GiftPack (current to 30 June 2005)
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Gifts, Charities and Non-profit Organisations
GiftPack for deductible gift recipients & donors is designed to help deductible gift recipients (DGRs) and donors understand income tax deductible gifts.
Who should use this guide?
You should use this guide if you are involved in administering an organisation entitled to receive tax deductible gifts or an organisation seeking to receive tax deductible gifts. Donors should also use this guide.
Getting started |
This chapter outlines which organisations and types of organisations can receive income tax deductible gifts. They are called deductible gift recipients (DGRs). We also outline who can claim tax deductions for gifts and the types of gifts that are tax deductible.
Recent changes in the income tax law relating to DGRs and deductible gifts are highlighted as well as proposed changes that are not yet law.
Go to 'Getting started'.
Deductible gift recipients (DGRs) |
Deductible gift receipts (DGRs) must be endorsed by the Tax Office. The only DGRs that do not need endorsement are DGRs listed by name in the income tax law (including prescribed private funds). These are explained.
To be endorsed as a DGR, an organisation must fall within a general category of DGR. These DGRs are introduced in this chapter and described in detail in the chapter 'DGR table - general categories'. As well as falling in a general category, there are other conditions an organisation must meet to be a DGR.
Other conditions for DGRs (including endorsement) are outlined in this chapter and explained in detail in the chapter 'Deductible gift recipients - other conditions'.
Go to 'Deductible gift recipients (DGRs)'
DGR table - general categories |
Organisations can use the DGR table to check whether they fall within a general category. The table lists the other conditions that must be met and the types of deductible gifts each category can receive.
Go to 'DGR table - general categories'
Deductible gift recipients - other conditions |
This chapter explains the other conditions for DGRs:
- In Australia - DGRs must be 'in Australia' (except ancillary funds and prescribed private funds).
- Endorsement - organisations that fall within a general category of DGR must be endorsed by the Tax Office to be DGRs. Before an organisation can be endorsed it must have an Australian business number (ABN), maintain a gift fund and apply to the Tax Office for endorsement.
- Receipts - DGRs must provide certain details when they issue receipts for gifts.
- Self-review - Endorsed DGRs should carry out regular self-reviews of their DGR status.
Go to 'Deductible gift recipients - other conditions'.
Donors and gifts |
Deductions for gifts are claimed by the person or organisation that makes the gift (the donor). To claim a tax deduction for a gift, it must be truly a gift, be made to a DGR, comply with any gift condition relating to the DGR, and be a gift of money or property mentioned as a gift type in this chapter.
Go to 'Donors and gifts'.
Political parties and conservation covenants |
In this chapter we provide information about deductions for contributions to registered political parties.
We also explain income tax concessions for landowners who enter into certain conservation covenants over their land. A conservation covenant is a covenant that restricts or prohibits certain activities on land that could degrade its environmental value. It must be permanent and be approved in writing by the Minister for the Environment and Heritage.
Go to 'Political parties and conservation covenants'.
Publications
To obtain copies of our publications:
- visit our website at www.ato.gov.au
- phone 1300 720 092 and quote the NAT number (which is a unique national identifying number we give each of our publications, for example, NAT 7966)
- write to us at GPO Box 9935 in your capital city, or
- obtain A Fax from Tax on 13 28 60.
General overview information
| Tax basics for non-profit organisations (NAT 7966) is for all non-profit organisations. It:
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More detailed information | |
| Income tax guide for non-profit organisations (NAT 7967) is an income tax guide for all non-profit organisations. It:
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| GiftPack for deductible gift recipients & donors (NAT 3132) is an income tax guide for organisations that want to receive tax deductible gifts. It explains:
Other publications are available for detailed information on tax issues, including goods and services tax, pay as you go, fringe benefits tax, the superannuation guarantee, capital gains tax, completing activity statements, and record keeping. |
Highly specific information
Our fact sheets and other publications will give you specific information on the more complex aspects of your organisation's tax affairs.
You can access information such as tax legislation, rulings and case law by visiting our legal database ATOlaw at www.ato.gov.au.
Services
Internet
www.ato.gov.au
Our website includes an area specifically for non-profit organisations.
The For non-profit organisations home page links you to information about:
- taxes relevant to non-profit organisations, including income tax, fringe benefits tax, goods and services tax, and pay as you go
- exemptions or concessions that may apply, and
- other issues, such as fundraising, record keeping, volunteers and deductible gifts.
Email update service
Use the Free Email Updates link on our home page to subscribe to the For non-profit organisations webspace and receive free email updates when information is updated or added, including articles from the Non-profit news service. This will keep you up-to-date on key tax issues affecting the non-profit sector, new publications we release for non-profit organisations, and changes to tax law.
Fax
Our fax service, A Fax from Tax, gives non-profit organisations access to tax information 24-hours-a-day, seven-days-a-week. Phone 13 28 60 and follow the instructions to order the List of available documents or particular publications from the list.
Speakers and seminars
We can deliver a variety of informative and practical sessions at a time and place convenient to you, and we can tailor presentations to suit your needs.
Phone our national coordinator on 1300 130 282 to discuss your requirements, or email us at speakersandseminars@ato.gov.au.
Phone
Phone the Non-profit infoline on 1300 130 248 for direct access to staff trained to deal with non-profit enquiries, including income tax, Australian business number, goods and services tax and fringe benefits tax.
If you have special needs, phone the:
- Translating and Interpreting Service (if you do not speak English) on 13 14 50
- Telephone Typewriter Service (if you have a speech or communication impairment) on 13 36 77, or
- Speech-to-speech Relay Service (if you have a speech or communication impairment and do not have a computer or TTY) on 1300 555 727.
Write
Write to us at GPO Box 9935 in your capital city.
How to use this guide - GifPack for deductible gift recipients & donors
Where do I start? | Obtain an overview of tax deductible gifts and recent developments. See 'Getting started'. |
Recipients
Donors
What types of gifts are tax deductible? | Most, but not all, gifts to deductible gift recipients (DGRs) are tax deductible. The DGR table lists the types of gifts each DGR category can receive. Each 'gift type' is explained further. See 'Gift types'. |
Can I claim a tax deduction for my gift? | The requirements for claiming a tax deduction for a gift are explained, including how to check if an organisation is a deductible gift recipient. See 'Donors and gifts'. |
Getting started - GiftPack for deductible gift recipients & donors
Tax deductible gifts - an overview |
What's new? |
Proposed changes |
Who can receive tax deductible gifts?
The income tax law determines which organisations and types of organisations can receive income tax deductible gifts. They are called deductible gift recipients (DGRs).
Some DGRs are listed by name in the income tax law. They include organisations like Amnesty International Australia, Landcare Australia Limited and the Australian Academy of Science. Prescribed private funds are also listed by name in the income tax law.
These listed-by-name DGRs are set out in the fact sheet Deductible gift recipients listed by name in the tax law (NAT 8443). There are currently fewer than 300 organisations on the list. More information is provided in 'Deductible gift recipients (DGRs)'.
For other organisations to be DGRs, they must fall within a general category set out in the income tax law. Examples are public benevolent institutions, public universities, public hospitals, school building funds, public libraries, registered cultural and environmental organisations, and ancillary funds. There are more than 30 general categories. They are set out in 'DGR table - general categories'.
As well as falling within 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 Tax Office. These conditions and other requirements are explained in detail in 'Deductible gift recipients - other conditions'.
If DGRs in a general category are not endorsed by the Tax Office, donors cannot claim tax deductions for their gifts.
You can find out whether a particular organisation can receive tax deductible gifts by phoning the Tax Office on 13 28 61, or by searching the Australian Business Register at www.abr.business.gov.au.
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 'Political parties and conservation covenants'.
Can charities receive tax deductible gifts?
Charities can receive tax deductible gifts provided the organisation is a deductible gift recipient.
Some charitable organisations are not DGRs and therefore cannot receive tax deductible gifts.
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
What types of gifts are deductible?
Most, but not all, types of gifts to DGRs are tax deductible. There are various limits depending on the type of DGR, the amount of the gift, valuation and other factors. These are summarised in 'DGR table - general categories' and explained in detail in 'Donors and gifts'.
A contribution to a registered political party may be tax deductible. The tax deduction is explained in 'Political parties and conservation covenants'.
Landowners who enter into approved conservation covenants with a DGR may be eligible for a tax deduction. Conservation covenants are explained in 'Political parties and conservation covenants'.
GiftPack was last issued in May 2000. Following are changes to the income tax law and administrative procedure that have been incorporated into this edition.
New DGRs
Prescribed private funds
Prescribed private funds are funds listed by name in the income tax regulations. They are established by individuals and corporations for philanthropic purposes. Gifts to a prescribed private fund on or after 1 July 1999 can be allowable tax deductions. For more information, see the 'Prescribed private funds' section of 'Deductible gift recipients (DGRs)'.
Health promotion charities
Charitable institutions whose principal activity is promoting the prevention or the control of disease in people may qualify as a health promotion charity. Institutions that meet the criteria are entitled to the same concessions as those received by public benevolent institutions (PBIs). Gifts made to a health promotion charity can be allowable tax deductions. For more information, see the 'Health promotion charity' section of 'Deductible gift recipients (DGRs)'.
New gift type
A gift of property valued by the Tax Office at more than $5,000 can be a deductible gift regardless of when or how it was acquired. This new gift type applies to gifts made to DGRs from 1 July 1999. See the 'Property>$5,000' section in 'Donors and gifts'.
Conservation covenants
Certain types of conservation covenants over land entered into on or after 1 July 2002 will be eligible for an income tax deduction and concessional capital gains tax (CGT) treatment. For more information, see 'Political parties and conservation covenants'.
Spreading tax deductions
Income tax deductions for property donated to most DGRs may now be spread over a period of up to five years where the Tax Office values the gift at more than $5,000 or for some cultural, heritage and environmental gifts. See 'When can a gift deduction be claimed?' in 'Donors and gifts'.
Capital gains tax exemptions
CGT exemption is now available for some cultural gifts and some testamentary gifts, that is, gifts made under a will. See the 'Other income tax matters' section of 'Donors and gifts'.
Workplace giving programs
From 1 July 2002, if a portion of an employee's pay is donated to a DGR through regular payroll deductions, employers may reduce the PAYG amount they have to withhold from that employee's pay. See the 'Tax deductible gift' section of 'Donors and gifts'.
The following information is a summary of recent media releases in which the government announced its intention to introduce legislation affecting DGRs and deductible gifts.
At the time of printing, the changes had not become law.
In the Treasurer's press release No. 049 of 29 August 2002, the following measures were announced:
- New category of deductible gift recipient. A new general category of deductible gift recipient for charities whose principal activities promote prevention and control of harmful and abusive behaviour among humans. The new category applies from 1 July 2003.
- New process to become a DGR listed by name. The Income Tax Assessment Act 1997 is to be amended with effect from 1 July 2003 to allow future additions to the list of organisations specifically listed in the legislation as deductible gift recipients to be prescribed by regulation rather than requiring a legislative amendment.
- Entities established in perpetuity. Entities established in perpetuity by the Parliament are to be allowed to be endorsed as deductible gift recipients from 1 July 2003. They are currently denied endorsement because they cannot meet the requirement that their constituent documents or governing rules require that any surplus assets be transferred to another deductible gift recipient if they are wound up.
In the Prime Minister's media release of 11 December 2002, the following measure was announced:
- Spreading deductions for cash donations. From 1 July 2003 taxpayers will be able to spread deductions for cash donations made to deductible gift recipients, in instalments elected by the taxpayer, over a period of up to five years. The measure will make sure that donors receive the full benefit of deductions for gifts made to deductible gift recipients and will ensure that cash and non-cash gifts are treated similarly.
In a joint media release, dated 20 February 2003, issued by the Minister for the Environment and Heritage and the Minister for Revenue and Assistant Treasurer, the following measure was announced:
- Extension of conservation covenant concessions to government covenanting programs. The announcement extends tax incentives to people entering conservation covenants with government agencies, such as state departments of parks and wildlife. Previously the concessions only applied to covenants entered into with deductible gift recipients. The change will apply to covenants entered into on or after 1 July 2002.
On 27 June 2002 the government introduced new heritage legislation into Parliament. The package of bills includes the Australian Heritage Council (Consequential and Transitional Provisions) Bill 2002. This Bill affects National Estate gifts. From the date of Royal Assent of the Bill, the reference to gifts of places in the Register of the National Estate in the income tax law will be replaced by gifts of places in the National Heritage List or the Commonwealth Heritage List.
Deductible gift recipents (DGRs) - GiftPack for deductible gift recipients & donors
Deductible gift recipients listed by name in the law |
Prescribed private funds |
Endorsed deductible gift recipients |
A deductible gift recipient (DGR) is an organisation that can receive income tax deductible gifts. The income tax law determines which organisations and types of organisations can be DGRs.
To be a DGR, an organisation needs to be endorsed by the Tax Office.
The only DGRs that do not need to be endorsed are those specifically listed by name in the income tax law, including prescribed private funds.
DGRs listed by name in the income tax law include organisations such as the Industrial Design Council of Australia and the Australian Sports Foundation. There are currently fewer than 300 of these organisations listed.
A list of these DGRs is set out in the fact sheet Deductible gift recipients listed by name in the tax law (NAT 8443). Donors may also find out if an individual organisation is a DGR by searching the Australian Business Register at www.abr.business.gov.au.
DGRs listed by name are not required to have an Australian business number (ABN) for gift deductibility purposes. However, most will have an ABN for other purposes.
These DGRs must be in Australia. See 'In Australia' in 'Deductible gift recipients - other conditions'.
When a DGR listed by name in the tax law issues a receipt for a tax deductible gift, certain details must be provided on the receipt. See 'Receipts' in 'Deductible gift recipients - other conditions'.
For more information |
Refer to our fact sheet Deductible gift recipients listed by name in the tax law (NAT 8443). To obtain this publication, see 'How to access our publications and services'. |
A prescribed private fund is a fund listed by name in the Income Tax Assessment Regulations as a prescribed private fund, but does not include any fund declared by the Treasurer, in writing, not to be a prescribed fund.
A list of these DGRs is set out in the fact sheet Deductible gift recipients listed by name in the tax law (NAT 8443). They can also be searched on the Australian Business Register at www.abr.business.gov.au.
Prescribed private funds are established by businesses, families and individuals for philanthropic purposes and need not seek contributions from the public. Distributions from the fund may only go to DGRs that are not ancillary funds or other prescribed private funds. Ancillary funds are explained in 'DGR table - general categories'.
The application process and the requirements to establish a fund are set out in the Guidelines for Prescribed Private Funds. These guidelines include a model trust deed.
Guidelines for Prescribed Private Funds
The Guidelines for Prescribed Private Funds specify three sets of requirements. They are:
- the fund must be established under a will or instrument of trust solely for the purpose of providing money, property or benefits to DGRs or towards establishing DGRs,
- the fund must meet the public fund requirements (see 'DGR table - general categories') without the need to invite donations from the public or the requirement for certain public participation in its administration, and
- the fund must meet the requirements of the integrity assurance measures mentioned in the guidelines.
Prescribed private funds can only provide for the benefit of DGRs that are not ancillary funds or other prescribed private funds.
The integrity assurance measures are as follows:
- the controlling body of the fund must include at least one person who is a person with a degree of responsibility to the community as a whole. This person must not be associated with the donor/settlor in anything other than a professional capacity. Responsibility to the community as a whole is explained in the discussion on public funds in 'DGR table - general categories'.
- the fund must be audited.
- the founding documents must prohibit making any benefit to the trustee, the donor/settlor or to any associate. The guidelines list distributions that the founding documents must prohibit.
- the founding documents of the fund may allow accumulation of income (not including donations, gifts, government grants, and other voluntary transfers of property) to an extent which maintains the real value of the capital of the fund. Where your organisation is contemplating an accumulation of income beyond this amount, you must provide the Tax Office with a plan and rationale.
Applications
Applications are made to government but must first be lodged with the Tax Office. The Tax Office reviews the application and forwards valid applications to government for consideration.
Applications must be made in writing and include all information set out in the Guidelines for Prescribed Private Funds.
Annual information returns
Prescribed private funds are required to provide an annual information return. The return requires funds to supply information on:
- donations received and distributed
- income of the fund
- expenses of operation, and
- net worth of the fund.
Receipts
When a prescribed private fund issues a receipt for a tax deductible gift, certain details must be provided on the receipt. See 'Receipts' in 'Deductible gift recipients - other conditions'.
For more information |
Refer to:
To obtain these publications, see 'How to access our publications and services'. |
To be endorsed as a DGR, an organisation must fall within a general category of DGR. Examples of these categories are public benevolent institutions, public universities, public hospitals, school building funds, public libraries, registered cultural and environmental organisations, and ancillary funds.
The general categories of DGRs are specified in the income tax law. They are not determined by the Tax Office.
There are more than 30 general categories. They are set out in the chapter 'DGR table - general categories'.
As well as falling within a general category, there are other conditions endorsed DGRs must meet. They are:
- in Australia
- endorsement
- receipts, and
- self-review.
In Australia
The 'in Australia' condition applies to all endorsed DGRs except ancillary funds. This condition means the fund, authority or institution covered by the DGR general category must be in Australia. If it is not, gifts to it are not tax deductible.
Endorsement
The 'endorsement' condition applies if the organisation is not a DGR listed by name in the tax law. It means they must have endorsement by the Tax Office for gifts to be tax deductible. If the recipient of a gift is not endorsed or listed by name, the gift will not be tax deductible.
The Tax Office has endorsed more than 17,000 DGRs. To be endorsed, an entity will need to have an Australian business number, maintain a gift fund and apply for DGR endorsement.
Receipts
The 'receipts' condition applies whenever a DGR issues a receipt for a tax deductible gift. Certain details must be provided on the receipt. If the details are not included, DGR endorsement can be revoked.
Self-review
The 'self-review' condition means endorsed DGRs must tell the Tax Office if they cease to be entitled to DGR endorsement. They should carry out regular self-reviews to check whether they are still entitled.
These conditions are explained in detail in the chapter 'Deductible gift recipients - other conditions'.
How to use the DGR table | |
DGR table - general categories | |
Explanation of terms in the table | |
Public authority | |
Public fund | |
Public benevolent institution | |
Necessitous circumstances fund | |
School building fund | |
Public library, public museum and public art gallery | |
Ancillary fund | |
Health promotion charity | |
Public fund on the Register of Cultural Organisations | |
Public fund on the Register of Environmental Organisations | |
Overseas aid fund | |
DGR table - general categories - GiftPack for deductible gift recipients & donors
To be endorsed as a deductible gift recipient (DGR), an organisation must fall within a general category of DGR.
The 'DGR table' lists the general categories of DGRs (for example, public universities, school building funds and public benevolent institutions). It will help you work out:
- the requirements and conditions an organisation must satisfy to be endorsed as a DGR, and
- the types of tax deductible gifts particular DGRs can receive.
The table will refer you to other parts of this guide for more information.
The parts of the DGR table
DGR group
DGRs are sorted into the following groups:
- health
- education
- research
- welfare and rights
- defence
- environment
- the family
- international affairs
- sports and recreation
- cultural organisations, and
- ancillary funds.
DGR category
There are various DGR categories in each DGR group and a description is provided for each category. For an organisation to fall within a category, it must meet all the requirements of the description.
Explanation of terms
Some DGR category descriptions are explained further in 'Explanation of terms in the table'. Where a description refers you to an explanation, your organisation must also meet the additional requirements in the explanation.
Item number
The income tax law lists DGR categories under item numbers. The table shows the item number relevant to the DGR category.
Other conditions
An organisation may need to satisfy other conditions to be a DGR. These are explained in 'Deductible gift recipients - other conditions'. The other conditions are:
- in Australia
- endorsement
- receipts, and
- self-review.
Types of gifts
Only certain types of gifts to particular DGRs are tax deductible to donors. Types of gifts are explained in 'Donors and gifts'. The types are:
- $2 or more: money
- property >$5,000: property valued by the Tax Office at more than $5,000
- property<12mths: 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.
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.
Example
Term |
Public authority |
Public fund |
Public benevolent institution |
Necessitous circumstances fund |
School building fund |
Public library, public museum and public art gallery |
Ancillary fund |
Health promotion charity |
Public fund on the Register of Cultural Organisations |
Public fund on the Register of Environmental Organisations |
Overseas aid fund |
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 that are exceptional compared to ordinary individuals, but not necessarily coercive powers.
EXAMPLE
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 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 people, 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 fall within 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, moneys 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?
If you are not a government fund, you should use the following checklist to help work out whether your organisation is a public fund:
|
If your organisation is a public fund, go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category.
If your organisation is not a public fund, go back to the DGR table to check whether it falls within another DGR category.
For more information |
Refer to taxation ruling TR 95/27 Income tax: public funds. There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
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 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 - PBI
- 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 help 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 that 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, or
- 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
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 merely to manage trust property, and/or hold 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 disseminating religious views, providing general social services or promoting cultural objectives, the organisation will not be a PBI.
EXAMPLE
Deciding whether an organisation is predominantly for provision of benevolent relief is a matter of fact and degree. It is an objective question that will involve weighing 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.
For more information |
Refer to taxation ruling TR 2003/5 Income tax and fringe benefits tax: public benevolent institutions. There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
Checklist - am I a public benevolent institution?
You should use the following checklist to help work out whether your organisation is a PBI:
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Working through this checklist, your organisation will be a PBI if it is a non-profit institution and its 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 in the DGR table.
If your organisation is not a PBI, go back to the DGR table to check whether it is entitled to endorsement as a DGR within a different DGR category.
Examples
The following list shows common types of organisations and whether they are PBIs. You must use the examples in conjunction with the checklist.
EXAMPLE
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. 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 short-term financial need.
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.
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.
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 individuals.
EXAMPLE
Normally a necessitous circumstances fund will use an application form to obtain 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 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
However, 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?
Relevant materials to examine when working out whether you are a necessitous circumstances fund are: your constituent or governing documents, application forms for assistance, policies, advertising and financial statements, as well as your day-to-day activities. The following checklist will help you decide if you are a necessitous circumstances fund:
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If your organisation is a necessitous circumstances fund, go back to 'DGR table -general categories'. It sets out the other conditions a necessitous circumstances fund must meet to be entitled to receive tax deductible gifts.
If your organisation is not a necessitous circumstances fund, go back to the DGR table to check whether it falls within a different DGR category.
For more information |
Refer to the following publications:
There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
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.
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.
EXAMPLE
- Sunday schools
- adult religious education centres
- bible study centres, and
- pre-school kindergartens that are not primarily for child minding.
- child care centres, and
- yoga schools, riding schools, woodturning centres, dressmaking, ceramics and cookery workshops where the primary activity is associated with recreational pursuits.
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 that 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% 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 acquiring, constructing or maintaining the school or college buildings. It cannot be used for any other purpose.
Expenditure on capital improvements and maintenance, as well as installing and maintaining 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 that 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?
You should use the following checklist to help work out whether your organisation is a school building fund:
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If your organisation is a school building fund, go back to the table. It sets out the other conditions a school building fund must meet to be entitled to receive tax deductible gifts.
If your organisation is not a school building fund, go back to the DGR table to check whether it falls within a different DGR category.
For more information |
Refer to the following publications:
There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
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, they 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 people, 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.
EXAMPLE
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
EXAMPLE
- Business exhibits set up as part of promoting or carrying on a business.
- Hobby associations and clubs that 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 in 'ancillary funds').
- Support organisations such as 'Friends of' an art gallery or museum.
- Urban preservation schemes that encourage 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. Start by checking the cultural organisations category.
Checklist - am I a public library, museum or art gallery?
To work out whether you are a public library, museum or art gallery, look at your constituent or governing documents, your membership and control, policies, advertising, financial statements and day-to-day activities. The following checklist will help you decide if you are a public library, museum or art gallery:
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If your organisation is a public library, museum or art gallery, go back to the table to check that it also meets the other relevant requirements.
If your organisation is not a public library, museum or art gallery, go back to the DGR table to check whether it falls within a different DGR category.
For more information |
Refer to taxation ruling TR 2000/10 Income tax: public libraries, public museums and public art galleries. There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
The DGR category of ancillary fund covers funds with the following characteristics:
- the fund is a public fund ('public fund' is explained)
- 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 or a prescribed private fund.
If a DGR is endorsed only for a fund, institution or authority that it operates (see 'Deductible gift recipients - other conditions '), 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.
EXAMPLE
Checklist - am I an ancillary fund?
Relevant material to examine when working out whether you are an ancillary fund is your trust deed or the will under which you were established, application forms for assistance, policies, advertising, and financial statements, as well as your day-to-day activities. The following checklist will help you decide if you are an ancillary fund:
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If your organisation is an ancillary fund, go back to the table to check that it also meets the other relevant requirements.
If your organisation is not an ancillary fund, go back to the DGR table to check whether it falls within a different DGR category.
If your organisation is not an ancillary fund merely because it is not a public fund, go to 'Prescribed private fund' in 'Deductible gift recipients (DGRs)' to check whether you may apply for your organisation to be a prescribed private fund.
For more information |
Refer to taxation ruling TR 95/27 Income tax: public funds. There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
The characteristics of a health promotion charity are:
- its principal activity is promoting the prevention or the control of diseases in human beings, and
- it is a charity that is a charitable institution.
EXAMPLE
- provide relevant information to sufferers of a disease, health professionals, carers and the public
- research how to detect, prevent or treat diseases in people
- develop or provide relevant aids and equipment to sufferers of a disease.
Disease
The term 'diseases' includes any physical or mental ailment, disorder, defect or morbid condition, whether of sudden onset or gradual development, and whether of genetic or other origin.
Examples of diseases that fall within this definition include asthma, cancer, acquired immune deficiency syndrome (AIDS), arthritis, heart conditions, brain conditions, paraplegia and kidney conditions.
The disease must be one affecting humans.
Control or prevention
The activities of the organisation must be directed towards promoting control or prevention of the disease. Examples of control or prevention include:
- providing broad-based education to individuals suffering from a disease
- providing broad-based education to carers and service providers
- engaging in medical research into the causes, prevention and treatment of a disease, and
- engaging in activities to raise community awareness of a disease and other similar diseases.
Charitable institution
The organisation must be a charity. The characteristics of a charity are:
- it is an entity
- it exists for the public benefit or the relief of poverty
- it is non-profit
- its purposes are charitable within the legal sense of that term, and
- its sole or dominant purpose is charitable.
For an explanation of these characteristics, refer to our publication Income tax guide for non-profit organisations (NAT 7967).
To be a health promotion charity, the charity must be a charitable institution and not a mere fund. 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.
EXAMPLE
Checklist - am I a health promotion charity?
You should use the following checklist to work out whether your organisation is a health promotion charity:
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Working through this checklist, your organisation will be a health promotion charity if it is a charitable institution and its principal activity is to promote the prevention or control of diseases in humans. Health promotion charities must meet other conditions to be entitled to receive tax deductible gifts, as shown in the DGR table.
If your organisation is not a health promotion charity, go back to the DGR table to check whether it is entitled to endorsement as a DGR within a different DGR category.
A public fund on the Register of Cultural Organisations is a public fund maintained by an organisation that is included on the Register of Cultural Organisations kept by the Department of Communications, Information Technology and the Arts (DCITA).
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 Tax Office.
An organisation on the Register of Cultural Organisations must meet several requirements, including:
- it is a body corporate, or a trust, or an unincorporated body established for a public purpose by the Commonwealth, a state or a territory
- its principal purpose is 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
- it does not give any of its property, profits or financial surplus to its members, beneficiaries, controllers or owners
- it maintains a public fund to receive gifts ('public fund' is explained), and
- it agrees with DCITA that, if included on the Register, it will participate in periodic reviews of eligibility.
EXAMPLES
- a new theatrical work
- the publication of a literary magazine, and
- the building of a community arts centre.
If your organisation is a public fund on the Register of Cultural Organisations, go back to the table to check that it also meets the other relevant requirements.
If your organisation is not a public fund on the Register of Cultural Organisations, go back to the DGR table to check whether it falls within a different DGR category.
For more information |
Refer to our fact sheet Register of cultural organisations and tax deductible gifts (NAT 8235). There are various ways of obtaining our information and services - see 'How to access our publications and services'. You can also contact DCITA: The Manager Phone: (02) 6271 1640 Fax (02) 6271 1122 Email: roco.mail@dcita.gov.au Website: www.dcita.gov.au/roco Guidelines and application form for registration can be obtained from the DCITA website or by phoning DCITA. |
A public fund on the Register of Environmental Organisations is a public fund maintained by an organisation that is on the Register of Environmental Organisations kept by the Department of the Environment and Heritage (also known as Environment Australia).
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 Tax Office.
If an organisation wants to be entered on the Register of Environmental Organisations, it must meet several requirements, including:
- it is a body corporate, a cooperative society, or a trust, or an unincorporated body established for a public purpose by the Commonwealth, a state or a territory;
- its principal purpose is
- the protection and enhancement of the natural environment or a significant aspect of it, or
- the provision of information or education, or the carrying on of research, about the natural environment or a significant aspect of it,
- it does not give any of its property or profits to its members, beneficiaries, controllers or owners, and
- it maintains a public fund to receive gifts ('public fund' is explained).
If your organisation is a public fund on the Register of Environmental Organisations, go back to the table to check that it also meets the other relevant requirements.
If your organisation is not a public fund on the Register of Environmental Organisations, go back to the DGR table to check whether it falls within a different DGR category.
For more information |
Refer to our fact sheet Environmental and heritage organisations and tax deductible gifts (NAT 8237). There are various ways of obtaining our information and services - see 'How to access our publications and services'. You can also contact Department of Environment and Heritage (Environment Australia): The Administrator Phone: (02) 6274 1467 Fax: (02) 6274 1858 Email: reo@ea.gov.au Website: www.ea.gov.au |
An overseas aid fund is a public fund that the Treasurer has declared, by notice in the Gazette, to be a relief fund.
For a fund to be a relief fund, it must meet several requirements:
- it is a public fund ('public fund' is explained)
- it is established by an organisation declared by the Minister for Foreign Affairs to be an approved organisation, and
- it is solely for the relief of people in a country declared by the Minister for Foreign Affairs to be a developing country.
There is a two-step process to achieve relief status. The Australian Agency for International Development (AusAID) is the agency responsible for managing the first step process. Firstly, an organisation must be accepted as an 'approved organisation' by the Minister for Foreign Affairs. This requires an organisation to satisfy a number of criteria that can be found at www.ausaid.gov.au/ngos.
Once an organisation gains approval from the Minister for Foreign Affairs, the Minister refers the 'approved organisation' to the Treasurer.
The Treasurer then needs to be satisfied that the organisation has established a public fund exclusively for the relief of people in declared developing countries.
If your organisation is an overseas aid fund, go back to the table to check that it also meets the other relevant requirements.
If your organisation is not an overseas aid fund, go back to the DGR table to check whether it falls within a different DGR category.
For more information |
Refer to our fact sheet Overseas aid funds and tax deductible gifts (NAT 8233). There are various ways of obtaining our information and services - see 'How to access our publications and services'. You can also contact AusAID: The Community Programs Section Phone: (02) 6206 4667 Fax: (02) 6206 4798 Email: ngo_liaison@ausaid.gov.au Website: www.ausaid.gov.au |
Deductible gift recipients - other conditions - GiftPack for deductible gift recipients & donors
In Australia |
Endorsement |
Receipts |
Self-review |
Worksheet 1 |
Worksheet 2 |
Condition | What does the condition require? | Who does the condition apply to? |
In Australia | The fund, authority or institution covered by the DGR category must be in Australia | All DGR categories including DGRs listed by name, but not ancillary funds or prescribed private funds |
Endorsement | Endorsement by the Tax Office as a DGR | All general categories of DGR - that is, organisations not listed by name in the tax law |
Receipts | The DGR must provide certain details on receipts when it issues a receipt for a tax deductible gift | All DGRs - that is, endorsed DGRs and DGRs listed by name |
Self-review | The endorsed DGR must:
| All endorsed DGRs |
QUICK REFERENCE
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The 'in Australia' condition applies to all DGR categories (except ancillary funds and prescribed private funds). This means 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.
QUICK REFERENCE Endorsement by the Tax Office is needed for organisations to receive tax deductible gifts (unless they are listed by name in the tax law). There are two types of DGR endorsement. An entity can be:
Before an entity can be endorsed, it must:
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The 'endorsed' condition applies to all DGR categories (except DGRs listed by name in the tax law). These organisations must be endorsed by the Tax Office. If your organisation is not endorsed, donors cannot claim income tax deductions for the gifts they make to it.
The pre-requisites to endorsement are that your organisation falls into a DGR category and that it is in Australia (unless it is an ancillary fund).
To be endorsed, an organisation must have an ABN. If you indicate on the ABN registration form that you want to be endorsed as a deductible gift recipient, you 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.
You should only lodge the form if you have worked out that your organisation is entitled to endorsement. Entitlement is explained in this guide and in the instructions that accompany the application form.
Organisations that already have an ABN and did not indicate their DGR status on the ABN application form will need to contact the Tax Office on 1300 130 248 to obtain a DGR endorsement application form.
Once your application has been processed, the Tax Office will send you 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 this second type of endorsement, the endorsement does not make the entity 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 one.
EXAMPLE
This second type of endorsement does not apply if an entity establishes another entity.
EXAMPLE
The requirements for endorsement
Before an entity can be endorsed, it must:
- have an Australian business number
- maintain a gift fund, and
- apply to the Tax Office for endorsement as a DGR.
These requirements are explained in the following sections.
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.
For an entity that is to be endorsed in its own right, it uses its own ABN.
If an entity is seeking endorsement for a fund, authority or institution it operates, it uses its own ABN. There is no need for an extra ABN for endorsement of the fund, authority or institution.
The requirement for an ABN only applies to DGR categories that need endorsement. DGRs 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
You can apply for an ABN:
- electronically through
- the Australian Business Register at www.abr.gov.au if all you want to do is apply for an ABN
- the Business Entry Point (BEP) at www.business.gov.au where you can also attend to other government obligations
- on a paper form, available by phoning the Tax Office on 13 28 66, or
- through a tax agent, who will lodge your application using the electronic lodgment system.
For more information |
Refer to the following fact sheets:
There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
A pre-requisite for 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 occurs first.
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 other requirements are met, the institution is maintaining a gift fund for its principal purpose. The operation of the donation funds - which together can be accepted as a fund - is for the principal purpose of the institution.
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 (that is, gifts made under a will) 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 fundraising, and
- investment, if it is consistent with carrying out 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. The entity must then notify the Tax Office so that the Tax Office can revoke the entity's 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
For more information |
Refer to taxation ruling TR 2000/12 Income tax: deductible gift recipients - the gift fund requirement. There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
Applying for endorsement
You can apply to the Tax Office for endorsement if your organisation:
- has an ABN
- falls into a DGR general category or operates a fund, authority or institution that falls into a DGR general category (see 'DGR table - general categories')
- maintains a gift fund, and
- is in Australia or its fund, authority or institution is in Australia (unless it is an ancillary fund).
The relevant application form is called an Application for endorsement as a deductible gift recipient. If your organisation has an ABN, you can obtain a copy of this form by contacting the Tax Office on 1300 130 248.
The application will ask you to verify that your organisation meets the conditions to be entitled to endorsement. If the Tax Office wants more information, we will contact you. Do not send any supporting material with your application.
Applying for a fund, authority or institution your organisation 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 above.
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
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 your organisation while it is endorsed.
EXAMPLE
EXAMPLE
Notification of endorsement
The Tax Office will advise each applicant of the outcome of an application. Notification will be in writing, confirming the Tax Office has either:
- endorsed the applicant, or
- refused endorsement.
If there are delays in notification
If you believe the Tax Office is 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 the Tax Office you wish your application to be treated as if it had been refused is the later of:
- the end of the 60th day after you made the application, or
- the end of the 28th day after the last day on which you gave the Tax Office information or documentation that it had requested.
To have your application treated as if it had been refused, you must give the Tax Office 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 Tax Office will provide you with a clear explanation of its decision.
Informal review
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 Tax Office where the decision was made or where action was undertaken.
Formal review
You also have the right, under the income tax law, to ask the Tax Office for a review of its taxation decision by lodging an objection against the refusal, or deemed refusal to endorse you. 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 in appropriate circumstances
- addressed to the Tax Office, and
- explain the grounds that you rely on.
This will enable us to reconsider 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.
Review and appeal
If you are dissatisfied with the Tax Office'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.
QUICK REFERENCE
|
When a DGR gives a receipt for a tax deductible gift, the income tax law specifies the information that must be included on the receipt. 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 applies not only to endorsed DGRs, but also to DGRs that are listed by name in income tax law. The only DGRs that do not have to include their ABN on receipts are those listed by name in 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.
QUICK REFERENCE
|
Endorsed DGRs must tell the Tax Office 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 you will need to carry out regular reviews of your organisation's status.
The law does not require any particular intervals between self-reviews, but the Tax Office recommends a yearly review. There should also be a review when there is a major change in your organisation's structure or operations.
To help you carry out a self-review, we have provided worksheets at the end of this chapter. You will only need to complete the worksheet that applies to your organisation. It will take you through the essential points.
If you go through the worksheet and find your organisation is no longer entitled to endorsement, you must tell the Tax Office. 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 your organisation ceases to be entitled because it ceases to have an ABN, you do not have to tell the Tax Office.
If you have gone through the worksheet and find your organisation is still entitled, you do not have to contact the Tax Office and your organisation's status will continue unchanged.
A log to record your reviews has also been included at the back of this guide 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 Tax Office conducts a review of your organisation's status.
Tax Office review
As part of its general administration of tax laws, and to ensure only genuine entities or funds receive DGR concessions, the Tax Office carries out reviews of endorsed DGRs. The reviews help establish if DGRs are in fact entitled to endorsement.
The Tax Office may ask you to provide information and documents relevant to your organisation's 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 Tax Office 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 Tax Office, or
- it has not given the specified information on receipts.
The Tax Office will provide written notice of the revocation. The revocation has effect from a date specified by the Tax Office and the date 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 do this in writing to the Tax Office, giving the grounds for the objection.
Worksheet 1 - reviewing your endorsement as a deductible gift recipient |
Entity endorsed as a deductible gift recipient in its own right
This worksheet will help you work out whether you are still entitled to endorsement as a deductible gift recipient (DGR). When we refer to 'your' endorsement in this worksheet, we mean the endorsement of your organisation.
Endorsed DGRs must tell the Tax Office 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 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 should use Worksheet 2. For example, a school that has been endorsed for a school building fund that it operates will use Worksheet 2.
What you will need
- A copy of GiftPack for deductible gift recipients & donors.
- The Tax Office notice that states you are endorsed as a DGR.
- Your governing or constituent documents, and information about your activities and finances.
- Full name of the deductible gift recipient (DGR)
- Australian business number (ABN)
- Period of review
to |
- Reason for review
Annual review | Change in circumstances | Other (please specify) |
- Tax Office notice of endorsement
Date of endorsement
DGR category
AUSTRALIAN BUSINESS NUMBER (ABN)
- Is your ABN still current?
Yes | Go to question 7 | You must have a current ABN to be entitled to endorsement as a DGR. You can check on your ABN by searching the Australian Business Register at www.abr.business.gov.au or by phoning the Tax Office on 13 28 66. If your ABN has been cancelled, you will have received written notification. |
No | You are not entitled to be endorsed. The Tax Office will notify you that endorsement has been revoked |
NOTES:
DGR CATEGORY
- Find the DGR category that applies to you. Do you still fall within it?
Yes | Go to question 8 | The DGR categories are listed in GiftPack for deductible gift recipients & donors in the chapter 'DGR table - general categories'. 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 DGR table. If the table sends you to an explanation of terms, check that you still satisfy the description in the explanation. |
No | You are no longer entitled to endorsement. You must tell the Tax Office, in writing, that you have ceased to be entitled to DGR endorsement and give the date you ceased to fall within a DGR category | If you no longer fall within the DGR category for which you were endorsed, you might still fall within another category. Check the other DGR categories in the table. If you do satisfy the description in another DGR category, answer 'Yes'. |
NOTES:
GIFT FUND
- Are you maintaining a gift fund?
Yes | Go to question 9 | You must maintain a gift fund to receive gifts made to you for your principal purpose. For any period you are not maintaining a gift fund, you are not entitled to DGR endorsement. The gift fund requirement is explained above. Check that you continue to meet this requirement. |
No | You are not entitled to DGR endorsement for the period you were not maintaining a gift fund. You must tell the Tax Office in writing so your endorsement can be revoked for that period | Briefly, a gift fund is a fund with these features:
|
NOTES:
IN AUSTRALIA
- Are you in Australia?
Yes | Go to question 10 | 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 above. Briefly, you will be in Australia if:
For exceptions to these conditions, click here. |
No | You are not entitled to be endorsed for the period you were not in Australia. You must tell the Tax Office in writing so that your endorsement can be revoked | |
Not applicable | Go to question 10 |
NOTES:
RECEIPTS
- Have you correctly issued receipts for gifts?
Yes | You have met all requirements to continue as an endorsed DGR. You do not need to contact the Tax Office. Continue to carry out periodic self-reviews | If an endorsed DGR issues receipts for tax deductible gifts, particular information must be provided on them. The receipts must contain:
Further information on receipts is provided above. |
No | You must ensure that gift receipts contain the required information. Take immediate steps so this problem does not arise again. If you do not, the endorsement may be revoked |
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 of status reviews' showing you have carried out the review.
Name of person carrying out review
Position held
Signature
Date
Approval by Board/Committee/Trustee
Worksheet 2 - reviewing your endorsement as a deductible gift recipient |
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. When we refer to 'your' endorsement, we mean the endorsement of a fund, authority or institution your entity operates.
Endorsed DGRs must tell the Tax Office 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 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 it operates will use this worksheet.
- Do not use this worksheet if you have been endorsed in your own right: that is, if the whole of your entity falls within a DGR category. These organisations should use Worksheet 1.
What you will need in order to complete this worksheet
- A copy of GiftPack for deductible gift recipients & donors.
- The Tax Office notice that states you are endorsed as a DGR.
- 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.
- Full name of the entity
- Australian business number (ABN)
- Name of the fund, authority or institution
- Period of review
to |
- Reason for review
Annual review | Change in circumstances | Other (please specify) |
- Tax Office notice of endorsement
Date of endorsement
DGR category
AUSTRALIAN BUSINESS NUMBER (ABN)
- Is the ABN of the entity still current?
Yes | Go to question 8 | The entity must have a current ABN to be entitled to endorsement as a DGR. You can check the entity's ABN by searching the Australian Business Register at www.abr.business.gov.au or by phoning the Tax Office on 13 28 66. If the entity's ABN has been cancelled, it will have received written notification. |
No | Your entity is no longer entitled to be endorsed as a DGR. The Tax Office will notify you that endorsement has been revoked |
NOTES:
DGR CATEGORY
- Find the DGR category that applies to the fund, authority or institution. Does it still fall within the DGR category?
Yes | Go to question 9 | The DGR categories are listed in 'DGR table - general categories'. 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 the DGR category given in the table. If the DGR table sends you to an explanation of terms, check that it still satisfies the description in the explanation. If it no longer falls within the DGR category for which it was endorsed, it might still fall within another category. Check the other DGR categories in the table. If it does satisfy the description in another DGR category, answer 'Yes'. |
No | The entity is no longer entitled to DGR endorsement for this fund, authority or institution. You must tell the Tax Office in writing so it can revoke endorsement and give the date that the fund, authority or institution ceased to fall within a DGR category |
NOTES:
GIFT FUND
- Is the entity maintaining a gift fund for the fund, authority or institution?
Yes | Go to question 10 | 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 above. Check that you continue to meet this requirement. Briefly, a gift fund is a fund with these features:
|
No | There is no entitlement to DGR endorsement for the period a gift fund was not maintained. You must tell the Tax Office in writing so the endorsement can be revoked for that period |
NOTES:
IN AUSTRALIA
- Is the fund, authority or institution in Australia?
Yes | Go to question 11 | 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 above. Briefly, a fund, authority or institution will be in Australia if: it is established and operated in Australia, and its purposes and beneficiaries are in Australia. For exceptions to these conditions, click here. |
No | There is no entitlement to be endorsed for the period the fund, authority or institution was not in Australia. You must tell the Tax Office in writing so that endorsement can be revoked | |
Not applicable | Go to question 11 |
NOTES:
RECEIPTS
- Have gift receipts been correctly issued?
Yes | All requirements to continue endorsement have been met. You do not need to contact the Tax Office. Continue to carry out periodic self-reviews | If receipts for tax deductible gifts are issued, particular material must be provided on them. The receipts must contain: the name of the fund, authority or institution the ABN of the entity, and the fact that the receipt is for a gift. Further information on receipts is provided above. |
No | You must ensure that gift receipts contain the required information. Take immediate steps so this problem does not arise again. If you do not, the endorsement may be revoked |
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 of status reviews' showing you have carried out the review.
Name of person carrying out review
Position held
Signature
Date
Approval by Board/Committee/Trustee
Donors and gifts - GiftPack for deductible gift recipients & donors
Claiming tax deductions for gifts |
Other income tax matters |
Tax deductible gifts |
QUICK REFERENCE For a donor to claim a tax deduction for a gift, it must:
For deductions:
|
For a donor to claim a deduction for a gift, there are several requirements:
- the payment must really be a gift
- the gift must be made to a DGR
- the gift must be of money or property that is covered by one of the gift types, and
- any gift conditions must be satisfied.
Donors who have made tax deductible gifts need to know:
- how much they can claim
- when they can claim deductions
- what records they 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 within one of the gift types, and
- there are no gift conditions for school building funds.
Note:
Deductions for contributions made to registered political parties and tax concessions for conservation covenants are explained in the chapter 'Political parties and conservation covenants'.
What is a gift?
Gifts have the following 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, the following 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
- 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 acknowledgment 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 deductible gift recipients
Only gifts made to deductible gift recipients (DGRs) are tax deductible.
Donors can check that the recipient is a DGR by:
- visiting the Australian Business Register website at www.abr.business.gov.au, or
- phoning the Tax Office on 13 28 61.
The various types of DGRs are explained in the chapter 'Deductible gift recipients (DGRs)'.
For some DGRs, gifts will only be deductible if made to some part of the DGR.
EXAMPLE
EXAMPLE
Where an organisation conducts an appeal for more than one purpose (and not all the purposes are for the benefit of DGRs), 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.
Workplace giving programs
Gifts to DGRs may also be organised through workplace giving programs. These are arrangements where:
- part of an employee's pay is paid, or is to be paid, as a gift to a DGR
- the gift is paid by the employer at the direction of the employee, and
- the gift is made under a regular planned giving arrangement.
Where an employee participates in a workplace giving program, confirmation by the employer to the employee of the amount donated to the DGRs the employee is supporting is sufficient to support the employee's claim for a deduction in their tax return.
The confirmation must be either sufficiently detailed to identify the DGR to whom the gift has been made or should state that all of the gifts are being made to Division 30 DGRs. It can be made on:
- the employee's payment summary, or
- other written or electronic communication from the employer to the employee.
Where a gift is made under a workplace giving program, employers can disregard the gift amount from the gross salary when calculating the PAYG tax to be withheld from an employee's pay. For employees, this means they may get the benefit of the reduced tax for their gift to a DGR immediately in their pay.
For more information |
For more information about PAYG withholding for workplace giving programs, phone the Tax Office on 13 28 66. |
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 >$5,000: property valued by the Tax Office at more than $5,000
- property <12 months: 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 'DGR table - general categories' gives the gift types for each general category of DGR.
EXAMPLE
- '$2 or more'
- 'property > $5,000'
- 'property < 12 months', and
- 'trading stock'.
The land would be a deductible gift for Georgia only if it was valued by the Tax Office at more than $5,000. It is not money or trading stock and, as she did not purchase the property, she cannot claim it as property purchased during the 12 months before the gift was made.
The gift types are explained in detail later in this chapter at 'Gift types'
Supplying a service does not fall within any of the gift types. There is no deduction for the 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
John's car expenses to collect the timber are not deductible as a gift. They are part of supplying the service.
However, the timber may be deductible as a gift if it falls within one of the gift types.
Gift conditions
For some DGRs, the law adds extra conditions affecting the types of deductible gifts they can receive. The gift may only be tax deductible:
- between certain dates, or
- for a specific use.
EXAMPLE
A gift for use by the institute for some other purpose is not a deductible gift as it has not been made for the specific purpose required by the gift condition.
The gift conditions for the general DGR categories are set out in 'DGR table - general categories'. Many categories of DGR have no gift conditions.
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
The tax deduction he can claim for his gift is limited to $15,000. This is because a deductible gift cannot add to or create a tax loss.
Dominic's taxable income therefore becomes nil and the excess $5,000 from his gift cannot be carried forward to a later tax return.
In certain circumstances, donors can elect to spread a gift deduction over a period of up to five years. See 'When can a gift deduction be claimed?' below.
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
John and Miranda donate property to a DGR that is a public museum. The property value is $80,000. They own it in the proportions ¼ to ¾.
John can claim $20,000 and Miranda $60,000 (or less if the claim would add to or create a tax loss).
When can a gift deduction be claimed?
A tax deduction for most gifts is claimed in the tax return for the income year in which the gift is made.
EXAMPLE
A donor may make a written election to spread the tax deduction for a gift over a period of up to five years if the gift was:
- a 'cultural gift' made on or after 1 July 1999
- a 'National Estate' gift made on or after 1 July 1999
- a gift of property made to certain environment or heritage DGRs on or after 1 July 1999, where the property has been valued by the Tax Office at more than $5,000, or
- a gift of property made to any DGR on or after 1 July 2002, where the property has been valued by the Tax Office at more than $5,000.
The election must be in the approved form and be made prior to lodging the income tax return for the year in which the gift was made.
The election must commence in the year in which the gift was made and continue for a period of up to four of the years immediately following.
The election must contain the percentage to be claimed in each year. The percentage for each year does not need to be the same, but the total percentage over the years cannot exceed 100%.
EXAMPLE
| 2003 | 2004 | 2005 | 2006 | 2007 |
| 10% | 30% | 20% | 20% | 20% |
The donor may make a written variation to any percentage to be claimed for tax returns that have not been lodged. The variation must be in an approved form and be made prior to lodging the first tax return to which the variation applies.
EXAMPLE
| 2000 | 2001 | 2002 | 2003 | 2004 |
| 50% | 15% | 15% | 10% | 10% |
In July 2002, she decides to claim the rest of her deduction in her 2001-02 tax return. Before she lodges that return, she must send a copy of the variation to DCITA indicating the new apportionment as follows:
| 2002 | 2003 | 2004 |
| 35% | 0% | 0% |
Approved forms for elections and variations vary depending on the gift and the DGR that receives it. Donors should obtain an Apportionment election form as outlined in the table below. A copy of the completed election or variation must be sent to the relevant Department before lodging the first return to which it applies.
Making elections to spread gift deductions
Gift | Where to obtain forms and return completed copy |
Cultural gift | DCITA |
National Estate gift | Environment Australia |
Gift of property valued by the Tax Office at more than $5,000 to heritage or environmental DGRs | Environment Australia |
Gift of property valued by the Tax Office at more than $5,000 to other DGRs | Donors can use the form in TaxPack and retain it with their records. |
Contact details:
Department of Communications, Information Technology and the Arts (DCITA) | Department of Environment and Heritage (Environment Australia) |
Department of Communications, Information Technology and the Arts Phone: (02) 6271 1643 | The Administrator Phone: (02) 6274 1467 |
For more information |
Refer to our fact sheet Gifts of property valued by the Tax Office at more than $5,000 (NAT 8261) There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
What records do donors need?
Donors should keep records of all their deductible gifts to help prepare their tax returns and as evidence if their claims are checked by the Tax Office.
DGRs are not required by 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 the date of acquisition, the amount paid for the property and any valuations.
Where a donor has elected to spread the tax deduction for a gift over up to five years, elections and any variations to elections should also be kept.
Employees who have made a gift to a DGR under a workplace giving program should keep their payment summary or other confirmation provided by their employer or the DGR stating that the gift was made.
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 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 that are not, in fact, gifts may be tax deductible if they are incurred in deriving assessable income.
EXAMPLE
The payments are not gifts. However, if they are incurred to promote the company's business, they may be tax deductible.
Decline in value
If a donor gifts property on which a decline in value has been claimed as a tax deduction (formerly called depreciation), 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 Guide to depreciating assets (NAT 1996). To obtain a copy, phone 1300 720 092 and quote the NAT number.
Trading stock
For trading stock disposed of as a gift outside the ordinary 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 consequences.
EXAMPLE
This could leave a deduction of $80,000 for the gift and an amount of capital gain included in his assessable income.
The following gifts of property are exempt from capital gains tax:
- a testamentary gift that would have been tax deductible if it had not been a testamentary gift (a testamentary gift is a gift made under a will),
- 'cultural gifts', and
- 'cultural bequests'.
The Guide to capital gains tax (NAT 4151) provides guidance on calculating capital gains and losses, and a list of exemptions from capital gains tax. Many personal use assets are exempt, and these are listed in the guide. To obtain a copy, phone 1300 720 092 and quote the NAT number.
QUICK REFERENCE
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The gift types are:
Gift type | Description |
$2 or more | Money |
Property >$5,000 | Property valued by the Tax Office at more than $5,000 |
Property <12 months | 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 |
National Estate | Places listed in the Register of the National Estate |
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.
Gifts that fall within the first four gift types - $2 or more, property >$5,000, property <12 months 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
'DGR table - general categories' on page xx lists the gift types for public benevolent institutions. They are '$2 or more', 'property >$5,000', 'property<12 months', and 'trading stock'.
Jill can only claim a deduction if the painting falls within one or more of these gift types.
The different gift types also affect how much can be claimed as a deduction.
EXAMPLE
The valuation for that gift type is the lesser of:
- 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.
EXAMPLE
- 'property>$5,000',
- 'trading stock', or
- 'cultural gift'.
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
Elizabeth can claim $30 as a gift deduction. While each individual gift to the DGR is $1.50, her total gift to the DGR that year is $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 value of the gift for deduction purposes is the amount of money the donor gives to the DGR.
Type of gift
This gift type covers gifts of property valued by the Tax Office at more than $5,000, regardless of when or how the property was acquired. How to obtain a valuation from the Tax Office is explained in 'Tax Office valuations'.
Property has a wide meaning. As well as physical things, it includes rights and interests that are capable of ownership and have a value.
This gift type does not cover testamentary gifts, that is, gifts made under a will.
Recipients
This gift type applies to all types of DGR (except for gifts to the Commonwealth for the purposes of Artbank).
Valuation
The amount of the gift deduction is the value determined by the Tax Office.
However, if the donor purchased the property during the 12 months before making the gift, 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.
See 'Property <12 months'.
It is up to the donor, not the DGR, to find out the value of the gift.
For this gift type, donors can make an election to spread the deduction over a period of up to five years. How to make an election to spread a tax deduction is explained in 'When can a gift deduction be claimed?'.
For more information |
Refer to the following fact sheets:
There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
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'.
Property is purchased if it is acquired by way of bargain or sale for money or some other valuable consideration. Examples of property that has not been purchased include prizes won in raffles, property received as a gift, and inherited property.
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
Clarence cannot claim $600 because the market value is less than the amount paid. He can only claim $500 (provided the claim does not add to or create a tax loss).
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.
For this gift type, donors can make an election to spread the deduction over a period of up to five years where the gift has been valued by the Tax Office at more than $5,000.
The amount that can be spread is the amount of the gift deduction that can be claimed under this gift type.
EXAMPLE
Bill's tax deduction for 2002-03 (provided the claim does not add to or create a tax loss) is $4,000.
Bill asks the Tax Office to value the property at the time the gift was made. The Tax Office values it at more than $5,000.
He can then elect to spread his $4,000 deduction over 2002-03 and the four following years.
How to obtain a valuation from the Tax Office is explained in 'Tax Office valuations'.
How to make an election to spread a tax deduction is explained in 'When can a gift deduction be claimed?'.
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
If Ghia gives the cupboard to the DGR, it would fall within the 'Trading stock' gift type.
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
In the 1998-99 income year Joseph claims as a deduction the $2,000 cost of trading stock purchased in that year. He also records $2,000 as part of his trading stock on hand at the end of the year. There is therefore a neutral effect on taxable income for the 1998-99 year.
In the 1999-2000 income year the stock forms part of his opening trading stock. On the day it is gifted, the stock ceases to be trading stock and does not form part of his closing trading stock for that financial year. Joseph receives a deduction for the difference between his opening and closing stock values, that is $2,000.
As the gift is a disposal of trading stock outside the ordinary course of business, Joseph also includes as assessable income the market value of the trading stock, that is $3,000. He will also claim a gift deduction for this amount. The overall effect in the 1999-2000 income year is a reduction of $2,000 in his taxable income.
Note: The gift deduction is not allowable to the extent that it adds to or creates a tax loss.
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.
For this gift type, donors can make an election to spread the deduction over a period of up to five years where the Tax Office has valued the gift at more than $5,000.
The amount that can be spread is the amount of the gift deduction that can be claimed under this gift type.
How to obtain a valuation from the Tax Office is explained in 'Tax Office valuations'.
How to make an election to spread a tax deduction is explained in 'When can a gift deduction be claimed?'.
Type of gift
This gift type (under the Cultural Gifts Program) covers gifts of significant cultural property, except property that 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 that 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. Contact details are in the 'For more information' box below.
Intending donors should contact the DGR, then they or the DGR should seek further information from DCITA.
Valuation
The general rule is that the amount of the deduction is the average of two or more written valuations made by valuers approved by the Secretary to the DCITA.
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 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.
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 gift. The valuation of the gift is the amount paid for the property, or if the property had been 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.
For this gift type, donors can make an election to spread the deduction over a period of up to five years for gifts made from 1 July 1999.
The election must be made in a form approved by DCITA. Copies are available from the contact details below. If a donor makes an election, a copy of the election must be sent to DCITA before the donor lodges the tax return for the year in which the gift was made.
Making elections to spread a tax deduction is explained in 'When can a gift deduction be claimed?'.
Conditional gifts
A gift deduction is reduced by a reasonable amount if property is donated subject to conditions on the ownership, custody and control of the property.
Capital gains tax exemption
Gifts of property made under the Cultural Gifts Program are exempt from capital gains tax. Any capital gain or loss made from such gifts is disregarded.
This rule does not apply if the donor or an associate of the donor later acquires the gift for less than market value.
For more information |
Refer to our fact sheet Cultural Gifts Program and tax deductible gifts (NAT 8236). There are various ways of obtaining our information and services - see 'How to access our publications and services' on page xx. You can also contact DCITA: Department of Communications, Information Technology and the Arts: |
The Cultural Bequests Program was administered by the Department of Communications, Information Technology and the Arts (DCITA) for three years to the end of the 1999-2000 financial year. The Program is currently suspended.
Holders of certificates issued by the Minister for the Arts whilst the Program was operating can claim a deduction to the value on the certificate.
The gift is deductible in the final tax return of the testator. If the deduction is not claimed in full at that point, because its value exceeds the taxable income, the balance may be claimed by the trustee in the first estate return. However this cannot add to or create a tax loss in the estate's tax return.
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.
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 valuers approved by the Department of Communications, Information Technology and the Arts (DCITA).
For this gift type, donors can make an election to spread the deduction over a period of up to five years for gifts made from 1 July 1999.
The election must be made in a form approved by Environment Australia. Forms are available from the contact details on page x5. If a donor makes an election, a copy of the election must be sent to Environment Australia before the donor lodges the tax return for the year in which the gift was made.
More information about making an election to spread a tax deduction is explained in 'When can a gift deduction be claimed?'.
For more information |
Refer to our fact sheet Environmental and heritage organisations and tax deductible gifts (NAT 8237). There are various ways of obtaining our information and services - see 'How to access our publications and services'. |
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
If she had acquired the kitchenware for $2,200 on that day, she would have been entitled to an input tax credit of 1/11th, given the assumption it would be used solely for the restaurant. That means she would have been able to claim back $200 of GST on the purchase.
As a result, Franziska's market value for gift deduction purposes would be $2,000, that is $2,200 minus $200.
Donors who are not registered for GST, and are not required to be registered, do not need to adjust the market value.
EXAMPLE
The valuation of gifts for the 'property <12 months' and 'property >$5,000' gift types can depend on the amount paid by the donor. For donors who are registered for GST, or are 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
Because Sergei would be entitled to an input tax credit of $300 (that is 1/11th of $3,300), his amount paid for gift purposes would be $3,000.
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
When a donor seeks a valuation from the Tax Office, application must be made to the Australian Valuation Office (AVO), which is a part of the Tax Office. The AVO undertakes the valuation.
Request for valuation forms can be obtained from the AVO. A deposit must accompany the Request for valuation upon lodgment with the AVO. The charge for a valuation is advised upon processing of your Request for valuation.
Philanthropy Program
Australian Valuation Office
PO Box 911
Dickson ACT 2602
Phone: (08) 8218 9008 or (02) 6229 3401
Fax: (08) 8212 6090
Website: www.avo.gov.au
Political parties and conservation covenants - GiftPack for deductible gift recipients & donors
Registered political parties |
Political parties are not deductible gift recipients (DGRs). However, contributions to political parties, 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 less than $2
- contributions made by companies, and
- testamentary contributions, that is, contributions made under a will.
Conservation covenants |
What is a conservation covenant?
A conservation covenant over land is a covenant that:
- restricts or prohibits certain activities on the land that could degrade the environmental value of the land
- is permanent and registered on the title to the land - if registration is possible, and
- is approved in writing by, or is entered into under a program approved in writing by, the Minister for the Environment and Heritage.
What are the tax concessions?
A landowner who does not receive any money, property or other material benefit for entering into a conservation covenant on or after 1 July 2002 may be eligible for:
- an income tax deduction, and
- concessional capital gains tax treatment.
A land owner who receives some capital proceeds for entering into a conservation covenant on or after 15 June 2000 may qualify for concessional capital gains tax treatment.
Income tax deduction
The covenant must be entered into with a deductible gift recipient (DGR).
The amount that can be deducted is the difference between the market value of the land just before entering into the covenant and its decreased market value just after that time, but only to the extent that the decrease is attributable to entering into the covenant.
The change in the market value of the land must be more than $5,000 due to the covenant. If the decrease in value of the land is less than $5,000, a deduction will only be available if the land was acquired not more than 12 months before entering into the covenant.
Donors must seek a valuation of the change in the market value of the land from the Commissioner of Taxation.
The deduction cannot add to or create a tax loss. However, donors can elect to spread the deduction over a five-year period.
Concessional capital gains tax treatment
The capital gains tax (CGT) concessions provide comparable treatment between landowners who enter into conservation covenants and landowners who sell part of their land. In other circumstances where rights are created over an asset, almost all of the capital proceeds are treated as a capital gain.
Donors who enter into a conservation covenant calculate their capital gain by comparing capital proceeds from the grant of the covenant with a portion of the cost base of the entire land over which the covenant is granted.
Similarly, a capital loss is calculated by comparing capital proceeds from the grant of the covenant with a portion of the reduced cost base of the entire land over which the covenant is granted.
If entitled to an income tax deduction, the capital proceeds from the event are equal to the amount that can be deducted.
Capital gains made from entering into a conservation covenant may qualify for:
- pre-CGT exemption, if the land was acquired before 20 September 1985
- the CGT discount, if the land was owned for at least 12 months before the grant of the conservation covenant
- the small business CGT concessions, if the land is an active asset.
For more information |
Refer to our fact sheet Conservation covenant concessions (NAT 6539). There are various ways of obtaining our information and services - see 'How to access our publications and services'. You can also contact the Department of Environment and Heritage (Environment Australia) at: The Secretary Phone: (02) 6274 2713 or (02) 6274 2368 Website: www.ea.gov.au |
Log of status reviews/Record of key information - GiftPack for deductible gift recipients & donors
Log of status reviews
We recommend you use this log each time you self-review your organisation's status as a deductible gift recipient (DGR).
Worksheets have been provided to assist you with these reviews:
- entities endorsed as a DGR in their own right should refer to the Worksheet 1 in 'Deductible gift recipients - other conditions'.
- entities endorsed as a DGR for a fund, authority or institution that they operate should refer to the Worksheet 2 in 'Deductible gift recipients - other conditions'. If your organisation is endorsed for several funds, authorities or institutions, do not write on this log - keep it as a template to make copies for each.
Period reviewed | DGR status confirmed (yes/no*) | Person conducting review | Position held | Signature | Date | |
Start date | End date | |||||
* If your organisation is no longer a DGR, have you notified the Tax Office? See 'Deductible gift recipients - other conditions'.
Record of key information
Record your organisation's key information in the table below:
Name of organisation | |
Australian business number (ABN) | |
Tax file number (TFN) | |
Public Officer | |
Authorised contact person |
Endorsement details:
Name of fund, authority or institution | ||
Type of endorsement | Item no. | |
Description | ||
Date of endorsement | ||
List of definitions - GiftPack for deductible gift recipients & donors
Australian business number
Your Australian business number (ABN) is your identifier for certain dealings with the Tax Office and other government departments and agencies.
Australian Business Register
Your ABN registration details become part of the Australian Business Register (ABR), which we maintain for all Commonwealth purposes. The publicly available information on this register 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.
Charitable fund
A charitable fund is a fund established under an instrument of trust or a will for a charitable purpose. Charitable funds mainly manage trust property, and/or hold trust property to make distributions to other entities or persons.
Charitable institution
A charitable institution is an institution that is established and run to advance or promote a charitable purpose.
Charitable purposes
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.
Charity
A charity is an institution or fund established for a charitable purpose.
Examples of charities include:
- religious institutions
- aged person's homes
- homeless hostels
- organisations relieving the special needs of people with disabilities, and
- societies that promote the fine arts.
For more information on charities, see our publication Income tax guide for non-profit organisations (NAT 7967).
Deductible gift recipient (DGR)
A deductible gift recipient (DGR) is an entity that is entitled to receive income tax deductible gifts. All DGRs have to be endorsed, unless they are named specifically in the income tax law. There are two types of endorsement. One is for entities that are DGRs in their own right. The other is for an entity that is a DGR only in relation to a fund, authority or institution that it operates. For the second type, only gifts to the fund, authority or institution are tax deductible.
Entity
For the purposes of this publication, an entity 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.
In addition, the trustee of a trust or superannuation fund is taken to be an entity consisting of the person or persons who are trustee/s at the time. That entity is a different entity to the person acting in their personal capacity. If reference is made to an entity of a particular kind (for example, trustee), it refers to the entity only in its capacity as that kind of entity.
Goods and services tax
Goods and services tax (GST) is a broad-based tax of 10% on the supply of most goods, services and anything else consumed in Australia and the importation of goods into Australia.
Input tax credits
An input tax credit is what you claim to get back the GST you pay in the price of goods and services you purchase for your business or enterprise. You are entitled to an input tax credit for the GST included in the price you pay for a purchase, or the GST paid on an import, if it is for use in your business or enterprise, but not to the extent that you use the purchase or import to make input taxed sales, or if the purchase or import is of a private or domestic nature. You must have a tax invoice before you can claim an input tax credit on your activity statement (except for purchases of $50 or less excluding GST.)
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 Tax Office 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.
Pay as you go withholding
Pay as you go (PAYG) withholding requires an entity to withhold an amount if it makes certain payments. These include salary, wages, commission, bonuses or allowances to an employee, directors' fees, payments for a supply (goods or services) to another business which does not quote an ABN, and certain dividend, interest and royalty payments.
Copyright
Commonwealth of Australia 2003
This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved.
Requests for further authorisation should be directed to the Commonwealth Copyright Administration, Intellectual Property Branch, Department of Communications, Information Technology and the Arts, GPO Box 2154, Canberra ACT 2601 or by email to commonwealth.copyright@dcita.gov.au.
ATO references:
NO NAT 3132
| Date: | Version: | |
| 1 July 2000 | Original document | |
| You are here | 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 |