GiftPack (current to 4 December 2013)
This version is no longer current. Please follow this link to view the current version. |
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Gifts, Charities and Non-profit Organisations
About GiftPack
GiftPack helps you work out if your organisation can receive tax deductible gifts.
You should use GiftPack if you are a treasurer, office bearer or employee involved in the administration of an organisation that wants to receive tax deductible gifts.
Only certain organisations, including some government agencies, can receive tax deductible gifts. They are called deductible gift recipients (DGRs). GiftPack explains the types of DGRs and how an organisation can be accepted as a DGR.
It does not explain how donors claim tax deductions for their donations - refer to Making tax deductible gifts and donations.
To find important notes, look for the
You will also find 'more information' boxes (look for the
We often refer to quick codes (QC) and NAT numbers. A quick code is used to search for specific information. NAT numbers can be used to order publications that are available in paper format.
Deductible gift recipients - an overview
Only certain organisations can receive tax deductible gifts. They are called deductible gift recipients (DGRs). DGRs are either:
Most DGRs are endorsed by us. To be entitled to endorsement, your organisation must meet several requirements, including falling within one of the general DGR categories described in the tax law. Examples are public hospitals, registered public benevolent institutions and school building funds.
If an organisation does not fall in a general DGR category, parliament may consider amending the tax law to list the individual organisation by name as a DGR. Examples are Amnesty International Australia and the Australian Sports Foundation.
| Political parties are not DGRs. For information about tax deductions for gifts and contributions to political parties and independent candidates and members of parliament, refer to Political contributions and gifts. |
| You can check if your organisation is already a DGR by:
|
If your organisation is a DGR you must:
- keep records that explain all transactions relevant to its DGR status
- issue gift receipts correctly
- self-review your DGR regularly to ensure it continues:
- to be entitled to endorsement if it is an endorsed DGR
- to operate for its principle purpose and comply with any rules or conditions made by the government on listing as a DGR if it is a listed by name DGR.
To be tax deductible, a gift or contribution must be money or property covered by one of the types of deductible gifts or contributions listed in the tax law.
For some DGRs, the law sets gift conditions restricting:
- when a DGR can receive tax deductible gifts and contributions
- how a DGR uses the tax deductible gifts and contributions it receives.
| Charities A charity can only receive tax deductible gifts if it is a DGR. Many charities are not DGRs and therefore cannot receive tax deductible gifts. Your charity may be required to be registered with the Australian Charities and Not-for-profits Commission to be endorsed as a DGR, see: |
What's new?
The information in GiftPack applies from 3 December 2012 and replaces GiftPack (NAT 3132-04.2011) which was issued in April 2011.
It has been updated to include the following changes in tax law which have occurred since the last edition of GiftPack.
Australian Charities and Not-for-profits Commission
From 3 December 2012, there is a new national regulator for charities, the Australian Charities and Not-for-profits Commission (ACNC).
The ACNC is responsible for determining the charity status for all federal tax purposes. As part of its status determinations, the ACNC also decides whether a charity is a public benevolent institution or health promotion charity.
We will continue to be responsible for administering tax concessions, including:
- deductible gift recipient (DGR) status
- income tax exemption
- FBT rebate or exemption
- GST charity concessions.
Registration with the ACNC is voluntary. However, ACNC registration is now a prerequisite for charities to access DGR status for many DGR general categories, see the DGR table.
| For more information, refer to Not-for-profit reforms. |
Transitional arrangements for DGRs endorsed before 3 December 2012
From 3 December 2012, in addition to registration with the ACNC for charitable DGRs, minor amendments have been made to some DGR general categories.
If your organisation was endorsed as a DGR before 3 December 2012, it has 12 months to comply with these changes.
We recommend you self-review your organisation as follows:
- Find your organisation's notice of DGR endorsement.
- Note the number advised at 'Item(s) in Subdivision 30-B of the Income Tax Assessment 1997' on the notice.
- Check that your DGR meets the description of the item number in the DGR table in this guide including any requirement for the fund, authority or institution to be either:
- an Australian government agency
- a registered charity or part of a registered charity
- registered with the ACNC.
Example 1
A public hospital falls within the description in item 1.1.1 of the DGR table. Its notice of DGR endorsement advises item 1.1.1 at 'Item(s) in Subdivision 30-B of the Income Tax Assessment Act 1997' on the notice.
From 3 December 2012, item 1.1.1 in the DGR table specifically requires that the public hospital must be either:
- an Australian government agency
- a registered charity.
The hospital has 12 months to be registered as a charity with the ACNC if it is not an Australian government agency.
Example 2
A public fund is maintained for the purpose of providing money for public hospitals covered by items 1.1.1 and 1.1.2 of the DGR table. Its notice of DGR endorsement advises item 1.1.3 at 'Item(s) in Subdivision 30-B of the Income Tax Assessment Act 1997' and it is endorsed as a DGR from 1 July 2000.
From 3 December 2012, item 1.1.3 in the DGR table specifically requires that the public fund must either:
- be registered with the ACNC
- not be an ACNC type of entity.
The public fund has 12 months to be registered with the ACNC if it is an ACNC type of entity. The hospitals the fund provides money to must meet the requirements of items 1.1.1 and 1.1.2 in the DGR table including charity registration if they are not Australian government agencies.
Example 3
A residential educational institution affiliated under statutory provisions with a public university has DGR status. Its notice of DGR endorsement advises item 2.1.4 at 'Item(s) in Subdivision 30-B of the Income Tax Assessment Act 1997' on the notice.
From 3 December 2012, item 2.1.4 in the DGR table specifically requires that the institution must be a registered charity.
The institution has 12 months to be registered as a charity with the ACNC and to ensure that the public university is also so registered (if the university is not an Australian government agency).
If a parent entity is endorsed as a DGR for the operation of the institution, it has 12 months to register the institution as a charity with the ACNC. This may require establishing the institution as a separate entity.
Public ancillary funds
From 1 January 2012, several changes apply to public ancillary funds, including that they are now required to:
- comply with the public ancillary fund guidelines
- lodge annual returns to the ATO.
| For more information, refer to Public ancillary funds. |
Proposed changes
This section summarises government proposals affecting DGRs. At the time this publication was released, these proposals had not become law.
In Australia
The government has announced that it will amend the tax law to include a provision stating the 'in Australia' condition that is expected to apply to all DGRs from 1 July 2013.
From 1 July 2013, a fund, authority or institution would meet the in Australia condition if all of the following apply:
- it is established in Australia
- it operates solely in Australia
- it pursues its purposes solely in Australia.
The control, activities, assets and beneficiaries of a DGR must only be in Australia. If administrators provide money, property or benefits to an organisation that is not a DGR, they must consider the final use of such assistance when working out if their organisation is 'in Australia'.
Exceptions would apply to funds and institutions falling in the following DGR categories:
- overseas aid funds
- developed country relief funds
- DGRs listed by name under the 'International' DGR category
- certain public funds on the Register of Environmental Organisations
- scholarship funds.
A DGR would not fail the 'operating solely in Australia' and 'pursuing purposes solely in Australia' tests if the overseas activities are merely incidental to the operation and pursuit of the entity's purposes in Australia; or the overseas activities are minor in extent and importance when considered with reference to the operations and pursuit of an the entity's Australian activities.
Not-for-profit
From 1 July 2013, the term 'not-for-profit entity' is expected to replace defined and undefined uses of 'non-profit' in the income tax law including those parts of it dealing with DGR status.
To meet this requirement your organisation must meet both of the following:
- be an entity that is not carried on for the profit or gain of its owners or members, neither while it is operating nor upon winding up
- under an Australian law, foreign law or your organisation's governing rules, be prohibited from distributing, and does not distribute, its profits or assets to its owners or members (whether money, property or other benefits), neither while it is operating nor upon winding up, unless the distribution is made to another not-for-profit entity with a similar purpose, or it is genuine compensation for services provided to, or reasonable expenses incurred on behalf of, the entity.
Organisations accepted as non-profit organisations before 1 July 2013 would have until 1 July 2014, if required, to amend their constitutions or constituent documents to meet the 'not-for-profit entity' test.
| For more information on the proposed changes for DGRs, refer to Not-for-profit reforms. |
Can your organisation be endorsed as a DGR?
Most DGRs are endorsed by the ATO. The only DGRs that do not need to be endorsed are those listed by name in the income tax law.
To be endorsed as a DGR, your organisation must meet all of these requirements:
- It must have an Australian Business Number (ABN).
- It must fall within a general category of DGR described in the DGR table in the tax law. This can happen in two ways:
- Your organisation itself may fall in a category as a whole. Examples are public hospitals or public universities.
- A part of your organisation may fall in the description of a fund, authority or institution covered in a category. Examples are school building funds owned by schools or parent and friends associations or public libraries operated by local councils.
For some categories, if your organisation is a charity, it may also need to be registered with the Australian Charities and Not-for-profits Commission.
- It or that part of it that falls in a category must be 'in Australia'.
- It must have acceptable rules for transferring surplus gifts and deductible contributions on winding up or revocation of endorsement.
- It must maintain a gift fund if seeking endorsement for a part of it that falls within a general DGR category (unless an exception applies).
- It then must apply to the ATO for endorsement.
Example - Can your organisation be endorsed as a DGR?
Martyn is an administrative officer working at XYZ Research Institute (XYZ). XYZ is a government authority based in New South Wales where it operates a facility engaged in research into the prevention of disease in Australian farm animals. He has to work out if XYZ can be endorsed as a DGR and if so apply for endorsement.
Martyn does this by taking these steps.
Step 1 - Martyn checks whether XYZ has an ABN
Martyn finds the ABN after checking XYZ's records and the Australian Business Register (ABR). He notes that the ABR does not indicate that XYZ is a deductible gift recipient (DGR).
Step 2 - Martyn checks whether XYZ falls in a general DGR category
Martyn reviews the DGR table and finds XYZ could potentially fall within two categories - 'Public authority for research' and 'Approved research institute'.
The description of the category 'Approved research institute' refers him to the Guidelines for approved research institute applicants for more information. He reads this and checks XYZ's records and finds it has not been approved.
The description of the category 'Public authority for research' refers him to an explanation of Public authority. XYZ meets this requirement. He notes that XYZ is established to conduct and does conduct the appropriate research and that it satisfies the requirement to be either an Australian government agency or a registered charity.
'Public authority for research' has a 'gift condition'. Donors can only claim a deduction for gifts or deductible contributions made for research into the causes, prevention or cure of disease in human beings, animals or plants. Martyn was advised that this is the purpose for seeking DGR status.
Step 3 - Martyn reviews whether XYZ is in Australia
Martyn reviews the information on In Australia.
XYZ is established in Australia. Its research is only conducted here and its objects and purposes are solely in Australia. Martyn confirms with his colleagues that any collaboration with institutions outside Australia is incidental to XYZ's Australian operations.
Step 4 - Martyn checks whether XYZ's governing rules cover the treatment of surplus gifts on winding up or revocation of endorsement.
Martyn finds that this is not the case and organises changes to the rules governing XYZ's activities to include suitable clauses.
Step 5 - Martyn checks whether XYZ has to maintain a gift fund
Martyn reads the gift fund information and finds that only organisations seeking endorsement for the operation of a fund, authority or institution may need to maintain a gift fund. As XYZ itself falls in a general DGR category and is seeking endorsement for itself as a DGR, XYZ does not need to meet this requirement.
Step 6 - Martyn applies for endorsement
Martyn reviews the information at Applying for endorsement, completes an application form and sends it to the ATO.
Step 7 - XYZ receives its notice of endorsement
Martyn puts in place the following procedures to:
- record the receipt and use of gifts and contributions made to XYZ
- issue receipts for gifts and contributions correctly
- self-review XYZ's DGR status regularly in the event that he needs to advise the ATO should XYZ cease to be entitled to endorsement.
Two types of endorsement
There are two types of endorsement:
- where an organisation as a whole falls within a DGR category
- where a fund, authority or institution that is operated by an organisation falls within a DGR category.
For the first type of endorsement, donors may claim gifts and deductible contributions to the entity. For the second type of endorsement, only gifts and deductible contributions to the fund, authority or institution can be deductible.
The first type of endorsement applies if an organisation as a whole falls within a DGR category.
Example
A corporation is a registered public benevolent institution. The corporation can be endorsed in its own right.
Example
A fund is established and maintained under a trust deed for relief of persons in Australia who are in necessitous circumstances. The trust fund can be endorsed in its own right.
The second type of endorsement applies to:
- a fund legally owned by an organisation
- an authority or institution within an organisation.
For this type of endorsement, the organisation can be endorsed, but it is endorsed only for the particular fund, authority or institution.
Example
A public library is part of a school. The school is an entity. The school would apply for endorsement for its public library.
Example
A corporation has a necessitous circumstances fund that is owned by the corporation. The corporation can be endorsed, but only for its fund.
For this second type of endorsement, only gifts or deductible contributions made to the fund, authority or institution can be deductible.
Example
A local council is endorsed for a public library that it operates. Only gifts to the library would be deductible. Other gifts, such as gifts to the council for a neighbourhood project, would not be deductible.
If an organisation operates more than one fund, authority or institution, it will need a separate endorsement for each one.
Example
A school (that is an entity) operates a public library and a school building fund. The school would need to be endorsed for the library and endorsed for the building fund.
This second type of endorsement does not apply if an organisation establishes another entity.
Example
A service club (that is an unincorporated association) sets up a trust. The trust is a necessitous circumstances fund. As the trust is an entity, it must be endorsed in its own right. The service club is not endorsed for the trust.
Australian business number (ABN)
For an organisation to be endorsed as a DGR, it must have an ABN. If an organisation does not have an ABN, it cannot be endorsed.
An organisation that is to be endorsed as a whole uses its own ABN.
If an organisation is seeking endorsement for a fund, authority or institution it owns or includes, it uses its own ABN. There is no need for an extra ABN for endorsement of the fund, authority or institution.
If an organisation establishes a new entity and the new entity is seeking it to be endorsed as a DGR, the new entity must apply for its own ABN.
If part of an organisation has an ABN as a non-profit sub-entity for GST purposes, that ABN cannot be used for DGR endorsement.
| You can apply for an ABN:
|
| For more information, refer to the fact sheet Australian business number (ABN) (NAT 4450). It provides information for non-profit organisations about ABN registration, including requirements for organisations that undertake multiple enterprises and/or have multiple entities. |
DGR table
Organisations that can receive tax deductible gifts are called deductible gift recipients (DGRs). The tax law sets out general categories of DGRs and lists other DGRs by name.
The following tables list the general DGR categories under the following headings:
- health
- education
- research
- welfare and rights
- defence
- environment
- the family
- international affairs
- sports and recreation
- cultural organisations
- fire and emergency services
- ancillary funds
We refer you to a fact sheet for more information for some categories. These fact sheets form part of this guide and are listed in the Appendix.
If your organisation (or a fund, authority or institution that it operates) falls within a general DGR category, donors cannot claim tax deductions for their gifts or deductible contributions to your organisation unless it is endorsed.
Some funds, authorities and institutions in the table have a gift condition. For these DGRs the tax law restricts either:
- when they can receive tax deductible gifts or contributions
- how they use the deductible gifts or contributions they receive.
Health
Item | DGR table - general categories |
Public hospital The public hospital must be either: | |
Hospital carried on by a society or association The society or association must be a registered charity. 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 people suffering from illness are accepted as hospitals. Hospices for the terminally ill will generally be hospitals. Minor outpatient and nursing care will not prevent an institution from being a hospital. Examples are hospitals run by churches and religious orders. | |
Public fund for hospitals - The public fund must have been established before 23 October 1963 and either:
| |
1.1.4 | Public authority for research - The activities of the public authority do not need to be limited to such research. It may engage in other activities. The public authority must be either: Gift condition - the gift must be made for research into the causes, prevention or cure of disease in human beings, animals or plants. |
1.1.5 | Public institution for research - 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. The public institution must be either: |
1.1.6 | Registered health promotion charity The principal activity of the charity is to promote the prevention or the control of diseases in human beings. The institution must be a registered health promotion charity. |
1.1.7 | Public ambulance service The organisation must be either: |
1.1.8 | Public fund for public ambulance services - The public fund must either:
|
Education
Item | DGR table - general categories |
2.1.1 | Public university The university must be either: |
2.1.2 | Public fund for the establishment of a public university The university must be covered by item 2.1.1. The public fund must be either: |
2.1.3 | Higher education institution - The institution must be approved as a 'higher education provider' by the Minister under division 16 of the HESA. An institution that was a 'higher education provider' is no longer entitled to DGR endorsement from the date its approval was revoked, suspended or otherwise ceased. The institution must be either: |
Residential educational institution - 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. The institution must be a registered charity. | |
2.1.5 | Commonwealth residential educational institution - |
2.1.6 | Affiliated residential educational institution - Examples are residential colleges affiliated with higher educational providers. The institution must be either: |
2.1.7 | TAFE -
The institution must be either: Gift condition - gifts must be for:
|
Public fund for religious instruction in government schools - The public fund must either:
| |
2.1.9 | Roman Catholic public fund for religious instruction in government schools - The public fund must either:
|
2.1.10 | School building fund - The building must be used, or going to be used, as a school or college by:
The public fund must either:
For more information, refer to School building funds. |
2.1.11 | Public fund for rural school hostel building - The building must be used, or going to be used, principally as residential accommodation for students who meet both of the following:
The costs of the school must be solely or partly funded by the Australian government, a state or a territory. The accommodation must be provided by any of the following:
The public fund must either: |
2.1.12 | Government special school - |
2.1.13 | Scholarship fund - To be eligible, the scholarship, bursary or prize must have all the following characteristics:
The public fund must be either:
For more information, refer to Scholarship funds. |
2.2.9 | Life education company -
Gift condition - the gift must be for the conduct of such programs. |
Research
Item | DGR table - general categories |
3.1.1 | Approved research institute - The institute must either:
For more information, refer to Guidelines for approved research institute applicants. Gift condition - only gifts for the purposes of scientific research in the field of natural or applied science are deductible. |
Welfare and rights
Item | DGR table - general categories |
4.1.1 | Registered public benevolent institution - The charity must be a registered public benevolent institution. |
4.1.2 | Public fund for public benevolent institutions - The public fund must meet both of the following:
|
4.1.3 | Public fund for persons in necessitous circumstances - The public fund must either:
For more information, refer to Necessitous circumstances funds and tax deductible gifts. |
4.1.4 | Public fund on the Register of Harm Prevention Charities The Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) maintains the Register of Harm Prevention Charitable Institutions. Harm prevention charities are charitable institutions whose principal activity is to promote the prevention or the control of behaviour that is harmful or abusive to human beings. The public fund must be a registered charity. For more information, refer to Harm prevention charities. Gift condition - the public fund must be listed on the Register of Harm Prevention Charitable Institutions when the gift is made. |
4.1.5 | Australian disaster relief fund - The disaster must have been:
The public fund must be any of the following:
For more information including the types of disasters that qualify, refer to Australian disaster relief funds and tax deductible gifts. Gift condition - gifts must be made within two years, beginning on:
|
4.1.6 | Animal welfare charity -
The institution must be a registered charity. For more information, refer to Animal welfare charities. |
4.1.7 | Charitable services institution -
The institution must be a registered charity. For more information, refer to Charitable services institution. |
Defence
Item number | DGR table - general categories |
5.1.1 | The Commonwealth or a state Gift condition - only gifts made for the purposes of defence will be deductible. |
5.1.2 | Public institution or public fund for members of the armed forces - The public institution or public fund must be either: |
5.1.3 | War memorial repair fund - The public fund must be either: For more information, refer to War memorial repair fund. Gift condition - gifts must be made within two years of the date of endorsement of the fund. |
Environment
Item number | DGR table - general categories |
Public fund on the Register of Environmental Organisations The Department of Sustainability, Environment, Water, Population and Communities maintains the Register. The principal purpose of the organisation must be:
For more information, refer to Environmental organisations. Gift condition - the public fund must be listed on the Register of Environmental Organisations when the gift is made. |
The family
Item number | DGR table - general categories |
8.1.1 | Public fund for an approved marriage guidance organisation - The company must be approved by the Minister for Families, Housing, Community Services and Indigenous Affairs under section 9C of the Marriage Act 1961. Applications for approval should be sent to: Branch Manager The public fund must be a registered charity. |
8.1.2 | Public fund for provision of family counselling or family dispute resolution -
The Australian Government only allocates new funding for the provision of family counselling and family dispute resolution through the Federal Budget. The availability of funding is advertised in the national press and in the local or regional press in areas of identified need. Funding opportunities are also listed on the websites of the Attorney-General's Department, at www.ag.gov.au and the Department of Families, Housing, Community Services and Indigenous Affairs, at www.fahcsia.gov.au The public fund must be a registered charity. |
International affairs
Item number | DGR table - general categories |
9.1.1 | Overseas aid fund - The public fund must be either:
For more information, refer to Overseas aid funds. Gift condition - the Treasurer's declaration must be in force at the time the gift is made. |
9.1.2 | Developed country disaster relief fund - For more information, refer to Developed country disaster relief funds. The public fund must be either:
Gift condition - gifts must be made within two years from the date of the disaster as specified in the Treasury minister's declaration. |
Sports and recreation
Cultural organisations
Item number | DGR table - general categories |
12.1.1 | Public fund on the Register of Cultural Organisations The Office for the Arts, Department of Regional Australia, Local Government, Arts and Sport maintains the Register of Cultural Organisations. The principal purpose of a the organisation must be the promotion of literature, music, a performing art, a visual art, a craft, design, film, video, television, radio, community arts, Aboriginal arts or movable cultural heritage. For more information, refer to Register of Cultural Organisations. Gift condition - the public fund must be listed on the Register of Cultural Organisations when the gift is made. |
12.1.2 | The public library must be any of the following:
For more information, refer to Public libraries, public museums and public art galleries. |
12.1.3 | Public museum The public museum must be any of the following:
For more information, refer to Public libraries, public museums and public art galleries. |
12.1.4 | Public art gallery The public gallery must be any of the following:
For more information, refer to Public libraries, public museums and public art galleries. |
12.1.5 | Institution consisting of a public library, public museum and public art gallery or of any two of them The public institution must be any of the following:
For more information, refer to Public libraries, public museums and public art galleries. |
Fire and emergency services
Item number | DGR table - general categories |
12A.1.1 | Fire and emergency services co-ordinating body - Gift condition - the gift or contribution must be made for the purposes of supporting the coordination of volunteer fire brigades or State Emergency Services. For more information, refer to Fire and emergency services funds. |
12A.1.2 | Fire and emergency services co-ordinating body fund -
For more information, refer to Fire and emergency services funds. |
12A.1.3 | Fire and emergency services fund -
For more information, refer to Fire and emergency services funds. |
Ancillary funds
Item number | DGR table - general categories |
AA.A.AA | Public ancillary fund A trust is a public ancillary fund if it meets all of the following:
Transitional arrangements apply to public ancillary funds endorsed as DGRs before 1 January 2012. These funds:
For more information, refer to Public ancillary funds. |
P.A.F | Private ancillary fund A trust is a private ancillary fund if it meets all of the following:
Private ancillary funds prescribed as DGRs before 1 October 2009 may retain non-corporate trustees (with certain exceptions). For more information, refer to Private ancillary funds. |
Explanation of terms
ACNC type of entity means an entity that meets the description of a type of entity that can be registered by the Australian Charities and Not-for-profits Commission (ACNC).
Several DGR categories require the fund, authority or institution to either:
- be registered with the ACNC
- not be an ACNC type of entity.
Registration with the ACNC is currently limited to charities and is expected to expand to other not-for-profit entities. A date has not been proposed and is not expected before 1 July 2014.
For these categories, if your fund, authority or institution is a charity, it must also be registered with the ACNC to fully meet the description of the category.
The term "not be an ACNC type of entity" covers:
- entities that are not charities
- funds, authorities and institutions that are not entities.
Australian government agency means:
- the Commonwealth, a state or a territory
- an authority of the Commonwealth, a state or a territory.
| For information about what is the Commonwealth, a state or territory, refer to Goods and Services Tax Ruling GSTR 2006/5 Goods and services tax: meaning of 'Commonwealth, a State or a Territory'. |
Gift condition
For some DGRs, the law adds extra conditions affecting the types of deductible gifts they can receive. The gift may only be tax deductible if either:
- between certain dates
- for a specific use.
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 it is prohibited, by law or its governing documents, from distributing profits or gains to individual members and its actions are consistent with the prohibition.
The company must be:
- not carried on for the purposes of profit or gain to its individual members, and
- prohibited by its constitution from making any distribution of money or property to its members.
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 that are exceptional compared to ordinary individuals, but not necessarily coercive powers.
A fund is a public fund if:
- it is intended that the public will contribute to it
- the public or a significant part of the public does in fact contribute
- the public participates in administration of the fund.
For non-government public funds, the fund must be administered or controlled by individuals or institutions that have a degree of responsibility to the community as a whole because of their tenure of some public office or their position in the community.
| For more information including setting up a public fund, refer to Public funds. |
Registered charity means an entity that is registered with the Australian Charities and Not-for-profits Commission (ACNC) as a charity.
Several DGR categories may require the fund, authority or institution to be either of the following:
- a registered charity
- operated by a registered charity.
For these categories, if your organisation is a charity it must be registered with the ACNC.
Registered health promotion charity
Registered health promotion charity means an institution that is both:
- a registered charity
- registered with the ACNC as a health promotion charity.
| For more information, refer to Is your organisation a health promotion charity? |
Registered public benevolent institution
Registered public benevolent institution means an institution that is both:
- a registered charity
- registered with the ACNC as a public benevolent institution.
| For more information, refer to Is your organisation a public benevolent institution? |
In Australia
The 'in Australia' condition applies to all DGRs. This means the organisation must be in Australia. If it is not in Australia, it cannot be a DGR.
For funds, institutions and authorities to be in Australia, they must be established and operated in Australia.
Example
A fund is set up in Turkey. Its controlling board, most of its assets and its donors are in Turkey. It sends money to Australia to help people who are in necessitous circumstances.
The fund is not 'in Australia'. It cannot be endorsed as a DGR.
Example
A public museum is incorporated in New Zealand and has a branch in Australia.
It is not 'in Australia'. It cannot be endorsed as a DGR.
For the following funds, the purposes or beneficiaries of the fund must also be in Australia:
- a public fund for providing religious instruction in government schools
- an Australian disaster relief fund
- a necessitous circumstances fund
- an Australian war memorial fund
- a public fund for family counselling or family dispute resolution
- a marriage guidance fund.
Example
A fund is set up and operates in Australia. It makes its distributions for providing religious instruction in schools run by a government in Europe.
The fund is not 'in Australia'. It cannot be endorsed as a DGR.
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
- developed country disaster relief funds
- DGRs listed by name in the income tax law if the government of the day (when they were listed) approved overseas purposes or beneficiaries
- public funds on the Register of Environmental Organisations.
The fund itself must still be established and operated in Australia.
The Guidelines for public ancillary funds and the Guidelines for private ancillary funds require ancillary funds to be established and operated only in Australia. Their beneficiaries, being limited to DGRs, are effectively in Australia.
| The government proposes to amend the tax law to include a provision stating the 'in Australia' condition that is expected to apply to all DGRs from 1 July 2013 - see 'In Australia' discussion in Proposed changes. |
Winding up and revocation
When endorsed DGRs are wound up, or if their endorsement is revoked, they have to transfer all remaining gifts, deductible contributions and money received in relation to such gifts and contributions to a gift deductible fund, authority or institution.
This requirement varies with the type of endorsement.
| Organisations do not need to meet this requirement if they are established by an Act of the Commonwealth Parliament, and that Act, or another Act, does not provide for the winding up or termination of the entity. |
Endorsement as a whole
The organisation must be required by a law, its constituent documents, or rules governing its activities, to transfer the following surplus assets to a gift deductible fund, authority or institution when it is wound up or its endorsement is revoked (whichever occurs first):
- gifts and deductible contributions made to the organisation for its principal purpose
- money received by the entity because of such gifts and contributions.
This requirement may be set out in a law, in an organisation's constituent documents or in separate rules governing an organisation's activities.
If the organisation is wound up or its endorsement as a deductible gift recipient is revoked (whichever occurs first), any surplus of the following assets shall be transferred to another organisation to which income tax deductible gifts can be made:
- gifts of money or property for the principal purpose of the organisation
- contributions made in relation to an eligible fundraising event held for the principal purpose of the organisation
- money received by the organisation because of such gifts and contributions.
The winding up requirement for surplus gifts and contributions will also be met where the organisation's winding up clause requires all surplus assets to be transferred to another DGR. In this case, the DGR must have a separate rule regarding distribution of surplus gifts and deductible contributions in the event of revocation of DGR endorsement.
While DGRs endorsed as a whole are not required to maintain a gift fund, all gifts and deductible contributions made for the principal purpose must be used for that purpose. All DGRs must maintain records that explain all transactions and other acts relevant to status as a DGR.
| For more information, see Record keeping. |
Endorsement for the operation of a fund, authority or institution
The organisation must be required to transfer any surplus assets of the gift fund to another gift deductible fund, authority or institution when its fund, authority or institution is wound up or on revocation of endorsement, whichever occurs first. The organisation must be required to do this by a law, its constituent documents or rules governing its activities, for example, in the rules of the gift fund.
Gift fund
To be endorsed as a DGR for the operation of a fund, authority or institution, an organisation must maintain a gift fund for the principal purpose of the fund, authority or institution. Maintaining a gift fund means:
- all gifts and deductible contributions for the principal purpose of the fund, authority or institution are made to it
- any money received by the organisation, because of such gifts and contributions, is credited to it
- it does not receive any other money or property
- the fund is used only for the principal purpose of the fund, authority or institution.
An exception is where the organisation is already endorsed as a DGR as a whole and is seeking endorsement for a fund, authority or institution that it owns or includes. In this situation, the organisation does not need to maintain a gift fund.
Example
A public university is endorsed as a DGR as a whole. The university is seeking endorsement for the operation of a public library. The university does not need to maintain a gift fund for its library, as the university itself is endorsed as a DGR as a whole.
| For more information, refer to Gift fund requirements. |
Applying for endorsement
You can apply to the ATO for endorsement if your organisation:
- has an ABN
- falls into a general DGR category or operates a fund, authority or institution that falls into a general DGR category
- has acceptable rules dealing with the transfer of surplus gifts and deductible contributions on winding up or revocation of endorsement
- satisfies the gift fund requirements, if applicable, and
- is in Australia, or its fund, authority or institution is in Australia.
| You apply for DGR endorsement on the form Application for endorsement as a deductible gift recipient (NAT 2948). |
Applying for endorsement of your organisation for a fund, authority or institution it operates
If you are applying for endorsement for a fund, authority or institution your organisation operates, the application will ask for details. This type of endorsement is discussed in Two types of endorsement.
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 your organisation and also for a fund, authority or institution it operates, use separate applications for the different endorsements.
Example
A corporation that is a registered public benevolent institution is seeking endorsement for itself. It is also seeking endorsement for a public library it operates. It will lodge two separate applications.
When does endorsement start?
The application will ask you for the date from which you want your organisation to be endorsed.
For most DGR categories, the earliest possible date an organisation can be endorsed as a DGR is 1 July 2000. If your organisation is applying for endorsement under one of the categories in the table below, the earliest possible date of endorsement is shown in the table.
DGR category | Item number | Earliest possible date of endorsement |
Public ambulance service | 1.1.7 | 1 April 2004 |
Public fund for public ambulance services | 1.1.8 | 1 April 2004 |
Government special school | 2.1.12 | 1 April 2004 |
Scholarship fund | 2.1.13 | 1 July 2006 |
Public fund on the Register of Harm Prevention Charities | 4.1.4 | 1 July 2003 |
Australian disaster relief fund | 4.1.5 | 1 July 2006 |
Animal welfare charity | 4.1.6 | 1 July 2006 |
Charitable services institution | 4.1.7 | 1 July 2006 |
War memorial repair fund | 5.1.3 | 1 July 2006 |
Public fund for provision of family counselling or family dispute resolution | 8.1.2 | 1 July 2006 |
Developed country disaster relief fund | 9.1.2 | 1 July 2006 |
Fire and emergency services co-ordinating body | 12A.1.1 | 7 December 2010 |
Fire and emergency services co-ordinating body fund | 12A.1.2 | 7 December 2010 |
Fire and emergency services fund | 12A.1.3 | 7 December 2010 |
Private ancillary fund | P.A.F | 1 October 2009 |
Example
A school that is a registered charity operates a scholarship fund (item number 2.1.13). The fund was established on 1 January 2006. When applying for endorsement of its scholarship fund, the school would enter an endorsement date of 1 July 2006.
If your organisation became entitled to endorsement after the earliest possible date, it should use the date from which it is entitled.
Example
A public art gallery in Australia (item number 12.1.4) was established on 1 May 2011 and had an ABN from that date. It therefore would enter an endorsement date of 1 May 2011.
Donors can claim income tax deductions only for the gifts they make to your organisation from the date it is endorsed to the earlier of the date of revocation of endorsement or the date it is no longer entitled to receive tax deductible gifts.
We will notify you in writing
When we have processed your application, we will send you written confirmation that your organisation either:
- is endorsed as a DGR
- has been refused endorsement.
If your organisation is endorsed, donors can claim income tax deductions from the date the endorsement starts.
If there are delays in notifying you
If you believe we are too slow in notifying you about whether your organisation is endorsed, you can have your application treated as if it had been refused. The deemed refusal will trigger formal review rights.
The earliest you can notify us that you want to have your organisation's application treated as if it had been refused is the later of the following:
- the end of the 60th day after you made the application
- the end of the 28th day after the last day on which you gave us information or documentation we had requested.
To have your application treated as if it had been refused, you must give us written notice that you want it treated in that way. Your application will be deemed to be refused on the day you give such notice.
You then have a right to lodge an objection to the deemed refusal and have the decision reviewed.
Review rights
If your application for endorsement is refused, we will provide you with a clear explanation of our decision. At your request, we will review any of our decisions or actions affecting your organisation 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 area of the ATO where the decision was made or where action was taken.
You also have the right under the law to ask us for a review by lodging an objection against the refusal, or deemed refusal. Your objection must be:
- in writing, signed and dated
- lodged within 60 days of the date of notice of decision (although you may be granted an extension of time)
- addressed to the ATO, and
- explain the grounds you are relying on.
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 our 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. We will send a letter with the notice of decision about your objection explaining the steps you need to follow to exercise your rights of review or appeal.
DGRs listed by name
DGRs listed by name include organisations such as the National Trust and the Australian Sports Foundation.
For an organisation to become a DGR listed by name, parliament must amend the Income Tax Assessment Act 1997 (ITAA 1997) to include your organisation individually by name as a DGR. We do not process an inquiry for listing by name. Requests, in writing, should be directed to the Treasurer.
The majority of deductible gift recipients (DGRs) are endorsed by us. If your organisation wants to receive tax deductible gifts, you should firstly check whether it can be endorsed as a DGR.
DGRs listed by name are not required to have an ABN for gift deductibility purposes. However, most will have an ABN for other purposes.
These DGRs must be in Australia.
DGRs listed by name must also:
- keep records that explain all transactions relevant to their DGR status
- issue gift receipts correctly
- ensure they continue to operate for their principal purpose and comply with any rules or conditions made by the government on listing as a DGR. We recommend you self-review your organisation regularly.
To be tax deductible a gift or contribution must be money or property covered by one of the types of deductible gifts or contributions listed in the tax law.
For many DGRs listed by name the law sets gift conditions restricting:
- the period during gifts and contributions are tax deductible
- the purpose for which the deductible gift or contribution can used.
| For more information, including the tables of DGRs listed by name, refer to Deductible gift recipients listed by name in the tax law (NAT 8443). If an organisation has an ABN, you may also find out if it is a DGR by searching the Australian Business Register. |
Record keeping
You are required to maintain records that explain all transactions and other acts that are relevant to your organisation's status as a DGR. This requirement applies to both endorsed DGRs and listed DGRs.
Your DGR records must show that the following were used only for its principal DGR purpose:
- all gifts, and deductible contributions, of money or property made to it for that purpose
- money received because of such gifts or deductible contributions.
If your organisation is endorsed as a DGR as a whole or listed by name as a DGR, it must keep adequate accounting and other records.
If your organisation is endorsed as a DGR for the operation of a fund, authority or institution, maintaining a gift fund will show that it has used its gifts and deductible contributions and their accretions for the principal purpose of its fund, authority or institution.
If your organisation maintains one gift fund for two or more funds, authorities or institutions that it operates, the records must be able to identify gifts and deductible contributions made in respect of each separate fund, authority or institution. You must also show how these gifts and contributions and money received by the fund because of them have been used to further the principal purpose of that fund, authority or institution.
You do not have to keep a record if:
- we notify you that your DGR does not need to retain the record
- your DGR is a company that has been finally dissolved.
| The records must be in English or easily convertible to English and you must maintain them for at least five years after the completion of the transactions or acts they relate to. |
| The penalty for not keeping proper records is twenty penalty units, currently $3,400 (20 x $170 per penalty unit). |
Receipts
Income tax law specifies that certain information must be included on a receipt issued by a DGR for a tax deductible gift or contribution. This requirement applies not only to endorsed DGRs, but also to DGRs listed by name in the income tax law.
If an endorsed DGR does not provide the information below on its receipts, its endorsement may be revoked.
Gifts
When a DGR issues a receipt for a deductible gift, 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 - some DGRs listed by name might not have an ABN), and
- the fact that the receipt is for a gift.
Example
The ZXC School is an endorsed DGR for the school building fund it operates. The fund's name is the ZXC School Building Fund. For gifts to the fund, the receipt must show all of the following:
- 'ZXC School Building Fund'
- the ABN of ZXC School
- that the receipt is for a gift.
Other information useful for donors includes the following:
- the amount of money donated
- a description of any gifts of property
- the date of the gift.
It is up to the donor, not the DGR, to find out the market value of a gift of property for the purposes of claiming a tax deduction.
Deductible contributions
When a DGR issues a receipt for a deductible contribution, the receipt must specify:
- the name and ABN (if any - some DGRs listed by name might not have an ABN) of the DGR
- the fact that the contribution was made for
- a right to attend a specified fundraising event, or
- the purchase of goods or services as a successful bidder at a fundraising auction
- the amount of the contribution (if money), and
- the GST-inclusive market value of the right or the goods or services received in return for the contribution.
Other information useful for contributors includes:
- the date the contribution was made
- a description of the contribution if it was property.
It is up to the donor, not the DGR, to find out the market value of a contribution of property for the purposes of claiming a tax deduction.
| For more information, refer to Fundraising (NAT 13095). This guide includes examples of working out the market value of the right or the goods or services received in return for deductible contributions. |
Self-review
We recommend that you regularly review your DGR to ensure that it continues to operate for the purposes for which it was granted status as a DGR.
The law does not require any particular intervals between self-reviews, but we recommend a yearly review. There should also be a review when there is a major change in your organisation's structure or operations.
Endorsed DGRs
Endorsed DGRs must tell us if they cease to be entitled to endorsement.
Things that can affect an entitlement to be endorsed as a DGR are:
- changes to purpose and operations
- revocation of ACNC registration
- maintaining a gift fund
- the 'in Australia' requirement
- the receipts for gifts or deductible contributions your organisation issues.
This obligation means you need to carry out regular reviews of your organisation's status.
To help you carry out a self-review, we provide two worksheets:
- Worksheet 1: review of a DGR endorsed as a whole
- Worksheet 2: review of a DGR endorsed for the operation of a fund, authority or institution it owns or includes
Upon completion of your review, if you find your organisation is 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 to an endorsement may result in prosecution. |
If your organisation ceases to be entitled because it no longer has an ABN, you do not have to tell us.
If you have gone through the worksheet and find your organisation is entitled, you do not have to contact us and your organisation's status continues unchanged.
DGRs listed by name
Whilst the authority to remove your organisation's listing as a DGR in the tax law remains with the government and parliament, we may request information from you about your organisation's DGR status. If we find your organisation no longer meets the conditions for which it was granted DGR status, we must advise the relevant minister in writing.
We recommend you regularly review your DGR status to ensure:
- your organisation uses gifts, contributions or money received solely for its principal purpose
- any change in your organisation's principal purpose has not affected your DGR status
- your organisation continues to comply with any rules or conditions made by the Prime Minister or any other minister relating to your organisation being or becoming a DGR.
Tax deductible gifts and contributions
Deductible gifts
Most, but not all, gifts to DGRs are tax deductible. The tax law sets out the types of gifts that are tax deductible. They are listed in the table below.
| Type of gift | Link to more information |
Money | |
Property (including trading stock and shares) purchased during the 12 months before making the gift - irrespective of its value | Gifts of property purchased by the donor in the last 12 months |
Trading stock disposed of outside of the ordinary course of business | |
Property (including shares) valued by the ATO at more than $5,000 | |
Shares in a listed public company valued at $5,000 or less held by the donor for at least 12 months | |
Culturally significant property (except an estate or interest in land or in a building or part of a building) accepted by the DGR for inclusion in a collection it is maintaining or establishing | |
Places included in the National Heritage List, the Commonwealth Heritage List, or the Register of the National Estate |
Gifts covered by the first five gift types may be made to all DGRs (except Artbank). 'Cultural gifts' and 'heritage gifts' may be made only to limited groups of DGRs.
There is no deduction for the gift of a service, as no money or property covered by one of these gift types is transferred to the DGR. If property is transferred to a DGR as part of providing a service, a deduction may be allowed in relation to that property.
Deductible contributions
Contributions made to DGRs for DGR fundraising events (such as fetes, balls, gala shows, dinners and charity auctions) may be tax deductible.
To be deductible, the contribution must meet all of the following requirements:
- it must be made by an individual
- it must be made to a DGR for either
- a right to attend or participate in a fundraising event in Australia
- the purchase of goods or services as a successful bidder at an auction that is, or is at, a fundraising event in Australia
- it must be more than $150 (and can include certain property contributions)
- the GST-inclusive value of the right or the goods or services (the benefit) must not be more than $150 or 20% of the value of the contribution, whichever is less
- it must meet any gift conditions relating to the DGR as though it was a gift.
As a benefit is received in return, such contributions are not deductible as a gift. If a contribution is in fact a gift, it can only be claimed as a gift.
| For information about claiming tax deductions for gifts, including deductible contributions to eligible fundraising events, refer to Making tax deductible gifts and contributions. It also explains:
|
ATO review
As part of our general administration of tax laws, and to ensure only genuine entities or funds receive DGR concessions, we carry out reviews of DGRs. The reviews help establish if DGRs are in fact entitled to their status as DGRs.
We may ask you to provide information and documents relevant to your organisation's status as a DGR. While you must comply with this request, you will be given at least 28 days to provide the information and documents.
| You need to be aware that failure to comply can lead to endorsement being revoked, and to prosecution. |
Endorsed DGRs - revoking endorsement
We can revoke a DGR's endorsement if any of the following apply:
- it is not entitled to be endorsed
- it has not provided information or documents within the specified time following our request
- it has not given the specified information on receipts for tax deductible gifts and contributions.
We will provide written notice of the revocation. The revocation has effect from a date we specify and it may be retrospective.
If you are dissatisfied with the revocation of your organisation's DGR endorsement, you can lodge an objection against the revocation. You must send your objection to us in writing, giving the grounds for the objection.
The ATO can review all DGRs, including DGRs listed in the law, to ensure they continue to be eligible to receive deductible gifts and contributions.
We may ask, in writing, that you provide information and documents relevant to your organisation's status as a DGR. While you must comply with this request, you will be given at least 28 days to provide the information and documents.
| You need to be aware that failure to comply can lead to penalties and prosecution. |
DGRs listed by name - removal of listing
The authority to remove a listed DGR remains with the government and parliament.
We must advise the relevant minister in writing within 28 days if we are satisfied as result of our review of any of the following:
- your organisation fails or ceases to use gifts, contributions or money received solely for its principal purpose
- there is a change in your organisation's principal purpose
- your organisation fails or ceases to comply with any rules or conditions made by the Prime Minister or any other minister relating to your organisation being or becoming a DGR.
Our notice to the relevant minister may only include such information that is relevant to your organisation's DGR status.
The minister may only disclose our information relating to the removal of your organisation's name as a DGR in the tax law.
The government and parliament will then consider whether to continue your organisation's DGR status or amend the tax law to remove your organisation's name as a DGR.
| For more information, refer to Deductible gift recipients listed by name in the tax law (NAT 8443). |
Appendix
The links listed below are referred to in GiftPack and form part of the guide. They contain more detailed information on the requirements for particular DGR categories.
- Animal welfare charities
- Australian disaster relief funds and tax deductible gifts
- Charitable services institution
- Deductible gift recipients listed by name in the tax law
- Developed country disaster relief funds
- Environmental organisations
- Fire and emergency services funds
- Gift fund requirements
- Harm prevention charities
- Is your organisation a health promotion charity?
- Is your organisation a public benevolent institution?
- Necessitous circumstances funds and tax deductible gifts
- Overseas aid funds
- Public funds
- Public libraries, public museums and public art galleries
- Register of Cultural Organisations
- Scholarship funds
- School building funds
- War memorial repair fund
More information
We have a range of products and services specifically for non-profit organisations. To find out more, see Essential tax information for your non-profit organisation.
Last Modified: Monday, 17 December 2012
Copyright
Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products)
ATO references:
NO NAT 3132
| Date: | Version: | |
| 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 | |
| You are here | 3 December 2012 | Updated document |
| 5 December 2013 | Archived |