DGR changes coming in 2019

Proposed changes to laws governing tax deductible gift recipients (DGRs) could affect many not-for-profit entities, especially those which are not registered as charities with the ACNC. In December 2017, the Minister for Revenue and Financial Services announced that all non-government DGRs will be automatically registered as charities from 1 July 2019. However, they will be given a 12 month transitional period to assist them with compliance.

Why the change?

In June 2017, the Federal Government released a discussion paper proposing reform to the existing DGR tax arrangements. The discussion paper highlighted concerns that the application process for obtaining DGR status was too complex and time-consuming. For example, to get DGR status without going through the ACNC, not-for-profit organisations had to:

a) be registered as a DGR under one of the ATO’s 47 general categories; or

b) apply for entry to one of the Overseas Aid Gift Deduction Scheme, the Register of Harm Prevention Charities, the Register of Environmental Organisations or the Register of Cultural Organisations; or

c) apply directly to the ATO for DGR endorsement.

What’s changing?

The DGR registers and the Overseas Aid Gift Deduction Scheme will be combined with the ACNC Charity Register. This should reduce duplicative reporting requirements for organisations that are registered as charities with the ACNC but have also obtained DGR status by being on a DGR register. Instead, DGRs currently listed on one of the DGR registers will satisfy their reporting requirements by filling out an Annual Information Statement required by the ACNC.

The Federal Government will also issue External Conduct Standards to DGRs and registered charities which operate or send funds overseas. Having these Standards will give the public greater confidence in knowing where and what their donations are going towards. DGRs and registered charities that do not comply with the Standards could face severe penalties.

Another key change is that the requirement to maintain a public fund will be abolished. Certain types of DGRs were required to establish separate public funds to receive tax deductible gifts, but this will no longer be the case from 1 July 2019. This should reduce additional requirements for some DGRs and remove issues with DGRs getting the necessary number of responsible persons to manage their funds.

How will this affect me?

If you are not sure how these changes might affect you, please contact Y%AD%DA%EC%DA%D8%8A%A5%D6%C4%88%8F.