DGR Reform: cutting red tape for environmental, cultural, harm prevention, and overseas aid charities
Deductible Gift Recipient (DGR) status allows donors to claim a tax deduction on their gifts and contributions to your charity. There are 52 DGR endorsement categories and a charity must meet certain criteria to achieve endorsement. The ATO is currently responsible for the endorsement of all categories but is not responsible for administering the registers for three register DGR categories and the Overseas Aid GiftDeduction Scheme (OAGDS).
Those 3 register DGR categories and the OAGDS; specifically environmental organisations, harm prevention charities, cultural organisations, and overseas aid organisations, which are administered by other government departments. A charity must seek government approval from the department responsible for assessing and advising the relevant Minister on the eligibility of the charity. The Minister, and the relevant Treasury Minister, direct the departmental Secretary to add the charity to the register. This process typically takes up to two years.
The Treasury Laws Amendment (Refining and Improving Our Tax System) Act 2023, which received royal assent on the 28 June 2023, essentially shifts the responsibility for administration and decision making of the 4 DRG categories from the government departments to the Australian Taxation Office (ATO). The registers maintained by the government departments will be abolished as will the reporting requirements.
In general, the amendments preserve the existing rules as they affect charities seeking endorsement as a DGR. The changes predominately affect how the Government administers the DGR categories. This will drastically reduce the time to obtain approval from up to two years to around one month.
The Act is set to come into force on the 1 January 2024.
A summary of the continuing obligations and change requirements are set out in the table below.
If you have any questions or wish to seek advice on what this means for your charity, please contact reception@nfplawyers.com.au.
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