, it will be necessary that:
- the affairs of the library, museum or art gallery are separate from the general affairs of the entity
- the public can readily distinguish the library, museum or art gallery from the rest of the entity
- the collection is readily identifiable to the public as the collection of a library, museum or art gallery
- the accounts of the library, museum or art gallery are separate from those of the rest of the entity, and
- any gifts made to the library, museum or art gallery will only be used for library, museum or art gallery purposes.
EXAMPLE
Organisations that are not public libraries, museums or art galleries
EXAMPLES
- Business exhibits set up as part of promoting or carrying on a business.
- Hobby associations and clubs which exist primarily to provide services and facilities for their members.
- Support funds that provide money for public libraries, museums and art galleries. These funds might fall within the DGR category of ancillary funds (explained on page 53).
- Support organisations such as 'Friends of' an art gallery or museum.
- Urban preservation schemes which encourage the preservation of buildings of historical and architectural significance.
Organisations that are not public libraries, museums or art galleries may fall within one of the other DGR categories in the table beginning here. Start by checking the cultural organisations category here.
Checklist - am I a public library, museum or art gallery?
- are you an entity (such as a corporation or trust) or do you have a separate institutional character?
- are you owned or controlled by a government or quasi-government authority, or by persons or an institution having a degree of responsibility to the public?
- do you make your collection available to the public?
- do your constituent or governing documents clearly show that you are set up to be a library, museum or art gallery?
- from your activities, do other people recognise you as a library, museum or art gallery?
- are your activities consistent with being a library, museum or art gallery?
If you are a public library, museum or art gallery, go back to the table here to check that you also meet the other requirements that apply to you.
If you are not a public library, museum or art gallery, go back to the table of DGRs to check whether you fall within a different DGR category.
Need more information?
Public libraries, museums and art galleries are explained in detail in a Taxation Ruling available from the sources listed at the end of this guide.
Ancillary fund
The DGR category of ancillary fund covers funds with the following characteristics:
- the fund is a public fund ('public fund' is explained here)
- it is established and maintained under a will or instrument of trust
- it is allowed, by the terms of the will or instrument of trust, to invest gift money only in ways that an Australian law allows trustees to invest trust money, and
- it is established and maintained solely for:
- the purpose of providing money, property or benefits to DGRs, or
- the establishment of DGRs.
An ancillary fund must be exclusively for these purposes. It must not carry on any other activities. It is like a conduit or temporary repository for channelling gifts to other DGRs.
EXAMPLE
An ancillary fund must not provide for, or establish, another ancillary fund.
If a DGR is endorsed only for a fund, institution or authority that it operates, the ancillary fund will only be able to assist or establish such a fund, institution or authority.
It must not assist other parts of that DGR.
EXAMPLE
If a gift condition applies to a particular DGR, the ancillary fund must provide money, property or benefits to it only for purposes allowed by the gift condition. The gift conditions for particular DGR categories are shown in the table starting here.
EXAMPLE
Checklist - am I an ancillary fund?
- are you a public fund?
- were you established under a will or instrument of trust?
- does the will or instrument of trust allow you to invest gift money only in ways that an Australian law allows trustees to invest trust money?
- does the will or instrument of trust require you to only provide money, property or benefits to DGRs or to establish DGRs?
- do you act solely to carry out these purposes?
- if the will or instrument of trust allows you to help DGRs which have gift conditions, can you only help them for purposes allowed by the gift conditions?
If you are an ancillary fund, go back to the table here to check you also meet the other requirements that apply to you.
If you are not an ancillary fund, go back to the table to check whether you fall within a different DGR category.
Need more information?
Ancillary funds are explained in detail in Taxation Ruling TR 95/27 available from the sources listed at the end of this guide.
Donors And Gifts
Deductible Gifts
QUICK REFERENCE
- be truly a gift
- be made to a deductible gift recipient (DGR)
- be a gift of money or property that is covered by a gift type - see Gift Types, and
- comply with any relevant gift conditions.
- claims are made in the tax return for the income year in which the gift is made
- the amount that is deductible for the gift is subject to special rules
- the claim cannot add to or create a tax loss
- donors will need to keep records, and
- there may be other income tax consequences (including capital gains, trading stock and depreciation).
For a donor to claim a deduction for a gift, there are several requirements:
- the payment is really a gift
- the gift is made to a DGR
- the gift is of money or property that is covered by one of the gift types, and
- any gift conditions are satisfied.
This chapter explains these requirements. It also explains:
- when deductions can be claimed
- how much can be claimed
- the records donors need to keep, and
- other income tax consequences of making gifts.
EXAMPLE
- the payment is a gift
- it is made to a DGR
- a payment of money falls in one of the gift types, and
- there are no gift conditions for school building funds.
- Colin makes his claim when he lodges his tax return for the 2000-2001 year.
NOTE
Deductions for contributions made to registered political parties are explained at Registered political parties in chapter 2.
Legislative changes have been proposed that would affect gifts from 1 July 1999, including a new gift type and additional concessions for cultural gifts. At the time GiftPack was written, the proposals had not become law. These proposals are outlined in Proposed changes later in this chapter.
What is a gift?
Gifts have these characteristics:
- they are made voluntarily
- they do not provide a material benefit to the donor, and
- they essentially arise from benefaction, and proceed from detached and disinterested generosity.
Not all payments to DGRs are gifts. For example, these payments are not gifts:
- purchases of raffle or art union tickets
- purchases of chocolates, pens, etc
- the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner
- membership fees
- payments to school building funds as an alternative to an increase in school fees, and
- payments where the person has an understanding with the recipient that the payments will be used to provide a benefit for the 'donor'.
EXAMPLE
EXAMPLE
An acknowledgement that a recipient makes in appreciation of a payment can be consistent with the payment being a gift.
EXAMPLE
Other acceptable forms of acknowledgment include stickers, mention in a newsletter or periodical, and plaques if they are of small cost and prominence.
However, enlarging the acknowledgment into forms of advertising would prevent the payment being a gift. Although there is no gift deduction, businesses may be entitled to claim income tax deductions for such payments as advertising costs. See Other deductions.
There is no gift deduction where a person enters into an arrangement in relation to the making of a gift and
- the value of the gift to the DGR is, or would be expected to be, less than the value of the gift at the time the gift was made
- any other entity makes, or may reasonably be expected to make, payments to other persons in relation to the gift
- the donor or an associate obtains, or would be expected to obtain, any benefit other than the benefit of a tax saving, or
- the DGR or another fund, authority or institution is to acquire property from the donor or an associate.
Gifts to DGRs
Only gifts made to DGRs are tax deductible. For gifts made before 1 July 2000, you can check that the recipient is entitled to receive deductible gifts:
- on the ATO web site at www.ato.gov.au, or
- by calling the ATO on 13 26 81.
For gifts made on or after 1 July 2000, you can check that the recipient is a DGR:
- on the Australian Business Register (ABR) web site at www.business.gov.au, or
- by calling the ATO on 13 24 78.
If you want more information about the various types of DGRs, they are explained in chapter 2.
For some DGRs, gifts will only be deductible if made to some part of the DGR.
EXAMPLE
Where an organisation conducts an appeal for more than one purpose (and not all the purposes are for the benefit of DGRs) then donors must pledge the extent to which their gifts are to be applied to a DGR.
A pledge is made in writing (for example, on the contribution envelope or a pledge form) to the fundraising body specifying the name of the DGR and the amount or percentage of the total to be applied to the DGR. The deduction is the amount of the actual gift to the DGR.
Alternatively, the terms of the appeal may state the proportion to be applied to the DGR. The tax deductible donation is limited to that proportion of the gift.
Gift types
To be deductible, a gift must be of money or property that is covered by one of the gift types. They are:
- $2 or more: money
- Property < 12 mths: property purchased during the 12 months before the gift was made
- Trading stock: trading stock disposed of outside the ordinary course of business
- Cultural gifts: property under the Cultural Gifts Program
- Cultural bequests: property under the Cultural Bequests Program, and
- National Estate: places listed in the Register of the National Estate.
Different gift types apply for different types of DGRs. The table in chapter 2 gives the gift types for each category of DGR.
EXAMPLE
- $2 or more
- Property < 12 mths, and
- Trading stock.
The gift types are explained in detail later in this chapter at Gift Types.
Supplying a service does not fall in any of the gift types. There is no deduction for a gift of a service, as no money or property is transferred to the DGR.
Examples of amounts that are not deductible include a volunteer's expenses in carrying out the voluntary work, and the value of unpaid work.
EXAMPLE
If property is transferred to a DGR as part of providing a service, a deduction may be allowed in relation to the property. The property has to be actually transferred to the DGR.
EXAMPLE
Gift conditions
For some DGRs, the income tax law adds extra conditions affecting the sorts of deductible gifts they can receive. The gift may only be tax deductible:
- between certain dates, or
- for a specific use.
EXAMPLE
The gift conditions are set out in the table in chapter 2. Many categories of DGR have no gift conditions.
When can a gift deduction be claimed?
A tax deduction for a gift is claimed in the tax return for the income year in which the gift is made.
EXAMPLE
How much can be claimed?
The amount of the deduction depends on the type of gift. For gifts of money, it is the amount of the gift. For gifts of property, there are various valuation rules. They are explained for the different gift types later in this chapter.
TaxPack explains how gifts can be claimed in the tax return for the year in which the gift was made.
The deduction for a gift cannot add to or create a tax loss. The deduction can reduce assessable income for the tax year to nil but any excess cannot be claimed in the year the gift is made or any later year.
EXAMPLE
When jointly owned property is gifted, the deduction to each owner is determined on a reasonable basis, having regard to each owner's interest in the property.
EXAMPLE
What records do donors need?
Donors should keep records of their deductible gifts. This will help in preparing tax returns and in case claims are checked by the ATO.
DGRs are not required by income tax law to issue receipts for deductible gifts, but if they do, the receipt must specify:
- that the receipt is for a gift
- the name of the fund, authority or institution receiving the gift, and
- the DGR's Australian Business Number.
Other useful information for donors is:
- the date the gift was made
- the amount of the gift if it was money, and
- a description of the gift if it was property.
When property has been gifted, donors may need to keep a record of the date of acquisition, the amount paid for the property, and any valuations.
Other income tax matters
Costs of obtaining valuations
Valuation expenses incurred by a donor are tax deductible if the valuation is made solely to determine the market value of a deductible gift so that a gift deduction can be claimed.
The valuation expense is claimed in the tax return for the year when the expense is incurred. TaxPack explains how the expense can be claimed.
Other deductions
Advertising and sponsorship expenses which are not in fact gifts may be tax deductible if they are incurred in deriving assessable income.
EXAMPLE
Depreciation
If a donor gifts property on which depreciation has been claimed as a tax deduction, there may be a consequential adjustment for income tax.
Such a balancing adjustment may either increase or decrease the donor's taxable income. This is explained further in the ATO's Guide to Depreciation which is available by calling 13 28 61.
Trading stock
For trading stock disposed of as a gift outside the normal course of business, the stock's market value is normally included in the donor's assessable income.
Capital gains tax
When property is gifted, there may be capital gains tax (CGT) consequences.
EXAMPLE
The ATO's Guide to Capital Gains Tax provides guidance on the calculation of capital gains and losses and a list of CGT exemptions. Many personal use assets are exempt. The guide lists those personal use assets that are exempt. Phone 13 28 61 for a copy.
Proposed changes
Legislative changes affecting gifts have been proposed to apply from 1 July 1999. The proposals had not become law at the time GiftPack was written.
The proposed changes include amendments that are intended to:
- create a new gift type for gifts of property worth more than $5000, regardless of when or how the property was acquired
- provide a capital gains tax (CGT) exemption for testamentary gifts, unless the property is reacquired by the estate, a beneficiary of the estate or an associate
- provide a CGT exemption for gifts of property made under the Cultural Gifts Program, unless the property is reacquired for less than market value by the donor or an associate, and
- allow the apportionment of deductions for gifts made under the Cultural Gifts Program over a period of up to five income years.
If you would like to check the status of these proposals, phone 13 63 20.
Gift types
QUICK REFERENCE
- For a gift to be tax deductible, it must be covered by a gift type.
- There are different gift types for different categories of DGR.
- The gift types also give the rules for valuing deductible gifts.
For each gift type, this section explains:
- the types of gifts covered
- the categories of DGRs that can receive the gifts, and
- how much donors can claim.
The gift types are:
Gift type | Description |
Money | |
Property purchased during the 12 months before the gift was made | |
Trading stock disposed of outside the ordinary course of business | |
Property under the Cultural Gifts Program | |
Property under the Cultural Bequests Program | |
Places listed in the Register of the National Estate |
Gifts that fall in the first three gift types -- $2 or more, Property < 12 mths and Trading stock - can be made to almost all categories of DGR. Gifts in the other gift types can only be made to limited categories of DGR.
EXAMPLE
The different gift types also affect how much can be claimed as a deduction.
EXAMPLE
- the market value of the timber on the day Jeremy made the gift, and
- the amount he paid for the timber.
In some situations, a gift may fall within more than one of the gift types. Donors may use the gift type that is most appropriate to their circumstances.
Legislative changes have been proposed that would affect gifts from 1 July 1999. At the time GiftPack was written the proposals had not become law. These proposals are outlined in Proposed changes earlier in this chapter.
$2 or more
Type of gift
This gift type covers gifts of money, including foreign currency. The money may be paid in various ways, including by cash, cheque, credit card or electronically.
The gift to a DGR must be $2 or more. A series of gifts made to a DGR in an income year may be aggregated to work out if the gift is $2 or more.
EXAMPLE
This gift type does not cover testamentary gifts, that is gifts made under a will.
Recipients
This gift type applies to all categories of DGR (except for gifts to the Commonwealth for the purposes of Artbank).
Valuation
The value of the gift for deduction purposes is the amount of money the donor gives to the DGR.
Property < 12 months
Type of gift
This gift type covers gifts of property purchased by the donor during the 12 months before making the gift.
Property has a wide meaning. As well as physical things, it includes rights and interests that are capable of ownership and have a value.
For gifts of trading stock where the disposal takes place outside the ordinary course of business, see Trading stock below.
Property is purchased if it is acquired by way of bargain or sale for money or some other valuable consideration. Prizes won in raffles, property received as a gift, and inherited property have not been purchased.
EXAMPLE
The value of the gift must be $2 or more.
This gift type does not cover testamentary gifts, that is gifts made under a will.
Recipients
This gift type applies to all categories of DGR (except for gifts to the Commonwealth for the purposes of Artbank).
Valuation
The amount of the gift deduction is the lesser of:
- the market value of the property on the day the gift is made, and
- the amount paid by the donor for the property.
EXAMPLE
If the donor is registered for GST, or required to be registered, the market value or amount paid may need to be adjusted. See Market value and Amount paid later in this chapter.
It is up to the donor, not the DGR, to find out the market value of the gift.
Trading stock
Type of gift
This gift type covers the trading stock of a business, but only if two conditions are met:
- the gift is a disposal of the trading stock outside the ordinary course of the donor's business, and
- if the gift involves the forced disposal or death of livestock, no income tax election has been made to spread or defer the profit.
For this gift type, it is not necessary for the trading stock to have been purchased during the 12 months before the gift was made.
EXAMPLE
Recipients
This gift type applies to all categories of DGR (except for gifts to the Commonwealth for the purposes of Artbank).
Valuation
The value of the gift is the market value of the trading stock on the day the gift was made. The donor may also need to include the market value in assessable income under the general rules for income tax.
EXAMPLE
NOTE
If the donor is registered for GST, or required to be registered, the market value may need to be adjusted. See Market value later in this chapter.
Cultural gifts
Type of gift
This gift type (under the Cultural Gifts Program) covers gifts of property, except property which is an estate or interest in land or in a building or part of a building.
Property has a wide meaning. As well as physical things, it also includes rights and interests that are capable of ownership and have a value.
The value of the gift must be $2 or more (except for gifts to the Commonwealth for the purposes of Artbank).
This gift type does not cover testamentary gifts, that is gifts made under a will.
Recipients
This gift type applies to DGRs which are public libraries, public museums, public art galleries, institutions consisting of two or more of these, the Australiana Fund and the Commonwealth for the purposes of Artbank.
The property must be accepted by the DGR for inclusion in a collection it is maintaining or establishing. For Artbank, the property must be accepted by the Commonwealth for inclusion in a collection maintained or being established for the purposes of Artbank.
The Cultural Gifts Program is administered by the Department of Communications, Information Technology and the Arts (DCITA) with the advice of the Committee on Taxation Incentives for the Arts. Contacts details for DCITA.
Intending donors should contact the DGR, then they or the DGR should seek further information from DCITA.
Valuation
For valuations, there is a general rule and several exceptions. For each of these, there may also be an adjustment if the gift is conditional (see here).
The general rule
The general rule is that the amount of the deduction is the average of two or more written valuations made by valuers approved by DCITA.
The valuations must:
- be by different approved valuers, and
- state the GST-inclusive market value of the property on the day of the gift or the day of the valuation.
If the valuation gives a value for the day of the valuation rather than for the day the gift is made, it must be made within 90 days before or after the gift was made. If it is outside the 90 days, only the ATO can allow a longer period. If the donor is registered for GST, or required to be registered, the GST inclusive market value may need to be adjusted to account for any input tax credit entitlement.
Exceptions to the general rule
The exceptions fall into three main categories:
- where a valuation is not required
- where the valuations do not fairly represent the GST-inclusive market value, and
- where other factors need to be considered.
Where valuations are not always required
Written valuations are not required if:
- no amount is included in the donor's assessable income in respect of the gift, and
- an amount would have been included if the property had been sold rather than gifted.
An example could be property purchased with a profit-making intention that is later disposed of by way of gift.
Where valuations are not required, the valuation of the gift is:
- the amount paid for the property, or
- if the property was manufactured or created, the amount allowable as a tax deduction if it had been sold by the donor.
If the donor is registered for GST, or required to be registered, these amounts may need to be adjusted to account for any input tax credit entitlement.
Where the valuations do not fairly represent a market value
If the written valuations for the property do not fairly represent the GST-inclusive market value of the property, the deduction is adjusted to the GST-inclusive market value on the day the gift was made.
If the donor is registered for GST, or required to be registered, this amount may need to be adjusted to account for any input tax credit entitlement.
Where other factors need to be considered
The valuation of the gift is the lesser of the amount the donor paid for the property and the average of the written valuations if the property was:
- acquired for the purpose of giving it away
- acquired subject to an arrangement that it would be given away, or
- acquired (otherwise than by inheritance) less than one year before making the gift.
If the donor is registered for GST, or required to be registered, these amounts may need to be adjusted.
Conditional gifts
A gift deduction is reduced by a reasonable amount if property is donated without the DGR receiving:
- immediate custody and control
- unconditional right to retain custody and control in perpetuity
- unencumbered legal and equitable title, or
- its use or any of the above are affected by an arrangement entered into in respect of the making of the gift.
Contacts:
Department of Communications, Information Technology and the Arts:
PO Box 2154
CANBERRA ACT
Telephone: (02) 6271 1643
Facsimile: (02) 6271 1697
E-mail:
Cultural gifts: cgp.mail@dcita.gov.au
Cultural bequests: cbp.mail@dcita.gov.au
Web site: http://www.dcita.gov.au
Cultural bequests
Type of gift
This gift type covers testamentary gifts of property.
Property has a wide meaning. As well as physical things, it also includes rights and interests that are capable of ownership and have a value. However, this gift type does not include property which is an estate or interest in land or in a building or part of a building.
Testamentary gifts are gifts made under a deceased person's will.
When the testator dies, there must be in force a certificate from the Minister for Communications, Information Technology and the Arts which approves the gift and specifies its value. Approval guidelines are available from the Department of Communications, Information Technology and the Arts (DCITA) from the sources given earlier.
The value of the gift must be $2 or more.
Recipients
This gift type applies to DGRs which are public libraries, public museums, public art galleries, institutions consisting of two or more of these, and the Australiana Fund.
The Cultural Bequests Program operates as a supplement to the Cultural Gifts Program (see Cultural gifts above). DCITA administers both Programs.
As with the Cultural Gifts Program, the property must be accepted by the DGR for inclusion in a collection it is maintaining or establishing.
Valuation
The valuation of the gift is the amount specified in the certificate from the Minister for Communications, Information Technology and the Arts.
When deductions can be claimed
The gift is deductible in the tax return for the period from the start of the income year to the day the testator died.
EXAMPLE
If the rule that a gift deduction cannot add to or create a tax loss applies, the trustee can claim the balance of the deduction.
EXAMPLE
Capital gains exemption
Gifts of property made under the Cultural Bequests Program are exempt from capital gains tax. Any capital gain or capital loss made from such testamentary gifts is disregarded.
National Estate
Type of gift
This gift type covers gifts of places listed in the Register of the National Estate.
The Register is kept pursuant to the Australian Heritage Commission Act 1975. The Register lists those places that:
- are part of the natural and cultural environment of Australia, and
- have aesthetic, historic, scientific or social significance or other special value for present and future generations.
This gift type does not cover testamentary gifts, that is gifts made under a will.
Recipients
This gift type applies to DGRs that are National Trust bodies (see here).
The gift must be accepted by the National Trust body for the purpose of preserving it for the benefit of the public.
Valuation
The general rule is that the valuation of the gift is the average of the written valuations provided by two or more approved valuers.
The procedures outlined for Cultural gifts (see above) are used for gifts in the National Estate gift type.
Market value
The valuation of gifts for the Property < 12 months and Trading stock gift types can depend on market value. For donors who are registered for GST, or required to be registered, adjustments to market value may be needed.
For these donors, the amount that would otherwise be the market value is reduced by an amount equal to the input tax credit (if any) to which the donor would have been entitled if:
- the donor had acquired the property at the time the gift was made, and
- the acquisition had been solely for a creditable purpose.
EXAMPLE
Donors who are not registered for GST, and not required to be registered, do not need to adjust the market value.
EXAMPLE
Amount paid
The valuation of gifts for the Property < 12 months gift type can depend on the amount paid by the donor. For donors who are registered for GST, or required to be registered, adjustments may be needed to the amount paid.
If such donors are entitled to input tax credits, the amount paid is reduced by the amount of the input tax credit. This is because the donor effectively receives a refund of the GST paid on purchasing the gifted property.
EXAMPLE
If GST was not included in the price of the property purchased by the donor, no adjustment would be made. Examples are purchases made before 1 July 2000 and purchases from businesses that are not registered for GST and not required to be registered.
For donors who are not registered for GST, and not required to be registered, the amount paid is not adjusted to exclude GST.
EXAMPLE
Other Taxes And Obligations
In this chapter we outline some other taxes and obligations that affect most deductible gift recipients (DGRs):
- Australian Business Number (ABN)
- goods and services tax (GST)
- income tax exemption
- fringe benefits tax (FBT)
- Pay As You Go (PAYG)
- Superannuation Guarantee Charge, and
- State and Territory taxes and duties.
Contact details are provided should you wish to obtain further information.
Australian Business Number (ABN)
QUICK REFERENCE
- You need an ABN to be endorsed as a DGR.
- The Australian Business Number (ABN) is a new single identifier that DGRs will use for their business dealings with the ATO.
The Australian Business Number (ABN) is a new single identifier which is a key element of The New Tax System.
Deductible gift recipients (DGRs) can use an ABN to:
- apply to the ATO for endorsement as a DGR
- apply to the ATO for endorsement as an income tax exempt charity (ITEC)
- register for GST and claim input tax credits from the ATO
- deal with investment bodies
- interact in future with other government departments and agencies, and
- interact with the ATO on other taxes including:
- the Diesel and Alternative Fuels Grants Scheme
- luxury car tax, and
- wine equalisation tax.
You can apply for an ABN on an application form available from the sources listed on the back cover of this guide. You need to check first with any parent organisation whether you should use their ABN or apply for your own.
Your ABN registration details will become part of the Australian Business Register, which the ATO will maintain for all Commonwealth purposes. The publicly available information in the ABR will allow people to find out whether the entities they are dealing with have an ABN, are registered for GST or are endorsed as deductible gift recipients.
Who is entitled to register for an ABN?
To be entitled to an ABN you must be:
- a company registered under the Corporations Law
- a government department or agency
- an entity carrying on an enterprise in Australia, or
- a non-profit sub-entity for GST purposes.
An entity for ABN purposes means an individual, a body corporate, a corporation sole, a body politic, a partnership, an unincorporated association or body of persons, a trust or a superannuation fund.
The definition of an enterprise for ABN purposes covers activities in the form of a business and includes the activities done:
- by an authority or institution to which deductible gifts can be made
- by a trustee of a fund to which deductible gifts can be made
- by a charitable institution or by a trustee of a charitable fund, and
- by a religious institution.
DGRs and certain non-profit organisations that are registered for GST may choose to register a branch as a non-profit sub-entity. A non-profit sub-entity maintains an independent system of accounting, is separately identifiable by its activities or location, and is referred to in the entity's records as a separate entity for GST purposes. ABN registration as a non-profit sub-entity for GST purposes cannot be used by the sub-entity to apply for endorsement as a DGR.
EXAMPLE
How do you register for an ABN?
You can register:
- electronically through the Business Entry Point (BEP) at www.business.gov.au
- by mail - phone the ATO on 13 24 78 for an application, or
- through a tax agent.
You can register for an ABN and GST on the same form.
Your DGR should register for one ABN regardless of the number of enterprises you undertake. However, if your enterprises are carried on by a number of different entity types, each entity must register in its own right.
EXAMPLE
If your organisation is a subsidiary of a parent organisation, you should discuss ABN registration with your parent organisation before applying.
Need more information?
If you have any questions after reading this guide, or if you need more information, please contact the information sources at the end of this guide.
Goods and services tax (GST)
QUICK REFERENCE
- GST is a broad-based tax of 10 per cent on the supply of most goods and services consumed in Australia.
- Non-commercial supplies by gift deductible entities - such as charitable activities - are GST-free.
- Gift deductible entities must register for GST if their annual turnover is $100 000 or more and they may choose to register if their annual turnover is lower.
- Registered gift deductible entities can claim credits for the GST included in the price of goods and services they buy in providing their GST-free supplies.
GST is a broad-based tax of 10 per cent on the supply of most goods, services and anything else consumed in Australia. It is also payable on most goods imported into Australia regardless of whether you are registered or not.
GST applies from 1 July 2000.
Gift deductible entities that are suppliers of goods and services and are registered (or required to be registered) for GST will have to include 10 per cent GST on many of their commercial supplies. Many supplies they make will be GST-free (see What if a gift deductible entity is registered for GST?).
Which gift deductible entities are required to register for GST?
A gift deductible entity must register for GST if its annual turnover is $100 000 or more. If its turnover is less, it can register if it chooses to. Only those that are registered can claim credits (input tax credits) for the GST included in the price of goods and services they buy.
Gift deductible entities can register for GST and apply for an Australian Business Number (ABN) on the same form.
GST Branches
A GST-registered entity which operates through a branch structure may choose to register a branch or branches separately for GST. By registering a branch of your organisation as a GST branch, it effectively operates as a distinct entity for GST purposes.
To register as a GST branch, the entity must:
- maintain an independent system of accounting
- be separately identifiable because of its activities or location
- carry on (or intend to carry on) an enterprise through the branch, and
- must not be a member of a GST group.
Non-profit sub-entities
Most non-profit organisations with small independent branches (units) have the option of treating their units as if they were separate entities for GST purposes and not part of the main organisation. This option is only available if the organisation is registered for GST. A unit will be considered to be independent if it:
- maintains an independent system of accounting
- can be separately identifiable because of its activities or location, and
- is referred to in the entity's records as a separate sub-entity for GST purposes.
For example, units could include a branch, fête, lamington drive or fundraising dinner.
This means, where the unit's turnover is less than $100 000, the unit can choose whether it registers for GST or not. Where the unit has a turnover of $100 000 or more, it will have to register separately for GST and will have the same rights and obligations as other GST registered entities.
In the case of non-profit sub-entities, the liability for all GST obligations of the unit will be imposed on the persons responsible for the management of the unit.
What if a gift deductible entity is registered for GST?
Many supplies made by gift deductible entities, their branches and non-profit sub-entities that are registered, or required to be registered, are GST-free, including:
- all charitable activities provided for no cost
- most education, childcare and health services
- basic food
- non-commercial supplies
- supplies of donated second-hand goods (not reprocessed), and
- raffles and bingo.
These bodies can claim credits for GST they pay for acquisitions used in making their GST-free and taxable supplies (input tax credits).
They include 10 per cent GST on their taxable supplies. When the input tax credits are greater than the GST included, the gift deductible entity will receive a refund or have the credit applied to other tax debts, if they have any.
What if a gift deductible entity is not registered for GST?
Gift deductible entities that are not registered and not required to be registered do not include the 10 per cent GST on their supplies. However, they are not able to claim input tax credits for the GST they have paid on their purchases.
In the same way, non-profit sub-entities that are not registered, and not required to be registered, will not include GST and will not be able to claim input tax credits.
Need more information?
Industry-specific booklets have been produced to provide details about how GST and The New Tax System will relate to the non-profit sector.
Topics covered include:
- Arts and Culture
- Charitable, Religious and Non-profit Organisations
- Child Care and Aged Care
- The Health Industry
- Higher Education and Training, and
- Schools.
Further information, including these booklets, is available from the sources listed at the end of this guide.
Income tax exemption
This section will tell you about how to find out if you are income tax exempt.
Various sorts of entities are exempt from income tax. Of itself, endorsement as a DGR does not entitle you to income tax exemption.
If exemption applies, it will apply to the entity. This means that if you are endorsed as a DGR only for a fund, authority or institution that you operate, it is you who may be exempt. That is, there is no separate income tax exemption for your fund, authority or institution. Only entities can be exempt from income tax.
The fact that the entity is exempt will mean that any income of the fund, authority or institution is also exempt.
EXAMPLE
Types of income tax exempt entity
There are two main groups of income tax exempt entities:
- charities, and
- other non-profit organisations and government bodies.
Charities
From 1 July 2000, a charity will be exempt if it is endorsed as an income tax exempt charity (ITEC). This is a different and separate process from DGR endorsement. You apply using a different form and receive separate notification.
To find out whether you are a charity and how to be endorsed, use CharityPack. Copies are available from the ATO by phoning 13 24 78 or from our web site at www.taxreform.ato.gov.au.
Entities that fall in some DGR categories are clearly charities. They include:
- public benevolent institutions
- overseas aid funds, and
- public libraries, museums and art galleries.
Most entities falling in some other DGR categories will also be charities:
- ancillary funds
- necessitous circumstances funds, and
- school building funds.
If you fall in another DGR category, CharityPack will explain how you can work out whether you are a charity and how to apply for endorsement.
Other non-profit organisations and government bodies
Categories of entities that may be income tax exempt even though they are not charities include:
- community service associations
- sports clubs
- musical societies, and
- resource development associations.
To find out whether you fall in these or another income tax exempt category, use ClubPack. Request your copy from the ATO by phoning 13 24 78.
ClubPack also explains the consequences of being a taxable or tax exempt entity.
Many government bodies are also exempt from income tax.
Need more information?
If you have any questions after reading this guide, or if you need more information, please contact the information sources listed at the end of this guide.
Fringe Benefits Tax (FBT)
Employers (including DGRs) who provide fringe benefits to employees are subject to fringe benefits tax (FBT). It operates to provide comparable tax treatment of fringe benefits and cash benefits.
Public benevolent institutions and religious institutions (for some fringe benefits) are treated concessionally.
Most non-government income tax exempt organisations will qualify for a reduction of their FBT liability by a rebate on the gross FBT payable.
These concessions and rebates are to become subject to capping, however, the changes were not law at the time this guide was written.
From 1 April 1999, employers are required to allocate the taxable values of most fringe benefits to those employees who have received them.
Where the total value of such benefits, relating to an employee, exceeds $1000 in a FBT year, an amount is included on the employee's group certificate or payment summary.
Benefits which are exempt from FBT solely because an employee works for a PBI or is a live-in carer for certain employers are also included in these reporting requirements.
Need more information?
If you have any questions or need more information on FBT, please phone the FBT enquiry service on 13 33 28.
Further information is available from the information sources listed at the end of this guide.
Pay As You Go (PAYG)
The new Pay As You Go (PAYG) system replaces most ATO instalment and withholding systems from 1 July 2000. It also simplifies how you pay tax by aligning the dates for payment.
PAYG instalments is how an organisation pays its own tax by paying instalments throughout the year to provide for its final taxation liability.
PAYG withholding is how an organisation withholds tax from payments it makes. This system encompasses the original Pay As You Earn (PAYE) and Tax File Number (TFN) withholding obligations and incorporates a number of other listed withholding categories.
A DGR may be subject to PAYG withholding on some payments it receives where it has not quoted its TFN or ABN.
Need more information?
Further information about current and new instalment and withholding systems is available from the information sources listed at the end of this guide.
Superannuation guarantee charge
All DGRs who are employers are subject to the Superannuation Guarantee legislation.
A Superannuation Guarantee Charge must be paid if an insufficient level of superannuation support is provided for the employees.
Need more information?
If you have any questions or need more information on the Superannuation Guarantee charge, please contact the Superannuation Hotline on 13 10 20.
Further information is also available from the information sources listed at the end of this guide.
State and Territory taxes and duties
State and Territory taxes include stamp duty, pay-roll tax, land tax, financial institutions duty and debits tax.
Each State has its own law for these taxes, administered by its Revenue Office. While the laws between States are comparable, there are some variations.
Some State taxes will be abolished as a result of GST.
Need further information?
For further information on State taxes, contact your local State/Territory Revenue Office. Enquiries should not be directed to the Australian Taxation Office (ATO).
Contact details of State and Territory revenue offices:
NSW Office of State Revenue | Revenue SA |
Queensland Office of State Revenue | Territory Revenue Management |
ACT Revenue Office | State Revenue Office Tasmania |
State Revenue Office of Victoria | State Revenue Department of Western Australia |
Appendices
Appendix 1 - List of definitions
Australian Business Number (ABN)
The Australian Business Number is the new identifier for your dealings with the ATO and for future dealings with other departments and agencies.
Charity
Charity is an institution or fund established for a charitable purpose. Charitable purposes are those which the law regards as charitable. The term 'charitable' has a technical legal meaning which is different from its everyday meaning. Charitable purposes are:
- the relief of poverty or sickness or the needs of the aged
- the advancement of education
- the advancement of religion, and
- other purposes beneficial to the community.
Entity
An entity is an individual (for example a sole trader), a body corporate (a company), a corporation sole (an ongoing paid office, for example a bishopric), a body politic, a partnership, an unincorporated association or body of persons, a trust, or a superannuation fund.
Fringe benefits tax (FBT)
FBT is a tax payable by employers who provide fringe benefits to their employees or associates of their employees.
Goods and services tax (GST)
GST is a broad-based tax of 10 per cent on the supply of most goods, services and anything else consumed in Australia and the importation of goods into Australia.
Income tax exempt charity (ITEC)
An ITEC is a charity that has been endorsed by the ATO as exempt from income tax.
Input tax credits
When you pay GST on any taxable supplies you purchase or acquire for use in your activities, you can claim these amounts (called input tax credits) back from the ATO.
Non-profit
An organisation is non-profit if it is not carried on for the profit or gain of its individual members. This applies for direct and indirect gains, and both while the organisation is being carried on and on its winding up. The ATO accepts an organisation as non-profit if its constitution or governing documents prohibit distribution of profits or gains to individual members and its actions are consistent with the prohibition.
Non-profit sub-entity
Certain non-profit organisations, with independent branches (units), have the option of treating their units as if they were separate entities for GST purposes and not part of the main organisation. For DGR endorsement it is the entity, and not the non-profit sub-entity, that must apply.
Supplies
Supplies include the goods and services sold in your enterprise. They also include many other transactions such as when you provide advice or information, lease out commercial premises or provide hire equipment. Not all supplies are taxable supplies.
Appendix 2 - Worksheet 1 - Reviewing your DGR endorsement
Entity endorsed as a DGR in its own right
This worksheet will help you work out whether you are still entitled to endorsement as a deductible gift recipient (DGR). Endorsed DGRs must tell the Tax Office (ATO) if they stop being entitled to endorsement. Things that can affect your entitlement are changes to your purpose and operations, your gift fund, the 'in Australia' requirement and the gift receipts you issue. You should self-review each year and whenever there is a major change in your structure or operations.
Do not write on the original worksheet - keep it as a template so that you can make copies whenever you carry out a self-review.
Who should use this worksheet?
- Use this worksheet if you have been endorsed in your own right as a DGR.
- Do not use this worksheet if you have been DGR-endorsed only for a fund, authority or institution that you operate. Those organisations use Worksheet 2- reviewing your DGR endorsement: entity endorsed for a fund, authority or institution it operates. For example, a school that has been endorsed for a school building fund that it operates will use Worksheet 2.
What you will need
- copy of GiftPack (and the latest GiftPack Updater)
- the ATO notice that states you are endorsed as a DGR, and
- your governing or constituent documents, and information about your activities and finances.
1. Full name of the deductible gift recipient (DGR)
2. Australian Business Number (ABN)
3. Period of review
from to
4. Reason for review
Annual review Change in circumstances
Other please specify
5. ATO notice of endorsement
Date of endorsement | DGR category |
|
|
AUSTRALIAN BUSINESS NUMBER (ABN)
6. Is your ABN still current?
| Yes | You must have a current ABN to be entitled to endorsement as a DGR. ABNs are explained here in GiftPack. The ABN is a single business identifier used for your government dealings. You can check on your ABN by searching the Australian Business Register (ABR) internet site at www.business.gov.au or calling the ATO on 13 24 78. If your ABN has been cancelled, you will have received written notification. |
| No |
NOTES:
DGR CATEGORY
7. Find the DGR category that applies to you. Do you still fall within it?
| Yes | The DGR categories are listed in the table in chapter 2 of GiftPack. The category for which you were endorsed is shown on your notice of endorsement. Check that you still fall within that DGR category's description given in the table. If the table sends you to an explanation of terms, check that you still satisfy the description in that explanation. If you no longer fall in the DGR category for which you were endorsed, you might still fall in another category. Check the other DGR categories in the table. If you do satisfy the description in another DGR category, answer 'Yes'. |
| No |
NOTES:
GIFT FUND
9. Are you maintaining a gift fund?
| Yes | You must maintain a gift fund to receive gifts made to you for your principal purpose. For any period that you are not maintaining a gift fund, you are not entitled to DGR endorsement. The gift fund requirement is explained on page 6 of GiftPack. Check that you continue to meet this requirement. Briefly, a gift fund is a fund with these features:
|
| No |
NOTES:
IN AUSTRALIA
9. Are you in Australia?
| Yes | All endorsed DGRs (except ancillary funds) must be in Australia. If your DGR category is ancillary fund, answer 'Not applicable'. The 'in Australia' requirement is explained here in GiftPack. Briefly, you will be in Australia if:
For exceptions to these conditions, refer to here in GiftPack. |
| No | |
| Not applicable |
NOTES:
RECEIPTS
10. Have you correctly issued receipts for gifts?
| Yes | If an endorsed DGR issues receipts for tax deductible gifts, particular information must be provided on them. The receipts must contain:
|
| No |
NOTES:
Once you have completed this worksheet you should:
- sign it off and keep it with your organisation's other records, and
- make an entry in the log at the back of GiftPack showing you have carried out the review.
Name of person carrying out review
| Position held
|
Signature
| Date
|
Approval by Board/Committee/Trustee | |
Appendix 2 - Worksheet 2 - Reviewing your DGR endorsement
Entity endorsed for a fund, authority or institution it operates
This worksheet will help you work out whether your endorsement as a deductible gift recipient (DGR) can continue. Endorsed DGRs must tell the Tax Office (ATO) if they stop being entitled to endorsement. Things that can affect entitlement are changes to purpose and operations, maintaining a gift fund, the 'in Australia' requirement and the gift receipts you issue. You should self-review each year and whenever there is a major change in structure or operations. Do not write on the original worksheet -- keep it as a template so that you can make copies whenever you carry out a self-review.
Who should complete this worksheet?
- Use this worksheet if your DGR endorsement applies only to a fund, authority or institution your entity operates. For example, a school that has been endorsed for a school building fund that it operates will use this worksheet.
- Do not use this worksheet if you have been DGR-endorsed in your own right: that is, if the whole of your entity falls within a DGR category. These organisations use Worksheet 1 - reviewing your DGR endorsement: entity endorsed as a DGR in its own right.
What you will need in order to complete this worksheet
- a copy of GiftPack (and the latest GiftPack Updater)
- the ATO notice that states you are endorsed as a DGR, and
- your governing or constituent documents, and information about your activities and finances.
Terms in this worksheet
- 'entity' is the entity - corporation, trust, unincorporated association, government entity - that has been endorsed
- 'fund, authority or institution' is the part of the entity that can receive tax deductible gifts.
If an entity has been endorsed separately for two or more funds, authorities or institutions, it should carry out a separate review for each of them. For example, if a school is endorsed for a school building fund and a public library that is part of the school, there should be a separate review for each of them.
1. Full name of the organisation
2. Australian Business Number (ABN)
3. Name of the fund, authority or institution
4. Period of review
from to
5. Reason for review
Annual review Change in circumstances
Other please specify
6. ATO notice of endorsement
Date of endorsement | DGR category |
|
|
AUSTRALIAN BUSINESS NUMBER (ABN)
7. Is your ABN still current?
| Yes | You must have a current ABN to be entitled to endorsement as a DGR. ABNs are explained here in GiftPack. The ABN is a single business identifier used for your government dealings. You can check the entity's ABN by searching the Australian Business Register (ABR) Internet site at www.business.gov.au or calling the ATO on 13 24 78. If the entity's ABN has been cancelled, it will have received written notification. |
| No |
NOTES:
DGR CATEGORY
8. Find the DGR category that applies to the fund, authority or institution. Does it still fall within the DGR category?
| Yes | The DGR categories are listed in the table in chapter 2 of GiftPack. The category for which the fund, authority or institution was endorsed is shown on the notice of DGR endorsement. Check that the fund, authority or institution still falls within the description of that DGR category given in the table. If the table sends you to an explanation of terms, check that it still satisfies the description in that explanation. If it no longer falls in the DGR category for which it was endorsed, it might still fall in another category. Check the other DGR categories in the table. If it does satisfy the description in another DGR category, answer 'Yes'. |
| No |
NOTES:
GIFT FUND
9. Is the entity maintaining a gift fund for the fund, authority or institution?
| Yes | A gift fund must be maintained to receive gifts made to the fund, authority or institution for its principal purpose. For any period that a gift fund is not maintained, there is no entitlement to DGR endorsement. The gift fund requirement is explained here in GiftPack. Check that you continue to meet this requirement. Briefly, a gift fund is a fund with these features:
|
| No |
NOTES:
IN AUSTRALIA
10. Is the fund, authority or institution in Australia?
| Yes | All funds, authorities or institutions (except ancillary funds) must be in Australia. If the DGR category is ancillary fund, answer 'Not applicable'. The 'in Australia' requirement is explained here in GiftPack. Briefly, a fund, authority or institution will be in Australia if:
For exceptions to these conditions, refer to here in GiftPack. |
| No | |
| Not applicable |
NOTES:
RECEIPTS
11. Have gift receipts been correctly issued?
| Yes | If receipts for tax deductible gifts are issued, particular material must be provided on them. The receipts must contain:
|
| No |
NOTES:
Once you have completed the worksheet you should:
- sign it off and keep it with your organisation's other records, and
- make an entry in the log at the back of GiftPack showing you have carried out the review.
Name of person carrying out review
| Position held
|
Signature
| Date
|
Approval by Board/Committee/Trustee | |
Appendix 3 - Log of DGR status reviews and record of key information
We recommend you use this log each time you self-review your DGR status. Self-reviews are explained - Self-review.
If your organisation is endorsed as a DGR for several gift deductible funds, authorities or institutions, do not write on the original log - keep it as a template to make copies for each.
Period reviewed | DGR status | Person conducting review | Position held | Signature | Date | |
Start | End | |||||
** If your organisation is no longer a DGR, have you notified the ATO? Refer here.
Record your organisation's key information in the table below:
Name of organisation (DGR) | |
Australian Business Number (ABN) | |
Tax File Number (TFN) |
Endorsement details:
Name of fund, authority or institution | ||
Type of endorsement | Item No. | |
Description | ||
Date of endorsement | ||
Need more information?
If you would like to find out more about deductible gift recipients and The New Tax System:
- phone the business Tax Reform Infoline on 13 24 78
- download information from our web site at www.taxreform.ato.gov.au
- obtain A Fax From Tax on 13 28 60, or
- write to us at PO Box 9935 in your capital city.
If you do not speak English and need help from the ATO, phone the Translating and Interpreting Service (TIS) on 13 14 50.
People with a hearing or speech impairment can phone the Telephone Typewriter Service on 1300 130 478.
Document last modified 22 May 2002
ATO references:
NO NAT 3132
| Date: | Version: | |
| You are here | 1 July 2000 | Original document |
| 1 July 2003 | Updated document | |
| 1 July 2005 | Updated document | |
| 1 July 2006 | Updated document | |
| 1 July 2007 | Updated document | |
| 1 May 2011 | Updated document | |
| 3 December 2012 | Updated document | |
| 5 December 2013 | Archived |