As of 14 December 2021, all non-government deductible gift recipients (DGRs) must also be registered with the Australian Charities and Not-for-profits Commission (ACNC).
Significantly, these recent changes are part of a broader reform to Australia’s DGR framework, first announced almost four years ago. Moreover, one of the goals of the reform is to reduce administrative complexity and the purpose of requiring DGRs to be registered with the ACNC is to improve consistency of regulation and governance by removing inconsistent reporting requirements.
However, a general 12-month transition period may apply to existing DGRs and some other organisations. Hence, the actual deadline for most is 14 December 2022.
That transition period is not automatic in all cases, and since applying for charity registration can be a complicated and time-consuming process, we recommend starting the application as early as possible and, if necessary, applying for an extension from the ATO.
The New Laws
In addition, the above changes came into effect on 13 September 2021 through the Treasury Laws Amendment (2021 Measures No 2) Act 2021 (Act), which amended the Income Tax Assessment Act 1997 (Cth) (ITAA 1997).
The amendments to the ITAA 1997 require a fund, authority or institution to, as a precondition for DGR endorsement, be:
- a registered charity;
- an Australian government agency; or
- operated by a registered charity or an Australian government agency.
Ancillary funds and DGRs specifically listed by name in the ITAA 1997 are exempt from these new requirements.
What is a DGR?
Firstly, a DGR is a not-for-profit organisation which can receive tax deductible gifts from donors, which could be an individual or organisation. The practical effect of this is that donors to that organisation will be entitled to a tax deduction in respect of donations of at least $2.
DGRs may also receive funds from other not-for-profit organisations which have DGR status.
Which DGRs are affected by the amendments?
If a DGR is already a registered charity with the ACNC, then no further action will be required other than continuing to meet the obligations associated with maintaining charity registration and DGR endorsement.
Organisations already endorsed as a DGR under the following categories, but which are not registered as a charity must do so to maintain their DGR endorsement:
|General category||DGR type|
|Health||Public fund for hospitalsPublic fund for public ambulance services|
|Education||Public fund for religious instruction in government schoolsRoman Catholic public fund for religious instruction in government schoolsSchool building fundPublic fund for rural school hostel building|
|Research||Approved research institute|
|Welfare and rights||Public fund for persons in necessitous circumstances|
|Environment||Public fund on the Register of Environmental Organisations|
|Cultural organisations||Public fund on the Register of Cultural Organisations|
|Fire and emergency services||Fire and emergency services fund|
When will the new requirements be in force?
The new requirements come into effect from 14 December 2021, although a transition period may apply.
In recognition of the fact that applying for charity registration with the ACNC can be a time-consuming process, the legislation allows for additional time so that existing non-charity DGR entities and DGR applicants can comply with the requirements to become a registered charity.
Organisations may be eligible for the following transitional periods:
- automatic 12-month general transition period – giving organisations until the 14 December 2022 to become a registered charity; or
- secondly, additional three-year extension in limited circumstances.
Furthermore, eligible organisations will need to apply to the Commissioner for Taxation for a three-year extension. If the Commissioner for Taxation grants an extension, organisations will have until 14 December 2025 to become a registered charity or operated by a registered charity.
Finally, if you have any questions in relation to the new requirements or need any assistance in managing the transition, please contact a member of our specialist Charities & Not-for-Profits team.