GiftPack (current to 30 June 2007)
This version is no longer current. Please follow this link to view the current version. |
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Gifts, Charities and Non-profit Organisations
This guide has been prepared for:
- organisations that want to receive tax deductible gifts, and
- donors that want to claim tax deductions for their gifts.
Only certain organisations can receive tax deductible gifts. They are called deductible gift recipients (DGRs). DGRs are:
- endorsed by the Tax Office, or
- listed by name in the tax law.
We explain the types of DGRs and tax deductible gifts they can receive. Most, but not all, gifts to DGRs are tax deductible.
We explain who can claim deductions for gifts, how much can be claimed and what records are required.
This guide also outlines concessions for:
- contributions to DGRs in relation to fundraising events such as fundraising dinners and charity auctions
- political contributions and gifts, and
- land owners entering into conservation covenants.
We have highlighted recent changes in the income tax law relating to DGRs and deductible gifts as well as proposed changes that are not yet law.
Copies of this publication
Download guide in PDF
This publication can be downloaded in Portable Document Format (PDF). Download GiftPack for deductible gift recipients & donors [668kB].
Order a paper copy
Printed copies of this publication are available through the following methods (please take note of the NAT number - NAT 3132-07.2006):
- Online publications ordering service
- phoning the Publications Distribution Service on 1300 720 092 for the cost of a local call - the service operates from 8.00am to 6.00pm Monday to Friday, or
- writing to us at GPO Box 9935 in your capital city.
How to use this guide
Where do you start?To receive tax deductible gifts an organisation must be a deductible gift recipient (DGR). For an overview of DGRs, claiming tax deductions for gifts and recent changes to the tax law, see 'Getting started'. |
Can your organisation receive tax deductible gifts?
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Do you want to claim a tax deduction for a gift?Deductions for gifts are claimed by the person or organisation that makes the gift (the donor). To find out whether a gift is tax deductible, how much can be claimed and what records donors need to keep, see 'Donors and gifts'. |
What types of gifts are tax deductible?Most, but not all, gifts to DGRs are tax deductible. To be tax deductible, a gift must be money or property covered by one of the 'gift types'. See 'Gift types'. |
Are there other gift-related concessions to consider?Concessions may also be available for contributions to DGR fundraising events, political contributions and gifts, and land owners entering into conservation covenants. |
How can you get more information?The Tax Office has a range of publications and services specifically for non-profit organisations. See 'More information' to find out how to access our publications and services. |
Getting started
Introduction
Only certain types of organisations can receive tax deductible gifts. They are called deductible gift recipients (DGRs).
Deductions for gifts are claimed by the person or organisation that makes the gift (the donor).
This chapter outlines:
- the types of DGRs and the tax deductible gifts they can receive
- what donors need to do to claim deductions for their gifts
- changes to this publication since it last issued in June 2005, and
- proposed changes affecting DGRs and donors.
Deductible gift recipients (DGRs)
The income tax law determines which organisations can receive income tax deductible gifts. They are called deductible gift recipients (DGRs). DGRs are:
- endorsed by the Tax Office, or
- listed by name in the tax law.
| You can check if an organisation is a DGR by:
|
The majority of DGRs are endorsed by the Tax Office. The only DGRs that do not need to be endorsed are those listed by name in the income tax law, including prescribed private funds.
Endorsed DGRs
To be endorsed as a DGR, an organisation must fall within a general DGR category as specified in the tax law and meet the other conditions that relate to the category.
There are more than 30 general DGR categories. Examples are:
- public hospitals
- health promotion charities
- public universities
- school building funds
- public benevolent institutions
- necessitous circumstances funds
- overseas aid funds
- public libraries, museums and art galleries, and
- ancillary funds.
For an explanation of the general DGR categories, see 'Endorsed DGRs'.
Organisations that meet the requirements for endorsement can apply to the Tax Office using an Application for endorsement as a deductible gift recipient (NAT 2948).
If an organisation falls within a general DGR category and is not endorsed by the Tax Office, donors cannot claim tax deductions for their gifts to the organisation.
Other conditions for DGRs
An organisation may have to meet some or all of the following conditions to be a DGR.
- In Australia - the organisation must be 'in Australia'.
- Endorsement - the organisation must:
- have an ABN
- maintain a gift fund, and
- apply to the Tax Office for endorsement.
- Receipts - if a DGR issues a receipt for a gift, it must include certain information on the receipt.
- Self-review - a DGR must tell the Tax Office if it ceases to be entitled to endorsement.
These conditions are explained in 'DGRs - other conditions'.
DGRs listed by name
DGRs listed by name in the tax law include organisations such as Amnesty International Australia and the Australian Sports Foundation. They also include prescribed private funds.
For an explanation of DGRs listed by name, including prescribed private funds, see 'DGRs listed by name'.
| Gifts to charities Charities can receive tax deductible gifts provided the organisation is a DGR. Some charities are not DGRs and therefore cannot receive tax deductible gifts. |
Gift types
Most, but not all, gifts to DGRs are tax deductible. To be tax deductible a gift must be money or property covered by one of the following gift types:
- $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 gifted under the Cultural Gifts Program
- cultural bequests: property gifted under the Cultural Bequests Program
- heritage gifts: places included in the National Heritage List, the Commonwealth Heritage List or the Register of the National Estate.
For an explanation of the gift types, see 'Gift types'.
| Contributions made to DGRs for fundraising events such as fundraising dinners and charity auctions may also be tax deductible. See 'Contributions to DGRs'. |
Claiming tax deductions for gifts
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.
To be tax deductible a gift must:
- be made to a DGR
- really be a gift
- be a gift of money or a certain type of property, and
- comply with any relevant gift conditions.
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.
A deduction for a gift cannot add to or create a tax loss for the donor. However, donors can elect to spread deductions for certain gifts over a period of up to five years.
Donors need to keep records of their deductible gifts. When property has been gifted, additional details may need to be recorded. This will help donors when they prepare tax returns and in case claims are checked by the Tax Office.
Sponsorship and advertising expenses that are not, in fact, gifts may be tax deductible if they are incurred in deriving assessable income.
The requirements for claiming deductible gifts and other income tax consequences for donors are explained in 'Donors and gifts'.
| Concessions may also be available for:
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What's new?
This publication applies from 1 July 2006 and replaces GiftPack for deductible gift recipients & donors (NAT 3132-06.2005) issued in June 2005.
This publication has been updated to include the following changes in the tax law since the publication last issued in June 2005.
New general DGR categories
Scholarship fund
Gifts made on or after 1 July 2006 to a public fund that is established for charitable purposes and is established and maintained solely for providing money for eligible scholarships, bursaries or prizes may be tax deductible.
See 'Scholarship fund'.
Australian disaster relief fund
Gifts made on or after 1 July 2006 to a public fund that is established for charitable purposes and is established and maintained solely to provide funds for the relief (including relief by way of assistance to re-establish a community) of people in Australia in distress as a result of a disaster, declared by the relevant state or territory minister (or with the approval of the state or territory minister) to be a disaster or state of emergency, may be tax deductible.
See 'Australian disaster relief fund'.
Animal welfare charity
Gifts made on or after 1 July 2006 to a charitable institution whose principal activity is to provide one or both of short-term direct care to animals that have been lost, mistreated or are without owners or the rehabilitation of those animals that are sick or injured, may be tax deductible.
See 'Animal welfare charity'.
Charitable services institution
Gifts made on or after 1 July 2006 to a charitable institution that would be a public benevolent institution, except for its activities promoting the prevention or control of diseases in human beings and/or the prevention and control of behaviour that is harmful or abusive to human beings, may be tax deductible.
See 'Charitable services institution'.
War memorial repair fund
Gifts made on or after 1 July 2006 to a public fund established and maintained solely for providing money to reconstruct, or make critical repairs to a war memorial in Australia, may be tax deductible.
See 'War memorial repair fund'.
Family counselling and family dispute resolution organisations
From 1 July 2006, a new DGR category will apply for organisations that receive funding from the Australian Government to provide family counselling or family dispute resolution within the meaning of the Family Law Act.
See 'Public fund for provision of family counselling or family dispute resolution'.
Developed country disaster relief fund
Gifts made on or after 1 July 2006 to a public fund that is established and maintained by a public benevolent institution solely to provide funds for the relief (including relief by way of assistance to re-establish a community) of people in a developed country who are in distress as a result of a disaster recognised by a Treasurer minister, may be tax deductible.
See 'Developed country disaster relief fund'.
New DGRs listed by name
DGRs that have been listed by name since the last edition of this publication include 85 prescribed private funds, six state and territory playgroup bodies and several other listed by name DGRs.
To find out how to access a list of these DGRs, see 'DGRs listed by name'.
Testamentary gifts of property
From 1 July 2005, testamentary gifts of property of any value are exempt from capital gains tax. See 'Capital gains'.
Contributions to political parties and independents
The arrangements for tax deductibility of contributions and gifts to registered political parties and independents have been expanded and extended with effect from 22 June 2006. See 'Political contributions and gifts'.
Proposed changes
This section summarises recent government proposals affecting DGRs and gifts. At the time of printing these proposals had not become law.
2006-07 Budget proposals
Budget Paper No. 2 of the 2006-07 Budget contains the following proposed measures.
Gift fund
'An entity whose activities are endorsed or listed under multiple DGR categories will be able to consolidate these under a single gift fund.'
Non-charitable prescribed private funds and ancillary funds
'The Government will allow non-charitable prescribed private funds and non-charitable public ancillary funds to obtain an Australian business number (ABN), with effect from 1 July 2005.'
Listed by name DGRs
Foundation for Rural and Regional Renewal
'The Government will broaden the scope of the Foundation for Rural and Regional Renewal (FRRR) to allow it to receive tax deductible donations from regional community foundations and to use these funds exclusively for projects in those regions, with effect from 1 July 2007.'
Compliance measures
'The Government will extend the power of the Commissioner of Taxation to review the activities of specifically listed deductible gift recipients (DGRs) against the terms of their DGR status.'
New gift type
'The Government will allow taxpayers to claim a tax deduction for the donation to a deductible gift recipient (DGR) of publicly listed shares that have been held for at least 12 months and are valued at $5,000 or less.'
Last Modified: Tuesday, 1 August 2006Endorsed DGRs
Introduction
The majority of deductible gift recipients (DGRs) are endorsed by the Tax Office. To be endorsed as a DGR, an organisation must fall within a general DGR category as specified in the tax law and meet the other conditions relating to that category.
Use this chapter to work out:
- if your organisation can be endorsed as a DGR, and
- the types of tax deductible gifts endorsed DGRs can receive.
Can your organisation be endorsed as a DGR?
To be endorsed by the Tax Office as a deductible gift recipient (DGR), an organisation (or a part of an organisation) must fall in a general DGR category as specified in the tax law and meet the other conditions that relate to that category.
| The DGR table lists the general DGR categories. For each category, it sets out:
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Follow the steps below to work out if your organisation can be endorsed as a DGR.
Step 1
Review the DGR table to see if your organisation (or a part of your organisation) meets the description of a DGR category.
An organisation itself may fall in a DGR category (examples are public hospitals and public universities) or a fund, authority or institution that is operated by an organisation may fall in a DGR category (for example, school building funds and council libraries).
Does your organisation (or a fund, authority or institution that it operates) meet the description of a DGR category?
Yes | Go to step 2 |
No | Your organisation cannot be endorsed as a DGR. Go to 'DGRs listed by name'. |
Step 2
Check that all the requirements in the description of the category are met.
Some terms in the description of a category are explained later. For example, many categories include the term 'public fund' which is explained.
Review the further explanation of the category, if any.
Does your organisation (or a fund, authority or institution that it operates) meet all the requirements in the description of the category?
Yes | Go to step 3 |
No | Go back to step 1 to find if your organisation falls in a different category. |
Step 3
Check that the other conditions relating to the category are met.
Column 3 of the DGR table lists the other conditions that apply to each category. They are:
- In Australia - the organisation must be 'in Australia'
- Endorsement - the organisation must:
- have an ABN,
- maintain a gift fund, and
- apply to the Tax Office for endorsement.
- Receipts - if a DGR issues a receipt for a gift, it must include certain information on the receipt.
- Self-review - a DGR must tell the Tax Office if its ceases to be entitled to endorsement.
Where required, the In Australia and Endorsement conditions must be satisfied before an organisation can be endorsed as a DGR by the Tax Office. Once endorsed, all relevant conditions must continue to be satisfied. These conditions are explained in 'DGRs - other conditions'.
Does your organisation meet all the requirements of a general DGR category and satisfy the In Australia and Endorsement conditions where required?
Yes | Your organisation can apply for endorsement as a DGR - see 'Applying for endorsement'. |
No | Your organisation cannot be endorsed as a DGR. Go to 'DGRs listed by name'. |
If your organisation is endorsed as a DGR, donors can claim income tax deductions from the date the endorsement starts.
Deductible Gifts
Column 4 of the DGR table lists the types of deductible gifts that endorsed DGRs can receive. The deductible gift types are explained in 'Gift types'.
For some DGRs, the income tax law adds further conditions relating to the gifts they can receive. Column 1 of the DGR table sets out the gift conditions, if any, for each general DGR category. Gift conditions are explained further in 'Gift conditions'.
| Contributions made to DGRs for fundraising events such as fundraising dinners and charity auctions may also be tax deductible. See 'Contributions to DGRs'. |
Example XYZ Agency is a government authority that operates a research facility engaged in research into the prevention of disease in animals. DGR Endorsement Follow the steps below to find out the requirements and other conditions XYZ Agency must meet to be endorsed as a DGR. | ||
Step 1 XYZ Agency could fall under the 'Health' or 'Research' groups. The categories 'Public authority for research' and 'Approved research institute' could describe XYZ Agency. If XYZ Agency has not been approved as an approved research institute, the description of 'Public authority for research' best describes XYZ Agency. | Step 2 The description of 'Public authority for research' refers to an explanation of 'Public authority'. XYZ Agency must meet the additional requirements in the explanation of 'Public authority'. | Step 3 XYZ Agency must meet other conditions. It must:
The other conditions are explained in 'DGRs - other conditions'. |
DGR table - general categories | Item Number | Other conditions (see chapter 3) | Type of gift (see chapter 6) |
Health | |||
Public authority for research - See 'Public authority'. The activities of the public authority do not need to be limited to such research. It may engage in other activities. Gift condition: a gift will only be tax deductible if it is made to the public authority for research into the causes, prevention or cure of disease in human beings, animals or plants. | 1.1.4 |
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Deductible Gifts XYZ Agency applied to the Tax Office for endorsement as a DGR and its application was approved. XYZ Agency is currently endorsed as a DGR as a 'Public authority for research'. XYZ Agency can receive the following types of tax deductible gifts:
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DGR Table
The DGR table lists the general categories of deductible gift recipients (DGRs). It will help you work out:
- the requirements and other conditions an organisation must satisfy to be endorsed as a DGR, and
- the types of deductible gifts particular DGRs can receive.
See 'Can your organisation be endorsed as a DGR?' for an explanation of how to use this table.
DGR table - general categories | Item Number | Other conditions (see chapter 3) | Type of gift (see chapter 6) |
Health | |||
Public hospital | 1.1.1 |
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Non-profit hospital - A hospital is an institution in which patients are received for continuous medical care and treatment for sickness, disease or injury. Providing accommodation is integral to a hospital's care and treatment. Clinics that mainly treat ambulatory patients who return to their homes after each visit are not hospitals. However, day surgeries that provide beds for patients to recover after surgery may be hospitals. Homes providing nursing care in respect of feeding, cleanliness and the like are not hospitals. However, nursing homes for people suffering from illness are accepted as hospitals. Hospices for the terminally ill will generally be hospitals. Minor outpatient and nursing care will not prevent an institution being a hospital. A society or association will be non-profit if it is prevented, by law or its governing documents, from distributing profits and its actions are consistent with the prohibition. The hospital may be carried on to make a profit but those profits must not find their way, directly or indirectly, to the individual members of the society or association. It is not necessary that the hospital is carried on for the general public. Examples are hospitals run by churches and religious orders. | 1.1.2 |
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Public fund for public and non-profit hospitals - See 'Public fund'. | 1.1.3 |
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Public authority for research - See 'Public authority'. The activities of the public authority do not need to be limited to such research. It may engage in other activities. Gift condition: a gift will only be tax deductible if it is made to the public authority for research into the causes, prevention or cure of disease in human beings, animals or plants. | 1.1.4 |
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Public institution for research -
The activities of the public institution must be confined to research into the causes, prevention or cure of disease in human beings, animals or plants. | 1.1.5 |
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Health promotion charity - See 'Health promotion charity'. | 1.1.6 |
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Public ambulance service | 1.1.7 |
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Public fund for public ambulance services - See 'Public fund'. | 1.1.8 |
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Education | |||
Public university | 2.1.1 |
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Public fund for the establishment of a public university See 'Public fund'. | 2.1.2 |
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Higher education institution - These institutions include the University of South Australia, Central Queensland University, Monash University, Southern Cross University and Batchelor Institute of Indigenous Tertiary Education. | 2.1.3 |
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Residential educational institution - The affiliation with the public university must be under the university's statutory provisions. It is the residential educational institution that must be affiliated rather than a building it uses. Examples include residential colleges established under public universities statutes. | 2.1.4 |
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Commonwealth residential educational institution - | 2.1.5 |
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Affiliated residential educational institution - The higher education institutions are discussed at item 2.1.3. Examples include residential colleges of the higher educational institutions. | 2.1.6 |
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TAFE - Gift condition: gifts must be for:
| 2.1.7 |
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Public fund for religious instruction in government schools - See 'Public fund'. | 2.1.8 |
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Roman Catholic public fund for religious instruction in government schools - See 'Public fund'. | 2.1.9 |
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See 'School building fund'. | 2.1.10 |
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Public fund for rural school hostel building - See 'Public fund'. The building must be used, or going to be used, principally as residential accommodation for students:
The costs of the school must be solely or partly funded by the Commonwealth, a State or a Territory. The residential accommodation must be provided by:
| 2.1.11 |
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Government special school - | 2.1.12 |
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See 'Scholarship fund'. | 2.1.13 |
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Life Education company - The company must be:
Gift condition: the gift must be for the conduct of such programs. | 2.2.9 |
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Research | |||
Approved research institute -
as an approved research institute for the purposes of section 73A of the Income Tax Assessment Act 1936 for undertaking scientific research which is, or may prove to be, of value to Australia. Guidelines on approved research institutes may be obtained from: CSIRO Gift condition: only gifts for the purposes of scientific research in the field of natural or applied science are deductible. | 3.1.1 |
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The Commonwealth Gift condition: only gifts made for the purposes of research in the Australian Antarctic Territory will be deductible. | 3.2.3 |
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Welfare and Rights | |||
Public benevolent institution - See 'Public benevolent institution'. | 4.1.1 |
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Public fund for public benevolent institutions - See 'Public fund'. See 'Public benevolent institution'. | 4.1.2 |
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Public fund for persons in necessitous circumstances - See 'Necessitous circumstances fund'. | 4.1.3 |
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Public fund on the register of harm prevention charities See 'Public fund'. The principal activity of a harm prevention charity must be the promotion of the prevention or the control of behaviour that is harmful or abusive to human beings. The Register of Harm Prevention Charitable Institutions is managed by the Department of Family, Community Services and Indigenous Affairs. Guidelines and the application form for registration and endorsement as a DGR can be obtained from: Community Strategies Branch Phone: 1800 441 242 Gift condition: the public fund must be listed on the Register of Harm Prevention Charitable Institutions when the gift is made. | 4.1.4 |
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Australian disaster relief fund - See 'Australian disaster relief fund'. Gift condition: gifts must be made within two years, beginning on
| 4.1.5 |
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Animal welfare charity -
See 'Animal welfare charity'. | 4.1.6 |
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Charitable services institution -
See 'Charitable services institution'. | 4.1.7 |
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Defence | |||
The Commonwealth or a State Gift condition: only gifts made for the purposes of defence will be deductible. | 5.1.1 |
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Public institution or public fund for members of the armed forces - See 'Public fund'. Such an institution will be a public institution if:
| 5.1.2 |
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War memorial repair fund - See 'War memorial repair fund'. Gift condition: gifts must be made within two years of the date of endorsement of the fund. | 5.1.3 |
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Environment | |||
Public fund on the Register of Environmental Organisations See 'Public fund on the Register of Environmental Organisations'. Gift condition: the public fund must be listed on the Register of Environmental Organisations when the gift is made. | 6.1.1 |
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The Family | |||
Public fund for an approved marriage guidance organisation - See 'Public fund'. The company must be approved by the Minister for Families, Community Services and Indigenous Affairs under section 9C of the Marriage Act 1961. Applications for approval should be forwarded to: Branch Manager Non-profit company is defined as a company that is not carried on for the purposes of profit or gain to its individual members and is, by the terms of the company's constituent document, prohibited from making any distribution, whether in money, property or otherwise, to its members; or a friendly society dispensary. | 8.1.1 |
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Public fund for provision of family counselling or family dispute resolution -
See 'Public fund'. The Australian Government only allocates new funding for the provision of family counselling and family dispute resolution through the Budget. The availability of funding is advertised in the national press and in the local or regional press in areas of identified need. Funding opportunities are also listed on the websites of the Attorney-General's Department, at www.ag.gov.au and the Department of Families, Community Services and Indigenous Affairs, at www.facsia.gov.au Non-profit company is defined as a company that is not carried on for the purposes of profit or gain to its individual members and is, by the terms of the company's constituent document, prohibited from making any distribution, whether in money, property or otherwise, to its members; or a friendly society dispensary. | 8.1.2 |
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International affairs | |||
Overseas aid fund - See 'Overseas aid fund'. Gift condition: the Treasurer's declaration must be in force at the time the gift is made. | 9.1.1 |
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Developed country disaster relief fund - See 'Developed country disaster relief fund'. Gift condition: gifts must be made within two years from the date of the disaster as specified in the Treasury minister's declaration. | 9.1.2 |
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Sports and Recreation | |||
Guides branch - | 10.2.3 |
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Scout branch - | 10.2.5 |
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Cultural Organisations | |||
Public fund on the Register of Cultural Organisations - See 'Public fund on the Register of Cultural Organisations'. Gift condition: the public fund must be listed on the Register of Cultural Organisations when the gift is made. | 12.1.1 |
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See 'Public library, public museum and public art gallery'. | 12.1.2 |
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Public museum See 'Public library, public museum and public art gallery'. | 12.1.3 |
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Public art gallery See 'Public library, public museum and public art gallery'. | 12.1.4 |
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Institution consisting of a public library, public museum and public art gallery or of any two of them See 'Public library, public museum and public art gallery'. | 12.1.5 |
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Ancillary Fund | |||
Ancillary fund - See 'Ancillary fund'. | - |
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The table above lists the general categories of deductible gift recipients. See 'Can your organisation be endorsed as a DGR?' for an explanation of how to use the table.
Explanation of terms in the table
Public authority
Several DGR categories require that the recipient of gifts be a public authority.
A public authority is an agency or instrument of government exercising power or command for the public advantage. It has governmental authority for doing so. It possesses powers that are exceptional compared to ordinary individuals, but not necessarily coercive powers.
Public authorities include:
- municipal authorities
- sanitary and water supply authorities
- railway and transport authorities
- lighting authorities
- construction authorities, and
- boards of guardians.
Charity
Several DGR categories require that the recipient of gifts be a charity.
The characteristics of a charity are:
- it is an entity that is also a trust fund or an institution
- it exists for the public benefit or the relief of poverty
- its purposes are charitable within the legal sense of that term
- it is non-profit, and
- its sole purpose is charitable.
Charitable purposes include:
- the relief of poverty
- the relief of the needs of the aged
- the relief of sickness or distress
- the advancement of religion
- the advancement of education
- the provision of child care services on a non-profit basis, and
- other purposes beneficial to the community.
The purposes must be for the benefit of the community, or a section of it, or for the relief of poverty.
A charity must be an entity. An entity, for this purpose, includes a corporation, unincorporated association, trust or partnership. The entity must be a trust fund or an institution.
Charitable fund
A charitable fund is a fund established under an instrument of trust or a will for a charitable purpose. It must manage trust property and/or hold trust property to make distributions to other entities or people.
Charitable institution
A charitable institution is an institution that is established and run to advance or promote a charitable purpose. An organisation's purposes can be found from its governing document/s and from its activities, history and control.
An institution may be an organisation established by will or instrument of trust. It may also 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 the organisation does is also relevant. An organisation established, controlled and operated by family members and friends would not normally be an institution.
Organisations that are not charities
An entity is not a charity if:
- it is primarily for sporting, recreational or social purposes
- it is primarily for political, lobbying or promotional purposes
- its purpose is illegal or against public policy, or
- it is primarily for carrying on a commercial enterprise to generate surpluses.
Government departments and instrumentalities carrying out the ordinary functions of government are unlikely to be charities.
| More information Refer to our publication Income tax guide for non-profit organisations (NAT 7967). To obtain this publication, see 'More information'. |
Public fund
Various DGR categories require that the recipient of gifts is a public fund.
The objects of a public 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 objects and rules can be set out in a separate founding document or incorporated in its constitution or the founding documents of the sponsoring organisation. The organisation's constitution or founding document must authorise the establishment of the fund, for example, in the organisation's objects.
It must be 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 must in fact contribute to the fund.
Example A trust fund is set up to provide benefits for a child with a severe medical condition. The trustees are the guardians of the child and the family lawyer. Although it is stated that donations would be sought from the public, the only donors are the guardians and family members. The fund would not be a public fund because it does not actually receive contributions from the public. |
The public must participate in the administration of the fund (except where it is established and controlled by a governmental or quasi-governmental authority).
For non-government public funds the fund must be 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 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 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.
An acceptable dissolution clause for a public fund is:
Dissolution clause
'In the event of the fund being wound up or dissolved, any surplus assets remaining after the payment of the fund's liabilities shall be transferred to another fund, authority or institution which has similar objects and to which income tax deductible gifts can be made.'
| More information Refer to Taxation Ruling TR 95/27 Income tax: public funds. To obtain this publication, see 'More information'. |
Checklist: Public fund Consider the following questions when working out whether your organisation is a public fund. Use them in conjunction with the other information provided in the explanation of a public fund.
|
Does your fund meet all the requirements of the description of a public fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Health promotion charity
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.
Examples of health promotion charities include charitable institutions that:
- 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.
Prevention or control
The activities of the organisation must be directed towards promoting prevention or control of the disease. Examples of prevention or control 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. See 'Charity'.
To be a health promotion charity, the charity must be a charitable institution and not a mere fund. An organisation 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 A fund is established with the principal purpose of soliciting funds for cancer research. However, the fund merely distributes money to cancer research organisations, so it does not have the characteristics of an institution, and it will not be a health promotion charity. |
| More information Refer to Taxation Ruling TR 2004/8 Income tax and fringe benefits tax: health promotion charities. To obtain this publication, see 'More information'. |
Checklist: Health promotion charity Consider the following questions when working out whether your organisation is a health promotion charity. Use them in conjunction with the other information provided in the explanation of a health promotion charity.
|
Does your organisation meet all the requirements of the description of a health promotion charity?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
School building fund
The DGR category of school building fund covers funds with the following characteristics:
- the fund is a public fund
- the public fund is established and maintained solely for providing money 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
See 'Public fund'.
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.
Bodies that have been accepted as schools or colleges include:
- Sunday schools
- adult religious education centres
- bible study centres, and
- pre-school kindergartens that are not primarily for child minding.
Bodies that are not schools or colleges include:
- 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.
Items that are not buildings include:
- tennis courts, playing fields, covered play areas, car parks 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.
Fixtures include ducted heating systems and fixed air conditioning systems.
The building or group of buildings must be used for a purpose that is connected with the curriculum of the school or college.
Buildings used as a school include:
- indoor swimming pool (surrounded by walls and a 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 A building used as a school or college every weekday and a place of worship on Sundays will qualify as a school or college building. However, a hall used for religious instruction on Sundays only and for community and social activities on other days of the week would not be a school or college building. |
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.
Costs payable from a school building fund include:
- 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.
| More information Refer to the following publications:
To obtain these publications, see 'More information'. |
Checklist: School building fund Consider the following questions when working out whether your organisation is a school building fund. Use them in conjunction with the other information provided in the explanation of a school building fund.
|
Does your fund meet all the requirements of the description of a school building fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Scholarship fund
The scholarship fund DGR category covers funds with the following characteristics:
- the fund is a public fund
- the fund is established for charitable purposes, and
- the fund is established and maintained solely for providing money for eligible scholarships, bursaries or prizes.
Public fund
See 'Public fund'.
Charitable purposes
The fund must be established for charitable purposes.
This means that if the fund is operating as a separate entity, it must be a charitable fund. If the fund is operating as part of an organisation, the organisation must be a charity.
Examples of funds that will not qualify include:
- a fund which is not established for the public benefit, such as a fund for employees of a particular employer or members of a particular association
- a fund which is part of a government department or organisation, carrying out government functions and activities, and
- a fund that has some features which would, hypothetically, be compatible with charitable purposes, but which in fact is not for charitable purposes for the public benefit.
For more information see 'Charity'.
Established and maintained
The fund's constituent or governing document must reflect that the fund is established for the sole purpose of providing money for eligible scholarships, bursaries or prizes.
If the fund is also established for other purposes, it cannot qualify as a scholarship fund.
In its operations, the fund must be maintained solely for the required purpose. In doing this, the fund can incur expenses that are incidental to the sole purpose, such as for advertising, investment and administration.
The fund may:
- provide one or more eligible scholarships, bursaries or prizes itself, providing money directly to recipients, and/or
- provide money to an organisation that provides eligible scholarships, bursaries or prizes.
If the fund provides money to another organisation for the provision of a scholarship, bursary or prize, it must ensure the money is used only for an eligible scholarship, bursary or prize. (There is no requirement for the recipient organisation to be a charity or deductible gift recipient.) The trustees or controllers of the fund must assure themselves that the money can only be used for the provision of an eligible scholarship, bursary or prize. If, nonetheless, the money is in fact not used solely for an eligible scholarship, bursary or prize, the fund must take all reasonable steps to stop and correct the misuse.
Eligible scholarships, bursaries and prizes
To qualify as an eligible scholarship, bursary or prize it must be:
- a scholarship, bursary or prize
- awarded only to Australian citizens or permanent residents
- open to individuals or groups of individuals throughout Australia, a state, a territory or a region of at least 200,000 people
- for the purpose of promoting the recipients' education
- in approved Australian courses, and/or
- at educational institutions overseas to study as a component of an approved Australian course, and
- awarded on merit or for reasons of equity.
Each and every scholarship, bursary or prize that is sponsored by a scholarship fund must satisfy these requirements.
Scholarships, bursaries and prizes
The words scholarship, bursary and prize are not defined by the legislation and have their ordinary meanings.
Scholarships and bursaries are ongoing or one-off benefit payments to students to cover school fees, textbooks and other related educational expenses such as for uniforms, travel, boarding or living costs.
A prize, in the context of a scholarship fund, is an award of money or property to students usually conferred for reasons of merit such as academic achievement, but may include reasons of equity.
Australian citizens and permanent residents
The scholarship, bursary or prize may only be awarded to people who are Australian citizens or permanent residents of Australia. These terms have the same meaning as in the Australian Citizenship Act 1948.
If the rules and criteria of a scholarship, bursary or prize are silent on this limitation, it must be clear from the application and other procedures for the scholarship, bursary or prize that it will only be awarded to Australian citizens or permanent residents.
Open to individuals throughout a region
To be eligible, entry to the scholarship, bursary or prize must be open to individuals or groups of individuals throughout Australia, an entire state or territory, or a region of at least 200,000 people.
In estimating whether a region has a population of at least 200,000 people, Australian Bureau of Statistics data or another reasonable basis may be used.
If the rules and criteria of a scholarship, bursary or prize are silent on being open throughout at least a state, territory or region of 200,000 people, it must be clear the rules, criteria and operation of the scholarship, bursary or prize do not indirectly restrict the required openness.
While a scholarship, bursary or prize will normally be open to individuals, some may be open to groups of individuals. Examples are prizes for a championship school choir or debating team.
The means used to ensure the required openness will vary with the nature of the scholarship, bursary or prize, but can include publicising through the internet and in appropriate forums.
Matters that can be consistent with this requirement, even though they may have the effect of reducing the number of people who could qualify, include:
- the scholarship or bursary is for study at a particular school
- the scholarship or bursary is for study within a particular discipline, and
- there are merit and/or equity criteria as explained in 'Merit or equity' below.
However, an eligible scholarship, bursary or prize could not have any of the following limits on eligibility:
- open only to students at a particular school (even if the school's students come from throughout a state, territory or region of 200,000 people)
- open only to employees of a particular employer, or
- open only to members of a particular society or association.
Example Each year a school awards a prize to its top student in each subject. The prizes could not be eligible prizes because they are not open throughout a state, territory or region of at least 200,000 people. A scholarship fund could not provide money for these prizes. |
A scholarship, bursary or prize will not be eligible if, in fact, it is operated in such a way as to not be open throughout at least a state, territory or region of 200,000 people. This is the case even if its rules and criteria require it to be so open.
Promoting recipients' education
To be eligible, the scholarship, bursary or prize must promote the recipients' education.
For scholarships and bursaries, this will be apparent from the study or course to which they relate. The fact that a scholarship or bursary can cover living and boarding costs does not detract from this. For prizes, they will usually promote the recipients' education by rewarding or recognising the recipients' achievement in the relevant course.
The education must be in either or both of the following:
- an approved Australian course
- educational institutions overseas, by way of study of a component of an approved Australian course.
Approved Australian courses are pre-school courses, primary courses, secondary courses and tertiary courses. These terms are defined and have the same meaning as in the GST legislation. They cover the approved curriculum and courses at Australian educational institutions (such as pre-schools, primary schools, secondary schools, higher education institutions and registered training organisations) that are approved or recognised by Australian educational authorities. They are explained in the GST rulings listed in 'More information'.
As well as courses on maths, history, science, engineering, management, etc, they could also include study or instruction on music, sport, cooking and agriculture, provided they are part of an approved Australian course.
Examples of activities and awards where there would not be an approved Australian course include:
- courses run by professional associations that are not registered training organisations
- activities run by a school or college that are not directly related to an approved Australian course, and
- community service awards.
An eligible scholarship, bursary or prize can promote the recipients' education in educational institutions overseas, provided it is by way of study of a component of an approved Australian course. While an exchange relationship between the Australian and overseas institutions is not essential, the approved Australian course must give credit for the overseas study.
Example A public charitable fund is established to provide a prize to allow the top student studying their final year of Japanese history in an Australian university to complete their final year at a Japanese university. The Japanese component of the course will be credited towards the Australian course. The prize is open to all second-year Japanese history students in Australia (who are Australian citizens or permanent residents) and will be awarded to the student with the highest marks. The public fund is eligible for DGR endorsement under this category. |
A course at an overseas educational institution cannot be supported by a scholarship fund if it is not used as a component of an approved Australian course.
Example A scholarship is open to Australians who have an honours degree from an Australian university. The scholarship can be taken up only for a bachelor's degree at a particular university in the USA. The scholarship is not an eligible scholarship, because it is not for study for a component of an approved course. Rather, it is for a stand-alone course at an overseas educational institution. The fact that completion of an approved course is a prerequisite for the scholarship is not sufficient. |
Merit or equity
To be eligible, the scholarship, bursary or prize must be awarded on merit or for reasons of equity.
The rules and criteria of the scholarship, bursary or prize, and the actual operations, will show whether it is awarded on merit or for reasons of equity.
The basis of merit can include non-academic criteria, where they are sufficiently connected with the educational objectives. Examples where a non-academic criterion could be consistent with the academic criteria include:
- community service, for a secondary school scholarship
- football skills, for a scholarship at a school where football is part of the curriculum, and
- ability to perform in the career resulting from the particular course, for a tertiary course bursary.
Example A scholarship for a nursing degree is open to individuals in a state who have the required entry grades. Applicants are rated on their grades and their essay on why they wish to pursue nursing as a career and what they, as a nurse, can offer the community. The scholarship can qualify as an eligible scholarship. |
Reasons of equity would cover students who are experiencing socio-economic disadvantage or hardship, or suffering disability. Other reasons may include special needs flowing from age, gender, ethnicity or geographic location, depending on the particular education being promoted.
Example A fund is set up to provide scholarships to students from rural areas to attend tertiary institutions. Eligibility is assessed against a set of criteria to determine the greatest level of need, including economic circumstances, geographic location and the student's academic ability. The scholarship satisfies the requirement of being awarded on merit or for reasons of equity. |
A scholarship, bursary or prize may impose reasonable eligibility conditions to ensure it is appropriately targeted on the basis of merit or for reasons of equity.
While the eligibility criteria may mean the numbers of possible recipients is small, the scholarship, bursary or prize can still be eligible, provided the criteria are on merit and/or equity, in respect of the education. (The other requirements, including being open throughout at least a region, must also be satisfied.)
Example A scholarship is open to all students from New South Wales with a bachelor's degree in botany to complete a graduate diploma in a branch of botany at a particular Australian university. Restricting access to the students who have studied botany does not preclude the scholarship from being eligible. |
Even where the only recipients will probably be students of a particular school, or members of a particular religion or association, a scholarship, bursary or prize can still be eligible where it is offered widely on the basis of merit relevant to the education.
Examples An award is open to all Australian citizens in a particular state, completing a tertiary course in that state, majoring in Latin. Recipients are selected on the basis of academic achievement. The criterion of academic achievement is acceptable as a basis of merit, even though there may be only one higher education institution in that state offering courses in Latin. A prize is awarded for academic excellence in approved courses at tertiary level in relation to particular aspects of theology. The prize could be an eligible prize even though the particular aspects of theology make it highly probable that only adherents of a particular religion would undertake the relevant studies. |
However, a scholarship, bursary or prize will not be eligible where the awarding is not truly on the basis of merit or equity. For example, the following eligibility criteria do not target on the basis of merit:
- current enrolment at a particular school or college
- membership of a club or association, including a professional association
- employment by a particular employer
- promising to become an employee of a particular employer
- membership of a religion, or
- race or ethnicity.
Example The recipients of a scholarship for secondary schooling are selected on the basis of academic achievement, with preference being given to children of employees of a particular company. This preference means that, while the scholarship is awarded in part on the basis of merit, it is also awarded on a basis unrelated to merit and equity. The scholarship is not eligible; a scholarship fund could not provide money for it. |
Where the basis of merit or equity is unrelated to the education, the scholarship, bursary or prize will not be eligible.
Example The criteria for a scholarship to study a university commerce degree course are that the student has the required entry grades and has competed in Highland dancing at state championship level. The scholarship is not an eligible scholarship. While the Highland dancing is based on merit, it is unrelated to the study. |
A requirement for a recipient to repay the scholarship, bursary or prize should be consistent with the education, merit or equity. For example, a bursary would not be eligible if repayment was required at the end of the course because the recipient did not take up employment with a particular employer.
| Refer to the following publications:
|
Checklist: Scholarship fund Consider the following questions when working out whether your organisation is a scholarship fund. Use them in conjunction with the other information provided in the explanation of a scholarship fund.
|
Does your fund meet all the requirements of the description of a scholarship fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Where a fund does not qualify as a scholarship fund, it may consider whether another DGR category applies. See the Educational DGR categories and ancillary funds.
Public benevolent institution
A public benevolent institution (PBI) is a non-profit institution organised for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness.
Organisations that may be PBIs include:
- 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.
Examples of activities of PBIs include:
- providing hostel accommodation for the homeless
- treating sufferers of disease
- providing home help for the aged and the infirm, and
- rescuing people who are lost or stranded.
Not all degrees of distress or suffering would necessarily arouse community compassion. 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.
For example, organisations that provide marriage guidance or counselling to sole parents who are divorced or have lost a spouse will not be PBIs.
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.
For example, primary and secondary schools, business colleges and Scouts are not PBIs, however a Braille learning centre for the blind is a PBI.
Relief of need
Organisations that serve people who are in need will only be PBIs if they relieve those needs.
Example A group of seniors form a club to organise their holidays. The club is not a PBI because its purpose is not the providing of relief. |
The services of some organisations are too broad and not sufficiently focused on meeting such needs to be considered PBIs.
Example A community service organisation helps the needy, runs after-school care, organises cultural events and offers relationship counselling. Its services are too broad to be a 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.
Examples of PBIs include:
- medical clinics treating the sick
- hostels providing accommodation for the homeless, and
- 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.
Organisations are not PBIs if they primarily:
- 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 A non-profit company is formed to provide administrative and publicity services for community groups. Its members are not predominantly PBIs and its services are not mainly for providing benevolent relief. The company is not a 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 An association provides welfare services for the aged and sick. However, its services are only provided to its subscribing members and their dependants. The association is not a 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.
Suitable clauses in constituent documents are:
Non-profit clause
'The assets and income of the organisation shall be applied solely in furtherance of its above mentioned objects and no portion shall be distributed directly or indirectly to the members of the organisation except as bona fide compensation for services rendered or expenses incurred on behalf of the organisation.'
Dissolution clause
'In the event of the organisation being wound up, any surplus assets remaining after the payment of the organisation's liabilities shall be transferred to another organisation in Australia which is a public benevolent institution for the purposes of any Commonwealth taxation Act.'
Institution
An institution can have different legal forms. It may be a trust established by will or instrument of trust. It may have the legal structure of an unincorporated association or a corporation. However, incorporation is not enough, on its own, for an organisation to be an institution. What it does - activities, size, permanence, recognition - is also relevant.
Example A community group forms a company limited by guarantee. Its objects and activities are providing services to the disabled. The company is an institution. |
An organisation that is established, controlled and operated by family members and friends would not normally be an institution.
An organisation 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 A charitable trust's object is relieving poverty. Its function is to manage trust property to make distributions to charities that help the poor. The trust is not an institution. |
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 A society is organised to relieve the sufferers of a particular disease. It also makes distributions to research bodies trying to find a cure for the disease. These distributions will not affect PBI status if they are minor. |
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 An association is organised by an ethnic group. It provides cultural, social and sporting activities, care for the aged and disabled, after-school care and education programs. While some of the association's purposes may provide benevolent relief, this is not its dominant purpose. |
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.
| More information Refer to Taxation Ruling TR 2003/5 Income tax and fringe benefits tax: public benevolent institutions. To obtain this publication, see 'More information'. |
Checklist: PBI Consider the following questions when working out whether your organisation is a PBI. Use them in conjunction with the other information provided in the explanation of a PBI.
|
Does your organisation meet all the requirements of the description of a PBI?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Types of organisations
The following list shows common types of organisations and whether they are PBIs.
Aged persons organisations will not be PBIs if they are essentially for the social, cultural or other pursuits of people who are over the usual retirement age. They will only be PBIs if their primary aim is to alleviate the loneliness and other misfortunes suffered by those aged people unable to readily mix in society. The fact that aged people will feel less lonely as a result of their participation in the organisation's social activities is not sufficient.
Aged persons hostels may be PBIs. They must be principally for people in poor circumstances or for the relief of needs arising from old age, such as sickness or incapacity, isolation, loneliness or insecurity, or the greater risks of being without prompt medical advice or help.
Animal welfare societies are not PBIs. However, they may fall within another DGR category.
Baby health centres are not generally PBIs.
Business enterprise organisations are not PBIs.
Charities are not necessarily PBIs. Charities for the relief of poverty, sickness and the needs of the aged may be PBIs, but most others are not.
Community radio stations are not PBIs.
Community bodies such as progress associations, community associations, advice bureaus, development associations, neighbourhood watch and agricultural societies are generally not PBIs.
Conservation groups are not PBIs.
Coordinating bodies - such as national associations to coordinate the activities of their state affiliates - will only be PBIs where they are completely integrated with, and provide services predominantly to, member organisations who are PBIs.
Counselling organisations may be PBIs where their services are mainly to meet needs requiring benevolent relief. Examples are organisations that alleviate helplessness by providing counselling for alcoholics and newly discharged prisoners. Organisations primarily for marriage, financial, family and similar counselling are not PBIs.
Credit unions, building societies and friendly societies are not PBIs.
Emergency services or search and rescue teams consisting of volunteers and voluntary organisations such as bush fire brigades, which have as their central purpose provision of direct relief to disadvantaged people, may qualify as PBIs. This will be the case where they are not arms of government and subject to government control.
Family self-help organisations are unlikely to be PBIs.
Government departments and agencies are unlikely to be PBIs. They are established to promote welfare for the community rather than to provide benevolent relief.
Government-funded organisations are only PBI s if they operate directly to relieve poverty, sickness, suffering or misfortune.
Hostels providing cheap traveller accommodation are not PBIs.
Housing bodies may be PBIs where they give benevolent relief by providing low rental or subsidised accommodation to underprivileged people affected by poverty, disability or other need requiring benevolent relief.
Legacy organisations that provide benevolent services to the dependants of deceased ex-members of the armed forces are PBIs.
Legal aid services may be PBIs where they are predominantly to handle the legal affairs of the needy and underprivileged. They might be operated by law societies, as community legal centres, or by quasi-government bodies.
Kindergartens, child care centres and creches are not PBIs.
Marriage guidance organisations are not PBIs. However, they may fall within another DGR category. Check the DGR table.
Migrant resource centres are not PBIs. In contrast, non-profit organisations that are predominantly to directly relieve the helplessness and distress of refugees may be PBIs.
Organisations operated by PBIs are not automatically PBIs. The organisation itself must provide direct relief of poverty, suffering, distress and misfortune.
Pensioner organisations will only be PBIs where they are predominantly to alleviate distress and helplessness requiring benevolent relief. In contrast, pensioner organisations primarily for political or lobbying purposes, or managing funeral funds for financial members, will not be PBIs.
Political parties and lobby groups are not PBIs.
Professional and trade associations, chambers of commerce and trade unions are not PBIs.
Religious organisations will only be PBIs where their primary purpose and predominant activity is the direct relief of poverty, sickness, suffering, distress, misfortune and helplessness.
School parents and citizens associations are not PBIs.
Scouts, Brownies, Guides and similar organisations are not PBIs. However, they may fall within another DGR category. Check the DGR table.
Social, cultural and sporting bodies are not PBIs.
Student unions are not PBIs.
Surf lifesaving associations will be PBIs if their purposes and activities are predominantly for providing life saving services.
Traditional service clubs are not PBIs.
Unemployed people may have needs that arouse community compassion and thus require benevolent relief. However, not all organisations providing services to the unemployed will be PBIs. For example, vocational training, apprenticeship, counselling, referral, fellowship and advisory services will generally not qualify. On the other hand, organisations assisting unemployed people in situations of helplessness to become more self-reliant during periods of unemployment, and develop their capacities for obtaining employment, may be PBIs.
Women's health centres will be PBIs where their dominant purpose is to relieve sickness, suffering, distress or helplessness. If the benevolent relief is only one among many activities - such as education, public awareness, lobbying, counselling and referral - the centre will not be a PBI.
Youth clubs will be PBIs only where they are primarily for youths from poor and disadvantaged backgrounds and provide services primarily directed to relieving this situation.
Necessitous circumstances fund
A necessitous circumstances fund is a public fund established and maintained for the relief of persons in Australia who are in necessitous circumstances.
See 'Public fund'. 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 While on holidays interstate, Jennifer was seriously injured in a car accident. She is suffering from loneliness and is facing a lengthy stay in hospital before she can return home. A local service club wishes to raise funds to fly Jennifer's mother to comfort her daughter. Jennifer's needs are not financial in nature. The fund is not a necessitous circumstances fund. |
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 Geoff is 17 years old and was permanently incapacitated while playing football. He will require 24-hour care for the rest of his life. He was not insured and his parents cannot meet the costs. The local community wishes to set up an appeal fund for Geoff. The money raised will be used to pay for necessary modifications to his parents' home and for the services of a carer. The fund will be a necessitous circumstances fund. |
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 During recent floods, three volunteer workers were killed while carrying out a rescue. None of the three volunteers had any financial dependants. A public fund to give money to the volunteers' families would not be a necessitous circumstances fund. |
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. See 'Public benevolent institution'.
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. See 'Ancillary fund'.
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 A fund provides scholarships for students to attend a particular school. Preference is given to meritorious students who are in necessitous circumstances. While persons in necessitous circumstances may benefit from the fund, it is not dedicated to providing 'relief' of necessitous circumstances. |
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 A fund is set up to raise money for two families whose homes were badly damaged in a bushfire. The rules of the fund state that the money will go to 'food, clothing and emergency shelter'. It is clear that the fund is for the relief of necessitous circumstances and not merely for the personal benefit of the families. |
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 Smithville has been devastated by a cyclone. A mayoral fund is set up to provide short-term assistance to residents who were victims of flood and cyclone damage. In the immediate short-term, the circumstances of the disaster itself would indicate the need for relief. During this period, close consideration of the potential beneficiaries' finances would not be necessary. |
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 A fund has been set up to distribute money evenly for the following purposes: financial need, disaster relief, talented children and sporting achievement. It is not a necessitous circumstances fund because it is not predominantly for the relief of necessitous circumstances. |
For people in Australia
The people whose necessitous circumstances are to be relieved must be in Australia.
Example A fund has been set up to provide immediate assistance (in the form of money, food and clothing) to victims of a recent earthquake in New Guinea. It does not fall within the DGR category because it is not for the relief of people in Australia. |
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 Justin is a 10-year-old Australian boy with cancer. The most appropriate treatment is available at a clinic in Germany. Justin's family cannot meet the costs. It is acceptable for a necessitous circumstances fund to help pay for Justin's treatment. |
| More information Refer to the following publications:
To obtain these publications, see 'More information'. |
Relevant materials to examine when working out whether your organisation is a necessitous circumstances fund are: the constituent or governing documents, application forms for assistance, policies, advertising and financial statements, as well as the day-to-day activities of your organisation.
Checklist: Necessitous circumstances fund Consider the following questions when working out whether your organisation is a necessitous circumstances fund. Use them in conjunction with the other information provided in the explanation of a necessitous circumstances fund.
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Does your fund meet all the requirements of the description of a necessitous circumstances fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
| If your organisation does not meet the requirements of this DGR category and it wishes to collect tax deductible donations for people who are victims of disasters:
|
Australian disaster relief fund
The DGR category of Australian disaster relief fund covers funds with the following characteristics:
- the fund is a public fund
- the fund is established for charitable purposes
- the fund is established and maintained solely for providing money for the relief (including relief by way of assistance to re-establish a community) of people in Australia in distress as a result of a disaster, and
- the disaster
- is declared to be a disaster, or it gives rise to a declaration of a state of emergency by, or with the approval of, a minister of a state or territory under the law of the state or territory
- developed rapidly, and
- resulted in the death, serious injury or other physical suffering of a large number of people and/or resulted in widespread damage to property or the natural environment.
Public fund
See 'Public fund'.
Charitable purposes
The fund must be established for charitable purposes.
If the fund is operating as a separate entity, it must be a charitable fund.
If the fund is operating as part of an organisation, the organisation must be a charity.
For more information see 'Charity'.
Disaster
The Tax Office maintains a list of disasters for which Australian disaster relief funds can provide money.
To qualify, the disaster must be declared, have developed rapidly, and have resulted in widespread damage or physical suffering.
Declaration
The disaster must be one which:
- is declared to be a disaster by, or with the approval of, a minister of a state or territory under the law of the state or territory, or
- gives rise to a declaration of a state of emergency by, or with the approval of, a minister of a state or territory under the law of the state or territory.
Example A public fund is set up to provide relief to victims of a flood that destroyed the district of Monty Bay in Queensland. The district is declared a disaster situation by the Queensland minister. The declared disaster requirement has been met. |
Developed rapidly
The disaster must be one that has developed rapidly. Examples of disasters which are likely to be eligible under this category include: fire, earthquake, flood, storm (including hailstorm), cyclone (including typhoon and hurricane), storm surge, tornado, landslide, tsunami, meteorite strike, volcanic eruption, plague, terrorist act, large scale transport accident or chemical accident, epidemic or war like action. Crop and animal disease may qualify if they developed rapidly.
Funds for relief from global warming, drought, land salinity and soil erosion would not be eligible for this category as they do not develop rapidly.
A disaster might be considered to have developed rapidly if it developed over a number of weeks, but not if it developed over a number of years.
Example A bushfire started in thick forest in a remote area of South Australia. The fire burned for 17 days, growing in intensity before it reached the town of Bertsvale, causing substantial damage. For the purposes of this category, the fire is considered to have developed rapidly. |
Results in widespread damage or physical suffering
The disaster must have resulted in:
- the death, serious injury or other physical suffering of a large number of people, or
- widespread damage to property or the natural environment.
Disasters will frequently have both of these characteristics, but either is sufficient.
It would be uncommon for a declared disaster to have only limited results. Nonetheless, if a large number of people are not harmed or the damage is not widespread in terms of the type of disaster, it will not qualify.
Whether damage is widespread may be affected by the nature of the disaster. For example, while the presence of a crop disease on one 30 hectare farm may not be widespread damage, the damage caused by a fire through the same area in a city may be widespread.
Relief of people in Australia
An Australian disaster relief fund must ensure that it only provides money for the relief of people in Australia in distress as a result of a disaster. This requirement applies not only to the fund's actual distributions but also it must be reflected in the fund's constituent or governing document.
Such relief can cover a broad range of activities, which will vary with the nature of the disaster and the types of distress being suffered. This includes emergency shelter, health care and food supplies, and providing relief for people through trauma counselling and through work on buildings, amenities, locations and infrastructure.
Repairing and reconstructing infrastructure could include:
- rebuilding community buildings such as aged persons homes, halls, churches and schools damaged by a flood, and
- replacing vehicles and computers of community organisations damaged in a severe storm.
Providing resources and facilities for use in relieving the distress could include:
- facilitating the recruitment and work of volunteers in cleaning out flooded buildings, and
- transporting fodder to farmers to feed their animals following a widespread fire.
Relief can also be provided by preventing further danger from the disaster. Such relief could include:
- building retaining structures to prevent landslides following loss of vegetation from a cyclone
- securing structures to limit damage if aftershocks follow an earthquake, and
- preventing the spread of disease after a flood.
While there are many types of relief for which an Australian disaster relief fund could provide money, it must not provide money for activities that are:
- for the relief of distress that is not a result of the disaster
- for people outside Australia
- not for the relief of people
- unrelated to the disaster.
Examples A public fund is set up to relieve distress following a storm. One of the organisations that applies to the fund is a sporting club which suffered no storm damage. It applies for money to build a new club house. If the public fund is to be an Australian disaster relief fund, it could not give the money to the club. The proposed use of the money is not for the relief of distress and is unrelated to the disaster. A public fund provides money to rescue wildlife affected by an oil slick. The fund does not qualify as an Australian disaster relief fund because it is financing activities that are not for the relief of people. |
Where an Australian disaster relief fund is making grants to various individuals and/or organisations, an application form can help provide assurance that its money will only be provided for acceptable uses.
Example A fire relief fund requires applicants to complete a form setting out what the applicant will use the money for, how that use is related to the fire, and how it will relieve people's distress that is a result of the fire. |
| More information Refer to our web only product Australian disaster relief funds and tax deductible gifts. To obtain this publication, see 'More information'. |
Relevant materials to examine when working out whether your fund is an Australian disaster relief fund include its constituent or governing document, application forms for assistance, policies, advertising, and financial statements, as well as the fund's day-to-day activities.
Checklist: Australian disaster relief fund Consider the following questions when working out whether your organisation is an Australian disaster relief fund. Use them in conjunction with the other information provided in the explanation of an Australian disaster relief fund.
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Does your fund meet all the requirements of the description of an Australian disaster relief fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
| If your organisation does not meet the requirements of this DGR category and it wishes to collect tax deductible donations for:
|
Animal welfare charity
The characteristics of an animal welfare charity are:
- it is a charitable institution, and
- its principal activity is one or both of the following
- providing short-term direct care to animals (but not only native wildlife) that have been lost, mistreated or are without owners
- rehabilitating orphaned, sick or injured animals (but not only native wildlife) that have been lost, mistreated or are without owners.
Charitable institution
For an explanation of charitable institution, see 'Charity'.
Animals
Animals that are lost, mistreated or without owners must be the focus of the animal welfare charity's principal activity.
'Animal' has its ordinary meaning. This is broad and includes land animals (such as cats, dogs, buffalo, horses, wallabies and cavies), reptiles (such as snakes and crocodiles), birds, fish and other aquatic animals.
The principal activity of the animal welfare charity must not be limited to native wildlife. A mix of native wildlife and other animals can be acceptable.
Example Highway Patrol is a charitable institution that provides transport and medical care to animals that have been injured by motor vehicles on the nation's highways in rural areas. The majority of the animals treated by Highway Patrol are native wildlife. Highway Patrol will qualify as an animal welfare charity as their services are not limited to native wildlife. |
For organisations whose focus is native wildlife only, see 'Public fund on the Register of Environmental Organisations'.
Lost animals may have been lost for a long or short period. To be mistreated, it is not sufficient that the animal is suffering an injury or sickness; the injury or sickness must be the result of mistreatment. Animals without owners could be domesticated or wild.
Charities that mainly provide pet owners with treatment services for their sick or injured pets are unlikely to qualify as animal welfare charities, because the animals are not lost, or without owners and are unlikely to be mistreated.
Activities
The principal activity that animal welfare charities need to undertake is either or both of:
- providing short-term direct care of the animals, and
- rehabilitating the animals that are orphaned, sick or injured.
Such care and rehabilitation can cover a broad range of activities, and are not limited to veterinary services.
For short-term direct care, the types and periods of care will vary with the needs and condition of the animals that are lost, mistreated or without owners. Examples include:
- veterinary services for their injuries and illnesses
- recovery, first aid and transport of injured animals
- washing and grooming lost animals and ridding them of fleas and ticks, and
- feeding and sheltering animals in the short term while their owners are contacted or new homes are found.
Example Animal Care is a charitable institution that operates a shelter for lost and unowned pets. Animal Care aims to find new homes for all the pets it cares for. However, due to the large volume of pets coming to Animal Care, many are put down because they cannot be given new homes. Animal Care's activities qualify as providing short-term direct care to animals that are lost or without owners. |
For animals that are not recovering from injury or sickness and are not in need of rehabilitation, ongoing care will not qualify.
Example Happy Trails takes in and cares for abandoned horses that, because of their advanced years, are no longer able to carry out equestrian activities, mustering and other duties. Happy Trails provides a home for these horses for the remainder of their lives. This ongoing care does not qualify as rehabilitating orphaned, sick or injured animals. |
For rehabilitation, the types of rehabilitation will vary with the needs and condition of the animals that are orphaned, sick or injured. Care provided after the animals have been rehabilitated will not qualify. Rehabilitating orphaned, sick or injured animals includes:
- training an orphaned animal to interact safely with humans
- providing care to return animals to health, and
- training injured animals to walk and eat again.
Animals that have received short-term direct care can receive the rehabilitation services, provided they are orphaned, sick or injured.
Organisations that have a more indirect relationship with the animals (for example through research, education and training) do not qualify as animal welfare charities. Activities that are not short-term direct care or rehabilitation include:
- lobbying and public education activities
- breeding and showing activities, and
- training veterinarians, veterinary nurses and animal carers.
Also organisations such as nature reserves, animal sanctuaries and zoos do not qualify.
Principal activity
An animal welfare charity's principal activity must be either or both of:
- providing short-term direct care to animals (but not only native wildlife) that have been lost, mistreated or are without owners
- rehabilitating orphaned, sick or injured animals (but not only native wildlife) that have been lost, mistreated or are without owners.
If one or both of these are the charitable institution's sole activity, it will qualify as an animal welfare charity. If not, one or both activities together must outweigh all of the charity's other activities.
This means that an animal welfare charity can undertake other activities, provided the other activities when viewed together remain secondary to the principal activity.
Examples of secondary activities undertaken by animal welfare charities can include providing veterinary services for pets and working animals, promoting the prevention of cruelty to animals and operating boarding kennels.
Examples Alix's Animals is a charitable institution that has a principal activity of providing short-term direct care, through its pet shelter, to pets that no longer have owners. To help fund the pet shelter, Alix's Animals also operates a boarding kennel and an opportunity shop which sells second-hand animal accessories. Both of these activities are minor activities and therefore do not affect Alix's Animals' eligibility as an animal welfare charity. Care for Katz is a charitable institution that operates a shelter to provide short-term direct care to lost and abandoned cats. It also undertakes promotional activities to prevent cats being abandoned. The promotional activities that Care for Katz undertakes are a small part of its operations. As a result the promotional activities will not prevent Care for Katz from being an animal welfare charity. |
Determining the principal activity involves weighing up various factors including the involvement of staff and volunteers, numbers and types of services provided, expenditure and uses of facilities and resources.
If the principal activity is not short-term direct care and/or rehabilitation, the organisation will not qualify as an animal welfare charity. Examples could include pet care organisations, lobbying organisations, research institutions and animal rights organisations. Some of these organisations might also fail to be animal welfare charities because they are not charitable institutions.
Checklist: Animal welfare charity Consider the following questions when working out whether your organisation is an animal welfare charity. Use them in conjunction with other information provided in the explanation of an animal welfare charity.
|
Does your organisation meet all the requirements of the description of an animal welfare charity?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Charitable services institution
The DGR category charitable services institution (CSI) covers institutions with the following characteristics:
- the organisation is a charitable institution, and
- the organisation would be a public benevolent institution (PBI) except that it also undertakes one or both of the following:
- it promotes the prevention or the control of diseases in human beings (but not as its principal activity)
- it promotes the prevention or the control of behaviour that is harmful or abusive to human beings (but not as its principal activity).
Such organisations do not fall into the DGR categories of health promotion charity, harm prevention charity or PBI.
Charitable institution
For an explanation of charitable institution, see 'Charity'.
Health promotion activities
A CSI must undertake health promotion activities. (The only exception is if the organisation undertakes harm prevention activities.) The health promotion activities must not be the principal activity of the organisation.
Health promotion activities are activities to promote the prevention or the control of diseases in human beings.
For an explanation of health promotion activities, see 'Health promotion charity'.
Organisations whose principal activity is health promotion activities may qualify under the health promotion charity DGR category.
Harm prevention activities
A CSI must undertake harm prevention activities. (The only exception is if the organisation undertakes health promotion activities.) The harm prevention activities must not be the principal activity of the organisation.
Harm prevention activities are activities to promote the prevention or control of behaviour that is harmful or abusive to human beings. Such behaviour is defined as one or more of the following:
- emotional abuse
- sexual abuse
- physical abuse
- suicide
- self-harm
- substance abuse, and
- harmful gambling.
These expressions are not defined by the legislation and have their ordinary meaning.
Various methods might be used in promoting the prevention or control of such behaviour, including:
- providing information about the prevention or control to those involved with or affected by the relevant behaviour, and to the public
- counselling people who are affected by the behaviour, such as family members
- running courses and programs on how to avoid, overcome or recover from the behaviour
- researching how to detect, prevent or deal with the relevant behaviour
- training carers and professionals in ways of dealing with the relevant behaviour
- treating and caring for persons suffering from the behaviour.
However, if the activity is too remote from the prevention or control it will not qualify.
Organisations whose principal activity is harm prevention activities may consider the DGR category 'Public fund on the register of harm prevention charities'.
Public benevolent institution
A CSI would meet all the conditions to be a PBI, but for its health promotion activities and harm prevention activities.
In working out whether an organisation meets this requirement, it is first necessary to disregard the organisation's health promotion activities and its harm prevention activities. Then, considering the organisation's remaining features, it must be able to qualify as a PBI. See 'Public benevolent institution'.
Example Caring Charities is a charitable institution whose objects are relieving poverty and improving health in relation to a particular disease. It carries out its objects by providing hostel accommodation for the homeless, and by providing health information about the disease to health professionals, carers and the public. The providing of health information accounts for 45% of its activities. It also prepares and publishes research papers about poverty, but these activities are minor in extent and importance. Caring Charities would qualify as a public benevolent institution except that it provides health information about the disease. Because this is not its principal activity, Caring Charities is eligible for endorsement under this category. |
If an organisation has purposes and activities that are not consistent with being a PBI, they must be limited to health promotion activities and harm prevention activities.
Example Nalla Care is a charitable institution whose objects and activities are operating a homeless shelter, running community health activities and operating a kindergarten. Running the community health program amounts to 20% of Nalla Care's activities. Nalla Care is equally engaged in the other two operations - the homeless shelter and the kindergarten. Nalla Care's health promotion activities are not its principal activity and its homeless shelter is consistent with being a PBI. However, its kindergarten is not providing direct benevolent relief and is not minor in extent and importance. This means Nalla Care would not be a PBI once the health promotion activities were disregarded. Therefore Nalla Care is not a CSI. |
Checklist: Charitable services institution Consider the following questions when working out whether your organisation is a charitable services institution. Use them in conjunction with other information provided in the explanation of a charitable services institution.
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Does your organisation meet all the requirements of the description of a charitable services institution?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
War memorial repair fund
The DGR category of war memorial repair fund covers funds with the following characteristics:
- the fund is a public fund
- the public fund is established and maintained solely for providing money to reconstruct or make critical repairs to a war memorial, and
- the war memorial
- is situated in Australia
- either commemorates events in a conflict in which Australia was involved or commemorates people (most of whom are Australian) who participated on Australia's behalf in a conflict
- is a focus for public commemorations, and
- is solely or mainly used for public commemorations.
Public fund
See 'Public fund'.
War memorial
The term war memorial is not defined by the legislation and has its ordinary meaning. The Macquarie Dictionary defines a war memorial as 'a monument or building commemorating those who died in a war'.
War memorial structures would include statues, honour rolls, decorative gates, ornamental bridges and fountains, monuments and obelisks. Trees may be considered war memorials where it can be demonstrated that they are the memorial and not the memorial surrounds.
Example The Campville Memorial consists of a water fountain at the entrance to a community parkland. The water fountain is inscribed with a dedication to the Australian soldiers who fought in World War I and is the focus of community commemorations. The water fountain is a war memorial. |
Not all war memorials are eligible. The war memorial must be in Australia. This includes memorials in Australia's external territories (such as Norfolk Island) and territorial seas. It does not extend to memorials in foreign countries (such as France and Turkey).
The war memorial must commemorate events and/or people in relation to a conflict in which Australia was involved. This includes, but is not limited to, the world wars, and the Korean and Vietnam wars. It does not include wars such as Yom Kippur and Falklands.
The events that are commemorated must be events in the conflict. However it is not necessary that the events mainly involved Australians. For example, a war memorial for the Battle of the Coral Sea could qualify.
If the war memorial commemorates people, most of them must be Australians participating in the conflict on Australia's behalf. This can extend to non-combatants, including nurses and merchant mariners. A memorial mainly for people other than Australians (for example, Canadians or North Koreans) is not eligible.
The war memorial must be a focus for public commemoration. Examples include ANZAC day services, wreath laying ceremonies and Remembrance Day services. War memorials that are not accessible to the general public (for example, a family's memorial for a deceased son) or that are for the exclusive use of members of a particular association or group will not satisfy this requirement. Also, structures operated for commercial purposes are not eligible.
The war memorial must be used solely or mainly for public commemorations. This means that amenities such as community memorial halls, churches, swimming pools, club buildings, hospitals and sports grounds will not be eligible, even if they are named as a memorial or contain a plaque. If such an amenity includes an eligible war memorial (such as a statue in a botanical gardens or an honour board in a community hall), it is only the memorial and not the amenity which qualifies.
Reconstruction or critical repair
A war memorial repair fund can provide its money only to reconstruct or make critical repairs to the eligible war memorial. The need for the reconstruction or critical repair must be significant. For example:
- a failure to repair the damage could significantly endanger public safety
- a failure to repair the damage could significantly compromise the structural integrity of the memorial
- the memorial is so badly damaged that it cannot be repaired.
Example The Brownville Memorial bridge is a small ornamental bridge that spans a man-made stream in the town's memorial gardens. The bridge was built in remembrance of the defence force personnel lost in the Vietnam War, and is only used for commemoration activities. A part of the supporting structure of the bridge sustained severe damage due to a lightning strike. The bridge is now unsafe to cross and is a risk to public safety. The memorial is in need of critical repair. |
While the need for reconstruction or critical repair might arise from events such as fire, vandalism, flooding or earthquake, it might also arise from the memorial falling into disrepair over time.
Examples that would not amount to reconstruction or critical repair include:
- maintenance
- routine repairs
- repairs that are desirable but not essential
- the construction of a new memorial
- the making of improvements to an existing memorial, and
- the extension or expansion of a memorial.
Example A group of residents has set up a public fund to add an obelisk to the town's memorial commemorating Australian World War I victims. The obelisk is an addition to the memorial. The fund has not been established for the reconstruction or critical repair of the war memorial. |
In situations where there is doubt about whether planned works will qualify as reconstruction or critical repair, the professional advice provided by a builder, engineer or architect may assist.
Where the work being done on a war memorial includes matters that are not reconstruction or critical repair, the fund can only provide money for the reconstruction or critical repair and cannot provide money for the other matters (such as extensions).
Checklist: War memorial repair fund Consider the following questions when working out whether your organisation is a war memorial repair fund. Use them in conjunction with the other information provided in the explanation of a war memorial fund.
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Does your fund meet all of the requirements of the description of a war memorial repair fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Public fund on the Register of Environmental Organisations
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 (DEH).
The Treasurer and the Minister for the Environment and Heritage decide whether an organisation and its public fund is entered on the Register of Environmental Organisations.
To be entered on the Register, an organisation 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 (see 'Public fund').
Organisations seeking entry to the Register apply on the Application Form for entry to the Register of Environmental Organisations and Endorsement as a Deductible Gift Recipient. To obtain this form and the Guidelines to the Register, contact DEH.
The application is sent to DEH to assess eligibility for inclusion on the register. If an organisation is included on the register the form is then sent to the Tax Office for endorsement as a DGR.
The organisation does not need to apply separately to the Tax Office.
| More information Refer to our fact sheet Environmental organisations and tax deductible gifts (NAT 8237). For information about the Register of Environmental Organisations, go to www.deh.gov.au/tax/reo/index.html. You can also contact: Register of Environmental Organisations |
Does your organisation meet all the requirements to be entered on the Register of Environmental Organisations?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Overseas aid fund
An overseas aid fund is a public fund that the Treasurer has declared, by notice in the Gazette, to be a 'developing country relief fund'.
For a fund to be a 'developing country relief fund', it must meet several requirements:
- it is a public fund (see 'public fund')
- 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.
Attaining 'developing country relief fund' status is a two-step process.
Firstly, the organisation wanting to establish the fund must be accepted as an 'approved organisation' by the Minister for Foreign Affairs. The Australian Agency for International Development (AusAID) is the agency responsible for managing this process.
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.
This arrangement is also known as the Overseas Aid Gift Deduction Scheme (OAGDS). To apply to be accepted as an 'approved organisation', or to obtain information about what constitutes relief for the purposes of the OAGDS, visit the AusAID website at www.ausaid.gov.au/ngos
| More information Refer to our fact sheet Overseas aid funds and tax deductible gifts (NAT 8233). To obtain this publication, see 'More information'. You can also contact AusAID: Phone: (02) 6206 4000 |
Does your fund meet all the requirements to be a 'developing country relief fund'?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
| If your organisation does not meet the requirements of this DGR category and it wishes to collect tax deductible donations for people who are victims of disasters in:
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Developed country disaster relief fund
The DGR category of developed country disaster relief fund covers funds with the following characteristics:
- the fund is a public fund
- the fund is established and maintained by a public benevolent institution (PBI) solely for providing money for the relief (including relief by way of assistance to re-establish a community) of people in a country other than
- Australia, and
- a country declared by the Minister for Foreign Affairs to be a developing country
- who are in distress as a result of a disaster, and
- the disaster is recognised by a Treasury minister as a disaster.
Public fund
See 'Public fund'.
Established and maintained by a PBI
The fund must be established and maintained by a PBI.
If the fund is part of a PBI, the requirement of being established and maintained by a PBI will be satisfied, as long as the fund provides money only for the purpose intended. The PBI should ensure the fund's money is not directed to the PBI's other purposes.
If the fund is an entity in its own right (such as a trust or a company), relevant matters include:
- the PBI's role in setting up the fund; for example, did the PBI settle the trust or form the company
- the PBI's control of the fund; for example, does the PBI control the trustee or the company's board, and are the PBI's officers the members of the company
- the PBI's role in supporting and resourcing the fund; for example, does the PBI provide the staff and facilities, and
- the connection or integration of the activities of the fund and the PBI.
It is not enough that the PBI helps or works with the fund or that there is a close connection in their operations. The PBI must have established the fund and it must continue to maintain it.
See 'Public benevolent institution' for an explanation of PBI.
Disaster
The Tax Office maintains a list of disasters for which developed country disaster relief funds can provide money.
To qualify, the disaster must be recognised by a Treasury minister as a disaster. The minister may recognise it as a disaster if satisfied that it developed rapidly and resulted in the death, serious injury or other physical suffering of a large number of people, or in widespread damage to property or the natural environment.
The minister's recognition of a disaster must be announced publicly and must specify the day (or the first day) the disaster is taken to have occurred or commenced.
Relief of people in a developed country
A developed country disaster relief fund must be established and maintained solely for providing money for the relief of people. The people must be in distress as a result of a disaster. The relief must be for people in a country that is not Australia nor a country declared by the Minister for Foreign Affairs to be a developing country. The relief can be by way of assistance to re-establish a community.
This requirement applies not only to the fund's actual distributions but also it must be reflected in the fund's constituent or governing document.
Relief can cover a broad range of activities, which will vary with the nature of the disaster and the types of distress being suffered. This includes emergency shelter, health care and food supplies, and providing relief for people through trauma counselling and through work on buildings, amenities, locations and infrastructure.
Repairing and reconstructing infrastructure could include:
- rebuilding community buildings such as aged persons homes, halls, churches and schools damaged by a flood, and
- replacing vehicles and computers of community organisations damaged in a severe storm.
Providing resources and facilities for use in relieving the distress could include:
- facilitating the recruitment and work of volunteers in cleaning out flooded buildings, and
- transporting fodder to farmers to feed their animals following a widespread fire.
Relief can also be provided by preventing further danger from the disaster. Such relief could include:
- building retaining structures to prevent landslides following loss of vegetation from a hurricane
- securing structures to limit damage if aftershocks follow an earthquake, and
- preventing the spread of disease after a flood.
While there are many types of relief for which a developed country disaster relief fund could provide money, it must not provide money for activities that are:
- for the relief of distress that is not a result of the disaster
- for people in a developing country (such as Sudan) or in Australia
- not for the relief of people
- unrelated to the disaster.
Examples A public fund is set up to relieve distress following a storm. One of the organisations that applies to the fund is a sporting club which suffered no storm damage. It applies for money to build a new club house. If the public fund is to be a developed country disaster relief fund, it could not give the money to the club. The proposed use of the money is not for the relief of distress and is unrelated to the disaster. A public fund provides money to rescue wildlife affected by an oil slick. The fund does not qualify as a developed country disaster relief fund because it is financing activities that are not for the relief of people. |
Where a developed country disaster relief fund is making grants to various individuals and/or organisations, an application form can help provide assurance that its money will only be provided for acceptable uses.
Example A fire relief fund requires applicants to complete a form setting out what the applicant will use the money for, how that use is related to the fire and how it will relieve people's distress that is a result of the fire. |
| More information Refer to our web only product Developed country disaster relief funds and tax deductible gifts. To obtain this publication, see 'More information'. |
Relevant materials to use when working out whether your fund is a developed country disaster relief fund include its constituent or governing document, application forms for assistance, policies, advertising and financial statements, as well as the fund's day-to-day activities.
Checklist: Developed country disaster relief fund Consider the following questions when working out whether your organisation is a developed country disaster relief fund. Use them in conjunction with the other information provided in the explanation of a developed country disaster relief fund.
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Does your fund meet all the requirements of the description of a developed country disaster relief fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
| If your organisation does not meet the requirements of this DGR category and it wishes to collect tax deductible donations for:
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Public fund on the Register of Cultural Organisations
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 administered by the Department of Communications, Information Technology and the Arts (DCITA ).
The Treasurer and the Minister for Communications, Information Technology and the Arts 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 (see 'public fund')
- it agrees to provide information on donations at six-monthly intervals, and
- it agrees with DCITA that, if included on the register, it will participate in periodic reviews of eligibility.
Cultural activities undertaken as the principal purpose of an organisation on the register may include:
- a new theatrical work
- the publication of a literary magazine, and
- the building of a community arts centre.
Organisations seeking entry to the register apply on the Application Form for entry to the Register of Cultural Organisations. To obtain this form and the Guidelines to the Register, contact DCITA.
The application is sent to DCITA to assess eligibility for inclusion on the register. If an organisation is included on the register the form is then sent to the Tax Office for endorsement as a DGR. The organisation does not need to apply separately to the Tax Office.
| More information Refer to our fact sheet Register of cultural organisations and tax deductible gifts (NAT 8235). To obtain this publication, see 'More information'. You can also contact DCITA : Phone: (02) 6271 1640 |
Does your organisation meet all the requirements to be entered on the Register of Cultural Organisations?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Public library, public museum and public art gallery
The following are separate DGR categories:
- a public library
- a public museum
- a public art gallery, and
- an institution consisting of a public library, public museum and public art gallery or of any two of these.
Because they have common characteristics, 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 A company is set up by a train enthusiast. Its members and board are the enthusiast, his solicitor and his accountant. The public control requirement is not met. |
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 A professional association has a library that it makes available only to its members. The library is not a public library. |
If limits are in place only to improve availability, they can be acceptable. For example:
- a public library's books may be available only to residents of a particular town, or
- particular exhibits of a public museum may be available only to people carrying out research.
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 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 A society owns a workshop. Its members use the workshop to restore and maintain their vintage cars. The society organises for members to display their cars to the public each month. The society is not a museum. Its purpose and functions are different from those of a museum. |
Possessing things that could form the collection of a public library, museum or art gallery is not sufficient.
Example An organisation owns and maintains a building that has architectural and historical significance. The building is opened for public tours twice a year, and the rest of the time it is used as offices. The organisation does not use its building in the ways that a museum would use its collection. It is not a public museum. |
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 organisation 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 organisation
- the public can readily distinguish the library, museum or art gallery from the rest of the organisation
- 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 organisation, and
- any gifts made to the library, museum or art gallery will only be used for library, museum or art gallery purposes.
Example A secondary school has a library for its students. It is housed in a separate part of the school, and has its own name, rules, committee, budget and accounts. The school's library has a separate institutional character. |
Organisations that are not public libraries, museums or art galleries
The following are examples of organisations that are not public libraries, museums or art galleries.
- 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 (see 'Ancillary fund').
- 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 DGR table. Start by checking the cultural organisations category.
| More information Refer to Taxation Ruling TR 2000/10 Income tax: public libraries, public museums and public art galleries. To obtain this publication, see 'More information'. |
Checklist: Public library, museum or art gallery Consider the following questions when working out whether your organisation is a public library, museum or art gallery. Use them in conjunction with the other information provided in the explanation of a public library, museum or art gallery.
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Does your organisation meet all the requirements of the description of a public library, museum or art gallery?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
Ancillary fund
The DGR category of ancillary fund covers funds with the following characteristics.
- The fund is a public fund (see 'public fund').
- 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.
- 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 not provide for or establish another ancillary fund or a prescribed private fund. |
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 A public fund is set up to provide money to DGRs and to children with disabilities. It is not an ancillary fund as it is not solely for DGRs. |
If a DGR is endorsed only for a fund, institution or authority that it operates (see 'Endorsement of an organisation for a fund, authority or institution it operates'), the ancillary fund will only be able to assist or establish such a fund, institution or authority. It must not assist or establish other parts of that DGR.
Example An ancillary fund receives requests for funding from a school. The school is a DGR for its school building fund. The ancillary fund will only be able to make distributions to the school's building fund. |
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 DGR table.
For example, the gift condition for an approved research institute states only gifts made for the purposes of scientific research in the field of natural or applied science are deductible. An ancillary fund can make distributions to an approved research institute but only if they are to be used for those purposes.
| More information Refer to Taxation Ruling TR 95/27 Income tax: public funds. To obtain this publication, see 'More information'. |
Relevant materials to examine when working out whether your fund is an ancillary fund are: the trust deed or the will under which your fund was established, application forms for assistance, policies, advertising, and financial statements, as well as the fund's day-to-day activities.
Checklist: Ancillary fund Consider the following questions when working out whether your organisation is an ancillary fund. Use them in conjunction with the other information provided in the explanation of an ancillary fund.
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Does your fund meet all the requirements of the description of an ancillary fund?
Yes | Go back to the DGR table to check that it also meets the other requirements to fall within the relevant DGR category. |
No | Go back to the DGR table to check whether your organisation falls within a different DGR category. |
If your organisation is not an ancillary fund merely because it is not a public fund, see 'Prescribed private funds' to check whether you may apply for your organisation to be a prescribed private fund.
Last Modified: Friday, 4 August 2006DGRs - other conditions
Introduction
Endorsed deductible gift recipients (DGRs) must meet all the other conditions as well as fall within a general DGR category. The only exception is ancillary funds which do not need to satisfy the In Australia condition.
DGRs listed by name are required to meet the In Australia and the Receipts conditions. The only exception is prescribed private funds which do not need to meet the In Australia condition.
This chapter explains the other conditions for DGRs:
- In Australia - the organisation or the fund, authority or institution it operates, must be in Australia (except ancillary funds and prescribed private funds).
- Endorsement - the organisation must have an ABN, maintain a gift fund, and apply to the Tax Office for endorsement.
- Receipts - if a DGR issues a receipt for a gift, it must include certain information on the receipt.
- Self-review - an endorsed DGR must tell the Tax Office if it ceases.
In Australia
The 'in Australia' condition applies to all DGRs (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 A fund is set up in Turkey. Its controlling board, most of its assets and its donors are in Turkey. It sends money to Australia to help people who are in necessitous circumstances. The fund is not 'in Australia'. It cannot be endorsed as a DGR. |
For most funds, the purposes or beneficiaries of the fund must also be in Australia.
Example The fund is not 'in Australia'. It cannot be endorsed as a DGR. |
The purposes or beneficiaries of a fund do not have to be in Australia if the fund is in one of these DGR categories:
- overseas aid funds
- developed country disaster relief funds
- 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 A public museum is incorporated in New Zealand and has a branch in Australia. It is not 'in Australia'. It cannot be endorsed as a DGR. Example A public benevolent institution for the homeless is set up in Australia. It provides services in Australia and Thailand. It is not 'in Australia'. It cannot be endorsed as a DGR. |
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 A public benevolent institution is set up in Australia. Part of the treatment it provides involves travel to Canada. |
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.
Endorsement
The 'endorsement' condition applies to all general DGR categories. If an organisation in a general DGR category is not endorsed, donors cannot claim income tax deductions for the gifts they make to it.
The prerequisites to endorsement are that an organisation or a fund, authority or institution it operates, falls within a general DGR category and that it is in Australia (unless it is an ancillary fund).
To be endorsed, an organisation must:
- have an Australian business number (ABN)
- maintain a gift fund, and
- apply to the Tax Office for endorsement as a DGR.
There are two types of endorsement:
- where an organisation falls within a DGR category, and
- where a fund, authority or institution that is operated by an organisation falls within a DGR category.
Endorsement of an organisation in its own right
If an organisation falls within a DGR category in its own right, it is the organisation that can be endorsed. Organisations for these purposes include entities such as corporations, unincorporated associations, trusts, partnerships and government entities.
Examples A particular corporation is a public benevolent institution. The corporation can be endorsed in its own right. A public fund owned by a particular corporation is a necessitous circumstances fund. The fund is not an entity so it cannot be endorsed in its own right. |
Endorsement of an organisation for a fund, authority or institution it operates
The second type of endorsement applies if a fund, authority or institution is part of an organisation. For this type of endorsement, it is the organisation that must be endorsed but it is only endorsed for the particular fund, authority or institution.
Example Example A corporation has a necessitous circumstances fund that is part of the corporation. The corporation can be endorsed, but only for its fund. |
For this second type of endorsement, only gifts made to the fund, authority or institution can be deductible.
Example A local council is endorsed for a public library that it operates. Only gifts to the library would be deductible. Other gifts, for example gifts to the council for a neighbourhood project, would not be deductible. |
If an organisation operates more than one fund, authority or institution, it will need a separate endorsement for each one.
Example A school that is an entity operates a public library and a school building fund. The school would need to be endorsed for the library and endorsed for the building fund. |
This second type of endorsement does not apply if an organisation establishes another entity.
Example A service club that is an unincorporated association sets up a trust. The trust is a necessitous circumstances fund. Because the trust is an entity, it must be endorsed in its own right. The service club is not endorsed for the trust. |
Australian busines number (ABN)
For an organisation to be endorsed as a DGR, it must have an ABN. If an organisation does not have an ABN, it cannot be endorsed.
For an organisation that is to be endorsed in its own right, it uses its own ABN.
If an organisation is seeking endorsement for a fund, authority or institution it operates, it uses its own ABN. There is no need for an extra ABN for endorsement of the fund, authority or institution.
If part of an organisation has an ABN as a non-profit sub-entity for GST purposes, that ABN cannot be used for DGR endorsement.
If your organisation has a parent body, you should check first whether to use their ABN or apply for your own.
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Refer to the fact sheet Australian business number (ABN) - an overview for non-profit organisations (NAT 4450). It provides information on ABN registration, including requirements for organisations that undertake multiple enterprises and/or have multiple entities. To obtain this publication, see 'More information'. |
Gift fund
A prerequisite for DGR endorsement is that the organisation maintains a gift fund. If the organisation is seeking endorsement in its own right, the gift fund must be for the organisation 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 organisation or of the fund, authority or institution
- all gifts, and deductible contributions, of money or property for that purpose are made to it
- any money received by the organisation, because of such gifts, or deductible contributions, is credited to it
- it does not receive any other money or property
- the fund is used only for the principal purpose of the organisation or of the fund, authority or institution, and
- the organisation is required - by a law, its constituent documents or governing rules - to transfer any surplus assets of the fund to another gift deductible fund, authority or institution when the fund is wound up or the DGR endorsement revoked, whichever occurs first.
See 'Contributions to DGRs' for an explanation of deductible contributions.
Setting up a gift fund
A gift fund should be set up as part of the organisation 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 organisation 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 An ancillary fund only receives gifts. All gifts and earnings from them are passed on to DGRs. It has appropriate rules covering winding up and revoking of endorsement. The ancillary fund itself meets the gift fund requirement. It does not need to set up a separate fund. Example A necessitous circumstances fund receives gifts, deductible contributions, raffle proceeds and government grants. It cannot be a gift fund itself. It must set up a separate gift fund for the gifts and deductible contributions. |
If an organisation 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 A school operates a school building fund and a public library. It maintains a fund that receives all gifts to the school. The school does not satisfy the gift fund requirement. It cannot be endorsed for either the building fund or the library. It would need to set up two separate gift funds. |
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A gift fund can receive either gifts or deductible contributions, or both. However, if a gift fund's rules permit the receipt of gifts only, and an organisation wants to receive deductible contributions, the gift fund rules must be amended to permit the receipt of deductible contributions to the fund.
Purpose of a gift fund
The gift fund must be maintained for the principal purpose of the organisation or of the fund, authority or institution.
Example A public benevolent institution operates a hostel and a detox centre through its two divisions. For each division, it has a donation fund to receive gifts only. Each donation fund then transfers the gifts to its division. 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 An organisation sets up a fund for donations towards its annual staff picnic. The fund is not for the principal purpose of the organisation and so cannot be a gift fund. |
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 organisation and accounted for accordingly.
Example A public art gallery receives gifts, entrance fees and sale proceeds from its gallery gift shop. All amounts received at the gallery - gifts, fees and sales - are banked into its donation account. The gallery is not maintaining a gift fund. |
Money or property received by a gift fund
The following amounts must be credited to a gift fund:
- 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 other charities or DGRs (if made for the principal purpose)
- the whole amount of deductible contributions made to a fundraising event staged to raise funds for the principal purpose, and
- money received because of these gifts and deductible contributions, including proceeds from the sale of gifted property, and investment returns from money or property that continues to be part of the gift fund.
Amounts that are not gifts or deductible contributions 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 where the proceeds are not deductible contributions.
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 organisation or of the fund, authority or institution.
Acceptable uses of a gift fund for the main purpose of the organisation or of the fund, authority or institution include:
- transferring money or property to the organisation or to the fund, authority or institution for its current and continuing use
- purchases of property or services for use by the organisation 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 organisation or of the fund, authority or institution.
Examples When a public museum receives gifted artefacts for its collection, its gift fund identifies the artefact by recording its characteristics, its date of receipt and that it is being held by the museum as part of its collection. These activities show the gift fund is being used for the principal purpose of the museum. The gift fund of a public benevolent institution pays leasing charges on cars the institution provides to its employees. This is an acceptable use of the gift fund. |
Winding up a gift fund
An organisation 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.
An acceptable provision in the constitution of an organisation seeking to be a DGR in its own right is:
Gift fund dissolution clause
'If the Gift Fund is wound up or if the endorsement (if any) of the organisation as a deductible gift recipient is revoked, any surplus assets of the Gift Fund remaining after the payment of liabilities attributable to it, shall be transferred to a fund, authority or institution to which income tax deductible gifts can be made.'
If an organisation is a DGR for more than one fund, authority or institution it operates, it may transfer the assets to another of its gift funds.
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Consequences of not maintaining a gift fund
If an organisation is not maintaining a gift fund, it cannot be endorsed as a DGR.
If an organisation that is endorsed as a DGR stops maintaining a gift fund, it ceases to be entitled to endorsement. The organisation must then notify us so that we can revoke the organisation'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 A public library ran a charity ball and banked all proceeds in the library's gift fund account. When preparing the treasurer's monthly report, the mistake was discovered. The money was immediately transferred to the library's general bank account. The rectification was noted in the gift fund's books. The library's endorsement would not be revoked and it would not have to notify the Tax Office because it had a system that would identify errors, it rectified the deposit in a short time and noted the accounts. |
Refer to Taxation Ruling TR 2000/12 Income tax: deductible gift recipients - the gift fund requirement. To obtain this publication, see 'More information'. |
Applying for endorsement
You can apply to the Tax Office for endorsement if your organisation:
- has an ABN (see 'Australian business number (ABN)')
- falls into a DGR general category or operates a fund, authority or institution that falls into a DGR general category (see 'Endorsed DGRs')
- maintains a gift fund (see 'Gift fund'), and
- is in Australia or its fund, authority or institution is in Australia, unless it is an ancillary fund (see 'In Australia').
The relevant application form is called an Application for endorsement as a deductible gift recipient (NAT 2948). If your organisation has an ABN, you can obtain a copy of this form by contacting the Tax Office on 1300 130 248.
If your organisation does not have an ABN, indicate on the ABN registration form that you want it to be endorsed as a DGR and you will automatically be sent an application form.
Do not send any supporting material with your application unless otherwise advised.
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 in 'Endorsement of an organisation for a fund, authority or institution it operates'.
If there is more than one fund, authority or institution for which you want endorsement, use a separate application for each.
If you are seeking endorsement for your organisation and also for a fund, authority or institution it operates, use separate applications for the different endorsements.
Example A corporation that is a public benevolent institution is seeking endorsement for itself. It is also seeking endorsement for a public library it operates. It will lodge two separate applications. |
When does endorsement start?
The application will ask you for the date from which you want your organisation to be endorsed.
For most DGR categories, the earliest possible date an organisation can be endorsed as a DGR is 1 July 2000. If your organisation is applying for endorsement under one of the categories in the table below, the earliest possible date of endorsement is shown in the table.
DGR category | Earliest possible date of endorsement |
Public ambulance service | 1 April 2004 |
Public fund for public ambulance services | 1 April 2004 |
Government special school | 1 April 2004 |
Scholarship fund | 1 July 2006 |
Public fund on the register of harm prevention charities | 1 July 2003 |
Australian disaster relief fund | 1 July 2006 |
Animal welfare charity | 1 July 2006 |
Charitable services institution | 1 July 2006 |
War memorial repair fund | 1 July 2006 |
Public fund for provision of family counselling or family dispute resolution | 1 July 2006 |
Developed country disaster relief fund | 1 July 2006 |
If your organisation became entitled to endorsement after the earliest possible date it should use the date from which it is entitled. Donors can only claim income tax deductions for the gifts they make to your organisation from the date it is endorsed to the earlier of the date of revocation of endorsement or the date it is no longer entitled to receive tax deductible gifts.
Examples A public hospital in Australia has existed since 1 January 1991. It started to maintain a gift fund in April 2000. Its ABN is effective from 1 July 2000. Its date of endorsement will be 1 July 2000. An animal welfare charity in Australia was established on 1 January 1998. It has had an ABN from 1 July 2000 and maintains a gift fund. Its date of endorsement will be 1 July 2006. |
We will notify you in writing
Once the Tax Office has processed your application, we will send you written confirmation that:
- your organisation is endorsed as a DGR, or
- endorsement has been refused.
If your organisation is endorsed, donors can claim income tax deductions from the date the endorsement starts.
If there are delays in notifying you
If you believe 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 of your wish to have your organisation's application treated as if it had been refused is the later of:
- the end of the 60th day after you made the application, or
- the end of the 28th day after the last day on which you gave the Tax Office information or documentation it had asked for.
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, we will provide you with a clear explanation of our decision. At your request, we will review any of our decisions or actions affecting your organisation and try to resolve any problems quickly and informally. If you want us to do this, you should contact the person handling your case, or the Tax Office where the decision was made or where action was undertaken.
You also have the right under the law to ask the Tax Office for a review by lodging an objection against the refusal, or deemed refusal. Your objection must be:
- in writing, signed and dated
- lodged within 60 days of the date of notice of decision - although you may be granted an extension of time
- addressed to the Tax Office, and
- explain the grounds that you rely on.
This will enable us to consider all the facts when conducting the review.
We will advise you in writing of our decision on your objection and provide reasons for the decision.
If you are dissatisfied with our decision in relation to your objection, you may have the right to a review by the Administrative Appeals Tribunal or you can appeal to the Federal Court. The Tax Office letter that accompanies the notice of decision on your objection will explain the steps you need to follow to exercise your rights of review or appeal.
Receipts
Income tax law specifies that certain information must be included on a receipt issued by a DGR for a tax deductible gift or contribution. This requirement applies not only to endorsed DGRs, but also to DGRs listed by name in the income tax law.
If an endorsed DGR does not provide the information below on its receipts, its endorsement may be revoked.
Gifts
When a DGR issues a receipt for a deductible gift, the receipt must state:
- the name of the fund, authority or institution to which the gift has been made
- the DGR's ABN (if any - note: some DGRs listed by name might not have an ABN), and
- the fact that the receipt is for a gift.
Example The ZXC School is an endorsed DGR for the school building fund it operates. The fund's name is the ZXC School Building Fund. For gifts to the fund, the receipt must show:
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Other information useful for donors includes:
- the amount of money donated
- a description of any gifts of property, and
- the date of the gift.
Deductible contributions
When a DGR issues a receipt for a deductible contribution, the receipt must specify:
- the name and ABN (if any - note: some DGRs listed by name might not have an ABN) of the DGR
- the fact that the contribution was made for
- a right to attend a specified fundraising event, or
- the purchase of goods and services as a successful bidder at a fundraising auction.
- the amount of the contribution (if money), and
- the GST inclusive market value of the right or the goods or services received in return for the contribution
Other information useful for contributors includes:
- the date the contribution was made, and
- a description of the contribution if it was property.
See 'Contributions to DGRs' for an explanation of deductible contributions.
Refer to our publication Non-profit organisations and fundraising (NAT 13095). To obtain this publication, see 'More information'. |
Self review
Endorsed DGRs must tell us 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 receipts for gifts or deductible contributions your organisation issues. 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 we recommend 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. See here. 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 entitled, you do not have to contact us and your organisation's status continues unchanged.
A log has also been included 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 Ofice 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.
We may ask you to provide information and documents relevant to your organisation's entitlement to endorsement. While you must comply with this request, 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 us, or
- it has not given the specified information on receipts for tax deductible gifts and contributions.
We will provide written notice of the revocation. The revocation has effect from a date specified by us and the date may be retrospective.
Review of revocation
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: Review of a DGR endorsed in its own right
This worksheet will help you work out whether you organisation is still entitled to endorsement as a deductible gift recipient (DGR). Endorsed DGRs must tell the Tax Office if they stop being entitled to endorsement. Things that can affect your organisation's entitlement are: changes to purpose and operations, the gift fund, the 'in Australia' requirement, and the gift or deductible contribution receipts the organisation 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?
What you will need
|
Worksheet 1
1. Full name of your organisation
2. Australian business number (ABN)
3. Period of review
to |
4. Reason for review
Annual review | Change in circumstances | Other (please specify) |
5. Tax Office notice of endorsement
Date of endorsement
DGR category
Australian business number (ABN)
6. Is your organisation's ABN still current?
Yes | Go to question 7. | Your organisation must have a current ABN to be entitled to endorsement as a DGR. You can check your organisation's ABN by searching the Australian Business Register internet site at www.abr.business.gov.au or by phoning the Tax Office on 1300 130 248. If your organisation's ABN has been cancelled, you will have received written notification. |
No | Your organisation is no longer entitled to be endorsed as a DGR. The Tax Office will notify you that endorsement has been revoked. |
Notes:
DGR category
7. Does your organisation still fall within the general DGR category for which it was endorsed?
Yes | Go to question 8. | The category for which your organisation was endorsed is shown on the notice of DGR endorsement. Check that your organisation still falls within the category's description given in the DGR table. If the table sends you to an explanation of terms, check that your organisation still satisfies the description in the explanation. If your organisation no longer falls within the general DGR category for which it was endorsed, it might still fall within another category. Check the other DGR categories in the table. If your organisation does satisfy the description in another DGR category, write to the Tax Office. |
No | Your organisation is no longer entitled to endorsement. You must tell the Tax Office, in writing, that it ceased to be entitled to DGR endorsement and give the date it ceased to fall within a DGR category. |
Notes:
Gift fund
8. Is your organisation maintaining a gift fund?
Yes | Go to question 9. | Your organisation must maintain a gift fund to receive gifts or deductible contributions made for its principal purpose. For any period your organisation is not maintaining a gift fund, it is not entitled to DGR endorsement. The gift fund requirement is explained in GiftPack for deductible gift recipients & donors. Check that your organisation continues to meet this requirement. Briefly, a gift fund is a fund with these features:
|
No | Your organisation is not entitled to DGR endorsement for the period it was not maintaining a gift fund. You must tell the Tax Office in writing so your organisation's endorsement can be revoked for that period. |
Notes:
In Australia
9. Is your organisation in Australia?
Yes | Go to question 10. | All endorsed DGRs (except ancillary funds) must be in Australia. If your organisation's DGR category is ancillary fund, answer 'Not applicable'. The 'in Australia' requirement is explained in GiftPack for deductible gift recipients & donors. Briefly, your organisation will be in Australia if:
For exceptions to these conditions, see GiftPack for deductible gift recipients & donors. |
No | Your organisation is not entitled to be endorsed for the period it was not in Australia. You must tell the Tax Office in writing so that your organisation's endorsement can be revoked. | |
Not applicable | Go to question 10. |
Notes:
Receipts
10. Has your organisation correctly issued receipts for gifts and deductible contributions it has received?
Yes | Your organisation has 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 or contributions, particular information must be provided on them. The receipts must specify:
Further information on receipts is provided in GiftPack for deductible gift recipients & donors. |
No | Your organisation must ensure that gift and deductible contribution 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'
Name of person carrying out review
Position held
Signature
Date
Approval by Board/Committee/Trustee
Do not send this form to the tax office - keep it with your records
Worksheet 2: Review of a DGR endorsed for a fund, authority or institution it operates
This worksheet will help you work out whether your organisation is still entitled to endorsement as a DGR. Endorsed DGRs must tell the Tax Office if they stop being entitled to endorsement. Things that can affect your organisation's entitlement are: changes to purpose and operations, the gift fund, the 'in Australia' requirement, and the gift or deductible contribution receipts your organisation issues. You should self-review each year and whenever there is a major change in structure or operations. 'Organisation' is the corporation, trust, unincorporated association, or government entity that has been endorsed. 'Fund, authority or institution' is the part of the organisation that can receive tax deductible gifts. If an organisation 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. Who should use this worksheet?
What you will need
Do not write on the original worksheet - keep it as a template so you can make copies whenever you carry out a self-review. |
Worksheet 2
1. Full name of your organisation
2. Australian business number (ABN)
3. Name of the fund, authority or institution for which your organisation is endorsed
4. Period of review
to |
5. Reason for review
Annual review | Change in circumstances | Other (please specify) |
6. Tax Office notice of endorsement
Date of endorsement
DGR category
Australian business number (ABN)
7. Is your organisation's ABN still current?
Yes | Go to question 8. | The organisation must have a current ABN to be entitled to endorsement as a DGR. You can check your organisation's ABN by searching the Australian Business Register (ABR) internet site at www.abr.business.gov.au or by phoning the Tax Office on 1300 130 248. If your organisation's ABN has been cancelled, it will have received written notification. |
No | Your organisation is no longer entitled to be endorsed as a DGR. The Tax Office will notify you that endorsement has been revoked. |
Notes:
DGR category
8. Does your organisation's fund, authority or institution still fall within the DGR category for which it is endorsed?
Yes | Go to question 9. | The general DGR category under which your organisation's fund, authority or institution falls is shown on its notice of DGR endorsement. Check that your organisation's fund, authority or institution still falls within the description of the DGR category given in the DGR table in GiftPack for deductible gift recipients & donors. 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 shown on the endorsement notice, it might still fall within another category. Check the other DGR categories in the DGR table. If it does satisfy the description in another DGR category, write to the Tax Office. |
No | Your organisation is no longer entitled to DGR endorsement for this fund, authority or institution. You must tell the Tax Office in writing that it has ceased to be entitled and give the date that the fund, authority or institution ceased to fall within a DGR category. |
Notes:
Gift fund
9. Is your organisation maintaining a gift fund for the fund, authority or institution?
Yes | Go to question 10. | A gift fund must be maintained to receive gifts or deductible contributions 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 in GiftPack for deductible gift recipients & donors. Check that your organisation continues to meet this requirement. Briefly, a gift fund is a fund with these features:
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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
10. Is your fund, authority or institution in Australia?
Yes | Go to question 11. | All funds, authorities or institutions (except ancillary funds) must be in Australia. The 'in Australia' requirement is explained in GiftPack for deductible gift recipients & donors. Briefly, your fund, authority or institution will be in Australia if:
For exceptions to these conditions, see GiftPack for deductible gift recipients & donors. |
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. |
Notes:
Receipts
11. Has your organisation correctly issued receipts for gifts and contributions it has received?
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 an endorsed DGR issues receipts for tax deductible gifts or contributions, particular information must be provided on them. The receipts must specify:
Further information on receipts is provided in GiftPack for deductible gift recipients & donors. |
No | You must ensure that gift and deductible contribution 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'.
Name of person carrying out review
Position held
Signature
Date
Approval by Board/Committee/Trustee
Do not send this form to the tax office - keep it with your records
Last Modified: Tuesday, 1 August 2006DGRs listed by name
Introduction
The majority of deductible gift recipients (DGRs) are endorsed by the Tax Office.
If an organisation wants to receive tax deductible gifts it should firstly consider whether it can be endorsed by the Tax Office as a DGR. See 'Endorsed DGRs'.
This chapter explains DGRs listed by name in the tax law. They are:
- prescribed private funds listed by name in the Income Tax Assessment Regulations 1997, and
- other DGRs listed by name in the Income Tax Assessment Act 1997.
Prescribed private funds
A prescribed private fund is a fund listed by name in the Income Tax Assessment Regulations 1997 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.abn.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 here.
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 'Public fund') 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 benefits of DGRs (except ancillary funds and 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 responsible person as defined in the Model Trust Deed. That is, a person who has a general responsibility to the community. This person must not be associated with the founder or major donor in anything other than a professional capacity.
- The fund must be audited.
- The founding documents must prohibit the making of any benefit to the trustee, the donor/founder 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 or a deductible contribution, certain details must be provided on the receipt. See 'Receipts'.
Gifts and contributions
Prescribed private funds can receive tax deductible gifts of money or property covered by one of the following gift types:
- $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.
These gift types are explained in detail in 'Gift types'.
Certain contributions made to prescribed private funds for fundraising events such as fundraising dinners and charity auctions may be tax deductible. See 'Contributions to DGRs'.
A prescribed private fund can only receive deductible gifts or deductible contributions on and from the date, or for the period that it is declared as a prescribed private fund.
| More information Refer to the web only products:
To obtain these publications, see 'More information'. |
Other DGRs listed by name
DGRs listed by name in the Income Tax Assessment Act 1997 include organisations such as the Industrial Design Council of Australia and the Australian Sports Foundation.
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 organisation is a DGR, provided it has an Australian business number (ABN), by searching the Australian Business Register at www.abn.business.gov.au
DGRs listed by name are not required to have an ABN for gift deductibility purposes. However, most will have an ABN for other purposes.
These DGRs must be in Australia. See 'In Australia'.
When a DGR listed by name in the tax law issues a receipt for a tax deductible gift or a deductible contribution, certain details must be provided on the receipt. See 'Receipts'.
The types of gifts that can be received by these DGRs are explained in 'Gift types'.
Certain contributions made to other DGRs listed by name for fundraising events such as fundraising dinners and charity auctions may be tax deductible. See 'Contributions to DGRs'.
For some listed by name 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.
| More information Refer to the web only product Deductible gift recipients listed by name in the tax law (NAT 8443). To obtain this publication, see 'More information'. |
| The government has announced that it will extend the power of the Commissioner of Taxation to review the activities of other listed by name DGRs. See 'Proposed changes'. |
Donors and gifts
Introduction
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.
This chapter explains:
- the requirements for a gift to be tax deductible
- who can claim a deduction
- how much can be claimed
- when can a gift deduction be claimed
- what records donors need to keep, and
- other income tax consequences of making a gift.
Requirements for a gift to be tax deductible
For a donor to claim a deduction for a gift, there are several requirements:
- the gift must be made to a deductible gift recipient (DGR)
- the payment must really be a gift
- the gift must be of money or property that is covered by one of the gift types, and
- any gift conditions must be satisfied.
Example Colin voluntarily gives $70 cash during 2004-05 to a school building fund that is a DGR. Colin can claim an income tax deduction for $70 because:
Colin makes his claim when he lodges his tax return for 2004-05. |
| The deduction for a gift cannot add to or create a tax loss. See 'Gifts and tax losses'. |
Gifts to DGRs
Only gifts made to DGRs are tax deductible.
| You can check that the recipient is a DGR by:
|
The types of DGRs are reviewed in 'Deductible gift recipients (DGRs)'.
For some DGRs, gifts will only be deductible if made to some part of the DGR.
Example A local government council is endorsed as a DGR only for its library. Only gifts made to the library will be tax deductible. Gifts made to the council's neighbourhood program, for example, will not be deductible. Example A school is endorsed as a DGR only for its school building fund. Only gifts made to the school building fund will be tax deductible. Gifts made to the school's sports teams, for example, will not be deductible. |
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 be organised through workplace giving programs. If a portion of an employee's pay is donated to a DGR through regular payroll deductions, the employer may reduce the gross salary by the gift amount when calculating the PAYG amount it withholds from that employee's pay. This may give the employee the benefit of the reduced tax for their donation immediately in their pay.
Where the PAYG withholding amount is reduced because of a gift made through a workplace giving program, the total pay on the employee's payment summary is not reduced by the amount of the gift. This means the employee must claim a deduction for the gift in their annual tax return so that the correct tax can be calculated.
For their records, employees may use confirmation by the employer of the amount donated to DGRs on:
- the employee's payment summary, or
- other written or electronic communication from the employer to the employee.
The confirmation must identify the DGR to whom the gift has been made or state that all of the gifts are being made to DGRs where there is insufficient space to identify the DGRs (for example on a payment summary).
| More information Refer to our publication How to set up a workplace giving program (NAT 9185). To obtain this publication, see 'More information'. |
What is a gift?
Gifts have the following characteristics:
- there is a transfer of money or property
- the transfer is made voluntarily
- the transfer arises by way of benefaction, and
- no material benefit or advantage is received by the donor.
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, and
- payments where the person has an understanding with the recipient that the payments will be used to provide a benefit for the 'donor'.
Examples Sally buys a clock at a charity auction. This is not a gift even if Sally has paid a lot more than the value of the clock. |
To be a gift there has to be a transfer of money or property.
Example On a telethon Theodora calls a DGR to say she will give $500. She later forgets about it and never in fact gives anything to the DGR. Theodora has not made a gift as she has not transferred the $500 to the DGR. |
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 Alessandra does volunteer work for a DGR caring for sick children. She buys toys and gives them to the children. Alessandra can't claim a deduction because she has not made a gift of property to the DGR itself. |
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 offers to repair a timber fence around a DGR's premises and supply the timber for the job. 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. |
An acknowledgment that a recipient makes in appreciation of a payment can be consistent with the payment being a gift.
Example Clare receives a lapel badge for her donation to a DGR. This is not a material benefit and the donation is a gift. |
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 organisation 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.
| More information Refer to Taxation Ruling TR 2005/13 Income tax: tax deductible gifts - what is a gift? To obtain this publication, see 'More information'. |
Gift types
To be deductible, a gift must be of money or property that is covered by one of the gift types. See 'Gift types'.
Different gift types apply for different types of DGRs. The DGR Table gives the gift types for each general DGR category.
Example Jill wants to know if she can claim a deduction for a painting she is giving to a public benevolent institution that is a DGR. The gift types for public benevolent institutions are listed in the DGR Table. 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 Jeremy gave some timber to a public hospital that is a DGR. He bought it six months before he made the gift. His gift is covered by the gift type 'property < 12 months'. 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. If the market value was $350 and the amount paid was $400, Jeremy would claim $350 (provided it does not add to or create a tax loss). |
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.
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 The fund for the reconstruction of the Ycart war memorial was endorsed as a DGR under the DGR category 'war memorial repair fund' on 5 July 2006. The gift condition for this DGR category states 'gifts must be made within two years from the date of endorsement'. Donors may only claim a deduction for a gift to the fund for the reconstruction of the Ycart war memorial if the gift is made between 5 July 2006 and 4 July 2008. Example Gifts to a DGR that is an approved research institute will only be tax deductible if they are made for the purposes of scientific research in the field of natural or applied science. 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 the DGR Table. Many categories of DGR have no gift conditions.
Who can claim a deduction?
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.
Example Colin's only income in his tax return for 2004-05 is a salary of $35,000. He has given $70 to a school building fund that is a DGR. This is the only deduction he claims when lodging his income tax return. His taxable income is therefore $34,930 (that is, $35,000 minus $70). |
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.
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 in 'Gift types'.
Jointly owned property
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 $100,000. They own it in the proportions 25% and 75%. John can claim $25,000 and Miranda $75,000 (or less if the claim would add to or create a tax loss). |
Gifts and tax losses
A deduction for a gift cannot add to or create a tax loss for the donor.
Example Dominic's assessable income in his tax return for 2004-05 is $15,000. He has donated $20,000 to a DGR during that year. He has no other income or deductions in his tax return. 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 as a tax loss |
However, donors can elect to spread deductions for certain gifts over a period of up to five years. See 'Spreading tax deductions for gifts'.
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 Harry gives a cash gift to a DGR on 7 August 2004. Harry will claim the deduction in his income tax return for 2004-05. |
Spreading tax deductions for gifts
Whilst a gift cannot add to or create a tax loss, 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:
- $2 or more: money
- property valued by the Tax Office at more than $5,000
- cultural gifts: property under the Cultural Gifts Program, or
- heritage gifts: a place included in the National Heritage List, the Commonwealth Heritage List or the Register of the National Estate.
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 In 2004-05, Rochelle donates a vehicle to a DGR. The vehicle is valued by the Commissioner at $7,000. Rochelle decides to spread the deduction over the five income years available for the apportionment. The first income year in which she can claim a portion of the deduction is 2004-05. Rochelle decides to apportion her deduction for the donation of the vehicle in the following manner: | ||||
2005 | 2006 | 2007 | 2008 | 2009 |
10% | 30% | 20% | 20% | 20% |
She makes a written record of the election before lodging her 2004-05 tax return. | ||||
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 Sarah donates a painting under the Cultural Gifts Program to an art gallery in April 2005. The first income year in which she can claim a portion of the deduction is 2004-05. She elects to apportion her deduction as follows: | ||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||
50% | 15% | 15% | 10% | 10% | ||
She sends her copy of the election to the Arts Secretary before lodging her income tax return for 2004-05. In July 2007, she decides to claim the rest of her deduction in her 2006-07 tax return. Before she lodges that return, she must send a copy of the variation to DCITA indicating the new apportionment as follows: | ||||||
2007 | 2008 | 2009 | ||||
35% | 0% | 0% | ||||
Approved forms for elections and variations vary depending on the gift and the DGR that receives it.
Donors should obtain an election form as outlined in the following table. 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
Type of gift | made on or after 1 July | Where to obtain forms and return completed copy |
$2 or more | 2003 | Donors can use the form in TaxPack and keep it with their records. |
Property valued by the Tax Office at more than $5,000 to heritage or environmental DGRs | 1999 | Department of Environment and Heritage (DEH) |
Property valued by the Tax Office at more than $5,000 to other DGRs | 2002 | Donors can use the form in TaxPack and keep it with their records. |
Cultural gifts | 1999 | Department of Communications, Information Technology and the Arts (DCITA) |
Heritage gifts | 1999 | Department of Environment and Heritage (DEH) |
Contact details:
DCITA
Department of Communications, Information Technology and the Arts
GPO Box 2154
CANBERRA ACT 2601
Phone: (02) 6271 1643
Fax: (02) 6271 1697
Email: cgp.mail@dcita.gov.au
Website: www.dcita.gov.au/cgp
DEH
The Administrator
Register of Environmental Organisations
Department of Environment and Heritage
GPO Box 787
CANBERRA ACT 2601
Phone: (02) 6274 1467
Fax: (02) 6274 1650
Email: reo@deh.gov.au
Website: www.deh.gov.au
| More information Donors should refer to TaxPack for information on how gifts can be claimed in the tax return for the year in which the gift was made. To obtain this publication, see 'More information'. |
What records are required?
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 ABN (if any).
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 a period of 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.
| More information Refer to our publication Non-profit organisations and fundraising (NAT 13095) for more information on the records donors should keep. To obtain this publication, see 'More information'. |
Other income tax matters
Costs of obtaining valuations
Valuation expenses incurred by a donor are tax deductible if the valuation is made solely to determine the market value of a deductible gift so 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 A company makes payments to a DGR to place its advertisements on the DGR's premises. 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 (formerly called depreciation) has been claimed as a tax deduction, there may be a consequential adjustment for income tax.
Such a balancing adjustment may either increase or decrease the donor's taxable income.
| More information Refer to our publication Guide to depreciating assets (NAT 1996). To obtain this publication, see 'More information'. |
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
When property is gifted, there may be capital gains tax consequences.
Example Conrad makes a deductible gift of property to a DGR. He bought it for $70,000 and its value at the time of the gift was $80,000. As the making of a gift can fall within the capital gains tax provisions, Conrad may have a capital gain of $10,000 with an amount being included in his taxable income (depending on his circumstances and ignoring the effect of indexation and other capital gains tax rules). 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:
- testamentary gifts (that is, gifts made under a will)
- 'cultural gifts', and
- 'cultural bequests'.
Many personal use assets are also exempt.
| Prior to 1 July 2005 a testamentary gift was only exempt from capital gains tax if the gift would have been tax deductible if it had not been a testamentary gift. |
| More information Refer to our publication Guide to capital gains tax (NAT 4151). To obtain this publication, see 'More information'. |
| Deductions for contributions made at DGR fundraising events, political contributions and gifts, and tax concessions for conservation covenants are explained in 'Contributions and conservation covenants'. |
Gift types
Introduction
To be tax deductible, a gift must be money or property covered by one of the gift types described in this chapter.
This chapter explains, for each gift type:
- what the gift type covers
- who can receive it, and
- valuation issues.
What types of gifts are tax deductible?
To be tax deductible, a gift must be covered by one or more of the following gift types.
Explanation of gift type | |
$2 or more - money | See '$2 or more'. |
Property > $5,000 - property valued by the Tax Office at more than $5,000. | See 'Property > $5,000' |
Property < 12 months - property purchased during the 12 months before the gift was made. | See 'Property < 12 months'. |
Trading stock - trading stock disposed of outside the ordinary course of business. | See 'Trading stock'. |
Cultural gifts - gifts made under the Cultural gifts Program. | See 'Cultural gifts'. |
Cultural bequests - gifts made under the Cultural Bequests Program. | See 'Cultural bequests'. |
Heritage gifts - places included in the National Heritage List, the Commonwealth Heritage List or the Register of the National Estate. | See 'Heritage gifts'. |
| The government has announced a new gift type, publicly listed shares. See 'Proposed changes'. |
For each gift type, this section explains the types of gifts covered, the types of DGRs that can receive the gifts, and valuation issues.
Issues relating to making elections to spread the deduction for each gift type are also covered.
The DGR table gives the gift types for each general DGR category. Gifts that fall within the first four gift types can be made to almost all DGRs. Gifts in the other gift types can only be made to limited groups of DGRs.
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 Samantha owns an antique book shop. She is considering giving an expensive antique book from the shop's trading stock to a public museum that is a DGR. If the requirements of the particular gift type are met, such a gift may fall within the following gift types, 'property > $5,000', 'trading stock', or 'cultural gift'. She may claim a deduction under the gift type that is most appropriate. |
| What a gift is and other requirements for a gift to be tax deductible are explained in 'Donors and gifts'. |
$2 or more
Type of gift
This gift type covers gifts of money, including foreign currency. The money may be paid in various ways, including by cash, cheque, credit card or electronically.
The gift to a DGR must be $2 or more. A series of gifts made to a DGR in an income year may be aggregated to work out if the gift is $2 or more.
Example For the last 20 weeks of the income year, Elizabeth participated in a workplace giving program. She has been having $1.50 deducted from her weekly pay. The money is being sent on a weekly basis by her employer to a DGR. 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 types 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.
For this gift type, donors can make an election to spread the deduction over a period of up to five years. See 'Spreading tax deductions for gifts'.
Property > $5,000
Type of gift
This gift type covers gifts of property valued by the Tax Office at more than $5,000.
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
If the donor purchased the property during the 12 months before making the gift, the amount of the gift deduction is explained in 'Property < 12 months'.
If the donor did not purchase the property during the 12 months before making the gift, the amount of the gift deduction is the value determined by the Tax Office.
| Property is purchased if it is acquired by way of bargain or sale for money or some other valuable consideration. |
Property that has not been purchased includes prizes won in raffles, property received as a gift, and inherited property.
Tax Office valuations are made by the Australian Valuation Office (AVO), which is a part of the Tax Office. 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.
Contact: Australian Valuation Office
Philanthropy Programme
Australian Valuation Office
PO Box 911
DICKSON ACT 2602
Phone: (02) 6229 3403
Fax: (02) 6230 5060
Website: www.avo.gov.au
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. See 'Spreading tax deductions for gifts'.
| In some situations a gift may fall under more than one gift type. Donors may use the gift type that is most appropriate. See gift types. |
| More information Refer to our fact sheet Gifts of property valued by the Tax Office at more than $5,000 (NAT 8261). To obtain this publication, see 'More information'. |
Property < 12 Months
Type of gift
This gift type covers gifts of property purchased by the donor during the 12 months before making the gift.
Property has a wide meaning. As well as physical things, it includes rights and interests that are capable of ownership and have a value.
For gifts of trading stock where the disposal takes place outside the ordinary course of business, see 'Trading stock'.
| Property is purchased if it is acquired by way of bargain or sale for money or some other valuable consideration. |
Property that has not been purchased includes prizes won in raffles, property received as a gift, and inherited property.
Example Giulia wins a desk in a raffle. If she gives it to a DGR, it will not fall within this gift type. She would have to check if it was covered by another gift type that applied to the DGR. |
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 types 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 purchases an item of property for $600 and donates it to a DGR 10 months later. The market value at the time Clarence makes the gift is $500. 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). |
It is up to the donor, not the DGR, to find out the market value of the gift.
Market value
For donors who are registered for GST or required to be registered, the amount that would otherwise be the market value is reduced by an amount equal to the GST 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.
Donors who are not registered for GST, and are not required to be registered, do not need to adjust the market value.
Example Franziska runs a restaurant and is registered for GST. She gives some of the restaurant's kitchenware to a DGR on 7 November 2004. The market value on that day (including GST) was $2,200. If she had acquired the kitchenware for $2,200 on that day, she would have been entitled to a GST 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. If Franziska was not registered for GST and was not required to be registered, the market value would be $2,200. |
Amount paid
For donors who are registered for GST, or are required to be registered, the amount paid is reduced by the amount of the GST credit (if any). This is because the donor effectively receives a refund of the GST paid on purchasing the gifted property.
If GST was not included in the price of the property purchased by the donor, no adjustment would be made. Examples are 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 Sergei is a builder who is registered for GST. He gives timber he had bought for his business to a DGR. It cost him $3,300. Because Sergei would be entitled to a GST credit of $300 (that is 1/11th of $3,300), his amount paid for gift purposes would be $3,000. If Sergei was not registered for GST and was not required to be registered, the amount paid would be $3,300. |
Spreading tax deductions
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. Tax Office valuations are made by the Australian Valuation Office which is part of the Tax Office. See Contact details.
The amount that can be spread is the amount of the gift deduction that can be claimed under this gift type.
Example Bill purchases property in May 2004 for $4,000 and donates it to a DGR nine months later. The market value at the time he makes the gift is $6,000. Bill's tax deduction for 2004-05 (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 2004-05 and the four following years. |
How to make an election to spread a tax deduction is explained in 'Spreading tax deductions for gifts'.
| In some situations a gift may fall under more than one gift type. Donors may use the gift type that is most appropriate. See gift types. |
Trading stock
Type of gift
This gift type covers the trading stock of a business, but only if two conditions are met:
- the gift is a disposal of the trading stock outside the ordinary course of the donor's business, and
- if the gift involves the forced disposal or death of livestock, no income tax election has been made to spread or defer the profit.
For this gift type, it is not necessary for the trading stock to have been purchased during the 12 months before the gift was made.
Example Ghia operates a furniture retail business. She knows a DGR that could use a particular cupboard she has in stock. If Ghia gives the cupboard to the DGR, it would fall within the 'Trading stock' gift type. |
Recipients
This gift type applies to all types 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 Joseph operates a retail business and values his trading stock at cost. In the 2003-04 income year he purchased $2,000 of trading stock for resale in his business. The stock was still on hand at the end of that income year. During the 2004-05 income year he gifted the same trading stock to a DGR. At the time of making the gift, the stock had a market value of $3,000. In the 2003-04 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 2003-04 year. In the 2004-05 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 2004-05 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. |
Market value
For donors who are registered for GST or required to be registered, the amount that would otherwise be the market value is reduced by an amount equal to the GST 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 Madeleine runs a fabric shop and is registered for GST. She gives some of the shop's stock to a DGR on 7 November 2004. The market value on that day (including GST) was $2,200. If she had acquired the stock for $2,200 on that day, she would have been entitled to a GST credit of 1/11th, given the assumption it would be used solely for the purposes of sale. That means she would have been able to claim back $200 of GST on the purchase. As a result, Madeleine'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.
Spreading tax deductions
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.
Tax Office valuations are made by the Australian Valuation Office which is part of the Tax Office. See contact details.
How to make an election to spread a tax deduction is explained in 'Spreading tax deductions for gifts'.
| In some situations a gift may fall under more than one gift type. Donors may use the gift type that is most appropriate. See gift types. |
Cultural gifts
Type of gift
This gift type covers gifts of culturally significant property (except property that is an estate or interest in land or in a building or part of a building) made under the Cultural Gifts Program.
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.
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 the following deductible gift recipients (DGRs):
- DGRs that are public libraries, public museums, public art galleries or institutions consisting of two or more of these
- DGRs endorsed as DGRs for the operation of a public library, public museum, public art gallery or an institution 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.
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 DCITA .
However, 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,
the valuation of the gift is the lesser of the amount the donor paid for the property and the average of the written valuations.
Where 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. See 'Spreading tax deductions for gifts'.
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.
| In some situations a gift may fall under more than one gift type. Donors may use the gift type that is most appropriate. See gift types. |
| More information Refer to our fact sheet Cultural gifts Program and tax deductible gifts (NAT 8236). To obtain this publication, see 'More information'. You can also contact DCITA : |
Cultural bequests
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 income 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.
Heritage gifts
Type of gift
This gift type covers gifts of places included in:
- the National Heritage List, or the Commonwealth Heritage List, under the Environment Protection and Biodiversity Conservation Act 1999, or
- the Register of the National Estate under the Australian Heritage Council Act 2003.
Places included in these lists are:
- places of outstanding natural, Indigenous or historic heritage value to the nation
- places of significant natural, Indigenous or historic heritage value owned or leased by the Commonwealth, and
- places of significant natural, Indigenous or historic heritage value throughout Australia.
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. See 'Spreading tax deductions for gifts'.
| In some situations a gift may fall under more than one gift type. Donors may use the gift type that is most appropriate. See gift types. |
| More information Refer to our web only product Heritage gifts. To obtain this publication, see 'More information'. |
Contributions to DGRs
Certain deductible gift recipient (DGR) fundraising events encourage contributions which may at the same time extend minor benefits to the contributor. As a benefit is received in return, the contributor is not entitled to claim the contribution as a tax deductible gift.
From 1 July 2004, contributions made by individuals to DGRs in relation to DGR fundraising events such as fetes, balls, gala shows, dinners and charity auctions may be tax deductible.
To be deductible, a contribution must meet several requirements:
- the contribution must be made to a DGR for
- a right to attend or participate in a fundraising event in Australia, or
- the purchase of goods or services as a successful bidder at an auction that is, or is at, a fundraising event in Australia
- the contribution must be more than $250 (and can include certain property contributions)
- the GST-inclusive value of the right or the goods or services (the benefit) must not exceed the lesser of $100 and 10 per cent of the value of the contribution
- the contribution must satisfy any gift conditions relating to the DGR as though it was a gift, and
- the contribution must be made by an individual.
Testamentary contributions, that is, contributions made under a will, are not tax deductible.
If the contribution is a gift, a deduction may only be claimed as a gift, see 'What is a gift?'
DGRs
All categories of DGR (except the Commonwealth for the purposes of Artbank) can receive deductible contributions.
For some DGRs, contributions will only be deductible if made to some part of the DGR.
Example A local government council is endorsed as a DGR only for its library. Only deductible contributions made to the library will be tax deductible. Contributions made to the council's neighbourhood program, for example, will not be deductible. |
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Contributions of property
The following contributions of property made in return for a right to attend or participate in a fundraising event may be deductible contributions:
- property valued by the Tax Office at more than $5,000 and not purchased during the 12 months before making the contribution, and
- property valued at more than $250 and purchased by the contributor during the 12 months before making the contribution.
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To value contributions of property valued by the Tax Office at more than $5,000, refer to the valuation section for 'Property > $5,000'.
To value property purchased by the contributor during the 12 months before making the contribution, refer to the valuation section for 'Property < 12 months'.
It is up to the individual and not the DGR to find out the value of a contribution of property.
Gift conditions
A deductible contribution to a DGR must also satisfy any gift conditions applicable to the DGR as though the contribution was a gift.
For some DGRs, the law adds extra conditions affecting the types of deductible gifts they can receive. The gift or contribution may only be tax deductible if made:
- between certain dates, or
- for a specific use.
A contribution is made for a specific purpose of the gift condition if the fundraising event is staged for that purpose.
The gift conditions for the general DGR categories are set out in the DGR table. Many categories of DGR have no gift conditions.
Example XYZ Agency is endorsed as a DGR under the general DGR category 'public authority for research'. To satisfy the gift conditions for public authority for research, the contributions to XYZ Agency must be made for fundraising events staged to raise funds for the purposes of research into the causes, prevention or cure of disease in human beings, animals or plants. |
Refer to Non-profit organisations and fundraising (NAT 13095) for information on determining the value of a minor benefit. To obtain this publication, see 'More information'. |
Who can claim a tax deduction?
Individual taxpayers who have made deductible contributions may claim a tax deduction. In order to claim tax deductions they need to know:
- how much can be claimed
- when contributions can be claimed
- what records are required, and
- other income tax consequences of making a contribution.
How much can be claimed?
The deduction is limited to that part of the contribution that is in excess of the benefit received in return for making the contribution.
Example Phillip pays $300 to attend a play hosted by a DGR, which is open to the public and costs $30 a ticket on the open market. Phillip can claim a deduction of $270 ($300 - $30). |
An individual attending a fundraising event may claim two contributions for the right to attend the same fundraising event, but no more (for example, one for the individual and one for the individual's partner).
There is no limit to the number of deductions that may be claimed for the purchase of goods and services by way of successful bids at a fundraising auction. An individual may claim a deduction for both attending a fundraising event (for example a fundraising dinner auction) as well as for the purchase of goods or services as a successful bidder at the auction.
Example Rebecca makes a payment of $260 to attend a charity auction conducted by a DGR. The ticket to the auction has a market value of $20. At the auction, Rebecca successfully bids $2,000 for a chair with a market value of $90. She also bids $1,000 for a painting with a market value of $100. Rebecca can claim three separate deductions - one of $240 in respect of her contribution for the right to attend the auction; one of $1,910 for the purchase of the chair at auction and a further $900 for the purchase of the painting at auction. |
The deduction for a fundraising contribution 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 it is made or any later year.
Example Dominic's assessable income in his tax return for 2004-05 is $15,000. The deductible portion of contributions he makes to DGRs during that year is $20,000. He has no other income or deductions in his tax return. The tax deduction he can claim for his contributions is limited to $15,000. This is because a deductible contribution cannot add to or create a tax loss. Dominic's taxable income therefore becomes nil and the excess $5,000 from his contributions claim cannot be carried forward to a later tax return. |
When can contributions be claimed?
A tax deduction for a contribution is claimed in the tax return for the income year in which the contribution is made.
To obtain this publication, see 'More information'. |
What records are required?
Individuals should keep records of all their deductible contributions 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 contributions, but if they do, the receipt must specify:
- the name and ABN (if any - note: Some DGRs listed by name might not have an ABN) of the DGR
- the fact that the contribution was made for
- a right to attend a specified fundraising event, or
- the purchase of goods and services as a successful bidder at a fundraising auction
- the amount of the contribution (if money), and
- the GST inclusive market value of the right or the goods or services (the benefit) received in return for the contribution.
Other useful information for contributors includes:
- the date the contribution was made, and
- a description of the contribution if it was property.
When property has been contributed, contributors may need to keep the date of acquisition, the amount paid for the property and any valuations.
Other income tax consequences
Amounts received as a refund or reimbursement of a contribution from a DGR or another person where an individual can or has claimed a deduction in relation to a contribution must be included in assessable income.
For other income tax matters to consider when making deductible contributions or gifts, see 'Other income tax matters'
Last Modified: Tuesday, 1 August 2006Political contributions and gifts
Political parties are not deductible gift recipients (DGRs). However, contributions and gifts to political parties and independent candidates and members may be claimed as income tax deductions.
Contributions before 22 June 2006For contributions made before 22 June 2006, the tax law allows a non-corporate taxpayer to deduct a contribution (which includes a membership subscription as well as a gift) of $2 or more to political parties registered under Part XI of the Commonwealth Electoral Act 1918. The total deductions allowable to the taxpayer are subject to a maximum level of $100 in an income year.
Contributions and gifts on or after 22 June 2006For contributions and gifts made on or after 22 June 2006 to be deductible, the contribution or gift must meet several requirements:
- the recipient must be
- a political party registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding state or territory legislation
- an individual who is or was an independent member of or who is an independent candidate for the Commonwealth Parliament, a State Parliament, the Legislative Assembly of the Northern Territory or the Legislative Assembly for the Australian Capital Territory, and
- the contribution or gift must be $2 or more and be of
- money, or
- property that the contributor or donor purchased during the 12 months before making the contribution or gift.
Contributions or gifts made to an independent candidate in an election must be made in the period:
- from the time the candidates for the election are officially declared or announced
- until the result of the election is officially declared or announced (or, in the rare situation of an election wholly failing, until the candidates are officially declared or announced for the replacement election).
For an independent member, the contribution or gift must be made:
- when the individual is an independent member (starting when the individual's election is officially declared or announced), or
- after the individual ceases to be an independent member because
- the parliament, a House of the parliament or the Legislative Assembly is dissolved or has reached its maximum duration, or
- the individual comes up for election
but only until the candidates for the resulting election are officially declared or announced.
Testamentary contributions and gifts, that is, those made under a will, are not deductible.
A tax deduction for a contribution or gift is claimed in the tax return for the income year in which the contribution or gift is made.
The most that contributors or donors (including companies) can claim in an income year is:
- $1,500 for contributions and gifts to political parties
- $1,500 for contributions and gifts to independent candidates and members.
Example During the 2006-07 income year, John contributes $500 and $1,500 respectively to two registered political parties. He also gifts $200, $600 and $1,100 respectively to two independent candidates and one independent member. John may claim a tax deduction of $3,000 in his 2006-07 income tax return:
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The amount of the deduction for a contribution or gift of property is the lesser of the market value of the property on the day that the contribution or gift was made and the amount paid by the taxpayer for the property.
| The deduction for a gift or contribution cannot add to or create a tax loss. See 'Gifts and tax losses'. |
An independent candidate is one whose candidature is not endorsed by a political party registered under the Commonwealth Electoral Act 1918 or under corresponding state or territory electoral legislation.
An endorsed candidate of an unregistered political party will be regarded as an independent candidate.
Independent membersAn independent member is one who is not a member of a political party that is registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding state or territory legislation.
A member belonging to an unregistered political party will be regarded as an independent member.
| A list of political parties registered under the Commonwealth Electoral Act 1918 is available at the Australian Electoral Commission website at www.aec.gov.au |
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.
A land owner 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 deductionThe covenant must be entered into with:
- a DGR
- the Commonwealth, a state, a territory or a local governing body, or
- an authority of the Commonwealth, a state or a territory.
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 Tax Office.
The deduction cannot add to or create a tax loss. However, donors can elect to spread the deduction over a period of up to five years.
Concessional capital gains tax treatmentThe capital gains tax (CGT) concessions provide comparable treatment between land owners who enter into conservation covenants and land owners 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.
| More information Refer to our fact sheet Conservation covenant concessions (NAT 6539). To obtain this publication, see 'More information'. You can also contact the Department of Environment and Heritage at: |
Log of status reviews/Record of key information
Log of status reviews
We recommend you use this log each time you self-review your organisation's DGR status.
Worksheets have been provided to assist you with these reviews:
Organisations endorsed as a DGR in their own right should refer to Worksheet 1.
Organisations endorsed as a DGR for a fund, authority or institution they operate should refer to Worksheet 2. 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 self review.
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 | ||
Definitions
Australian business number (ABN)
Your ABN is your identifier for certain dealings with the Tax Office and other government departments and agencies.
Australian Business Register (ABR)
Your ABN registration details become part of the 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. The purposes set out in the will or instrument of trust must be charitable. Charitable funds mainly manage trust property, and/or hold trust property to make distributions to other entities or persons. In contrast, if the trustee mainly carries on activities that are charitable, the fund will be treated as a charitable institution and not as a charitable fund.
For more information on charitable funds, refer to our publication Income tax guide for non-profit organisations (NAT 7967).
Charitable institution
A charitable institution is an institution that is established and run to advance or promote a charitable purpose. An organisation's purposes can be found in its governing document/s and from its activities, history and control. A charitable institution will carry on charitable activities whilst a charitable fund mainly manages, and/or holds trust property.
For more information on charitable institutions, refer to our publication Income tax guide for non-profit organisation (NAT 7967).
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
- the provision of child care services on a non-profit basis, 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 persons' 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 DGR is an organisation that is entitled to receive income tax deductible gifts. All DGRs have to be endorsed by the Tax Office, unless they are listed by name in the income tax law. There are two types of endorsement:
- where an organisation is endorsed as a DGR in its own right, or
- where an organisation is endorsed as a DGR for a fund, authority or institution that it operates.
For the second type, only gifts to the fund, authority or institution are tax deductible.
Endorsement
Endorsement is the process under which organisations apply to the Tax Office for approval to:
- access charity concessions under the income tax, FBT and GST laws - the relevant application form is Application for endorsement as a tax concession charity or income tax exempt fund (NAT 10651), and/or
- receive income tax deductible gifts - the relevant application form is Application for endorsement as a deductible gift recipient (NAT 2948).
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 (GST)
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.
GST credits
A GST 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 a GST 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 a GST 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.
Non-profit sub-entity
Certain non-profit organisations, with independent branches (units), have the option of treating their units as if they were separate entities for GST purposes and not part of the main organisation. For DGR endorsement, it is the main organisation and not the non-profit sub-entity that must apply.
Pay as you go (PAYG) withholding
PAYG withholding requires an organisation 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.
Last Modified: Monday, 31 July 2006Essential tax information for your non-profit organisation
This publication is also available in PDF and paper format.
Introduction
For those involved in the financial aspects of non-profit organisations - such as charities, clubs, societies and associations - we offer a range of publications, advisory, educational and electronic services.
Choose the right amount of tax information for your needs - from overviews, to guides and fact sheets on specific topics, to comprehensive technical information.
Services
INTERNET |
Our website includes an area specifically for non-profit organisations. The Non-profit organisations home page at www.ato.gov.au/nonprofit links you to information about:
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EMAIL UPDATE SERVICE |
Use the Subscribe link on our home page to subscribe to the 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. |
PHONE |
Phone our information line 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 do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call. If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727. |
SPEAKERS AND SEMINARS |
Subject to availability, we have experienced tax officers who can deliver a variety of informative, personalised and practical tax presentations and workshops to groups of 15 or more people. To discuss requirements for your meeting, seminar or function phone 1300 130 282 or email speakersandseminars@ato.gov.au |
Publications
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 for all non-profit organisations. It explains:
GiftPack for deductible gift recipients & donors (NAT 3132) is for organisations that want to receive tax deductible gifts and donors that want to claim deductions for their gifts. It explains:
Volunteers and tax (NAT 4612) is for volunteers and organisations that deal with volunteers. It explains the tax treatment of transactions that commonly occur between non-profit organisations and their volunteers. Non-profit organisations and fundraising (NAT 13095) is for all non-profit organisations. It:
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OTHER GUIDES |
Other guides are available with detailed information on goods and services tax, PAYG withholding, fringe benefits tax, superannuation, capital gains tax, activity statements and record keeping. |
FACT SHEETS |
We also have a range of fact sheets on specific topics written especially for non-profit organisations. |
TECHNICAL INFORMATION |
If you are looking for technical information such as rulings, practice statements and tax laws, you can find them on our website. |
Obtaining copies of our publications
To obtain copies of our publications:
- visit our website at www.ato.gov.au/nonprofit
- 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
- request a fax by phoning 13 28 60.
ATO references:
NO NAT 3132
| Date: | Version: | |
| 1 July 2000 | Original document | |
| 1 July 2003 | Updated document | |
| 1 July 2005 | Updated document | |
| You are here | 1 July 2006 | Updated document |
| 1 July 2007 | Updated document | |
| 1 May 2011 | Updated document | |
| 3 December 2012 | Updated document | |
| 5 December 2013 | Archived |
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