Applying for DGR endorsement

Transcription

1 Applying for DGR endorsement Presented by Matt Petersen, NFP Risk Manager NFP Strategy, Australian Taxation Office / 28 July 2016 Co-presented by Matt Crichton, Communications, Australian Charities and Not-for-profits Commission

2 Applying for DGR endorsement 28 July 2016 Overview What is DGR endorsement? Requirements for DGR endorsement What you need before you apply The application process UNCLASSIFIED Applying for DGR endorsement 2

3 What is DGR endorsement? Where the ATO approves an organisation to receive tax deductible gifts and contributions A deductible gift recipient (DGR) is an organisation that is entitled to receive income tax deductible gifts and deductible contributions. An organisation s endorsement details are recorded on the Australian Business Register (ABR) UNCLASSIFIED Applying for DGR endorsement 3

4 Endorsed DGRs cont. DGR table The DGR table lists the categories of organisations we can endorse as DGRs. The categories are grouped as follows: Health Sports and recreation Education Cultural Organisations Research Fire and emergency services Welfare and rights Ancillary funds Defence Environment The family International affairs DGR table QC ato.gov.au UNCLASSIFIED Applying for DGR endorsement 4

5 Endorsed DGRs categories Examples - Animal welfare charities Developed country disaster relief funds Overseas aid funds Public fund on the Register of Environmental Organisations Public universities Australian disaster relief funds Necessitous circumstances funds Public Hospitals Public libraries, museums and art galleries Registered health promotion charities Registered public benevolent institutions Scholarship funds School Building funds Volunteer fire brigades UNCLASSIFIED Applying for DGR endorsement 5

6 Endorsed DGRs cont. Two types of DGR endorsement 1. Where your whole organisation falls within a DGR category - Donors may claim gifts and deductible contributions to your organisation 2. Where your organisation operates a fund, authority or institution that falls within a DGR category - Only gifts and deductible contributions to the fund, authority or institution can be deductible UNCLASSIFIED Applying for DGR endorsement 6

7 Eligibility for DGR endorsement General requirements To be endorsed as a DGR, an organisation must meet all of these requirements: it must have an Australian business number (ABN) it must fall within a category of DGR described in the DGR table in the tax law. This can happen in two ways - an organisation itself may fall in a category as a whole (examples are public hospitals or public universities) - a part of the organisation may fall in the description of a fund, authority or institution covered in a category (e.g. school building funds owned by schools or public libraries operated by local councils) UNCLASSIFIED Applying for DGR endorsement 7

8 Eligibility for DGR endorsement cont. in Australia it or the part of it that falls in a category must be 'in Australia All DGRs must meet the in Australia condition. The in Australia condition requires all DGRs to be in Australia. This means that all DGRs must be established and operated in Australia. The purposes and beneficiaries of a DGR do not have to be in Australia, unless the DGR category specifically states that the category is for purposes or beneficiaries in Australia e.g. item # necessitous circumstances funds. Tip check the DGR table! UNCLASSIFIED Applying for DGR endorsement 8

9 Eligibility for endorsement cont. Winding up and revocation must have acceptable rules for transferring surplus gifts and deductible contributions on winding up or revocation of endorsement revocation clause This requirement may be set out in a law, in an organisation's constituent documents or in separate rules governing an organisation's activities. Sample clauses QC UNCLASSIFIED Applying for DGR endorsement 9

10 Eligibility for endorsement cont. Gift fund it must maintain a gift fund if seeking endorsement for a part of it that falls within a DGR category (unless an exception applies) A gift fund should be set up as part of your organisation or of the fund, authority or institution it operates. The gift fund may have its own rules or constitution, or they may be part of the governing documents of your organisation or of the fund, authority or institution. Special rules apply regarding the operation of a gift fund QC UNCLASSIFIED Applying for DGR endorsement 10

11 Eligibility for endorsement Category of DGR described in the DGR table in the tax law UNCLASSIFIED Applying for DGR endorsement 11

12 Endorsement example Registered Public Benevolent Institution (PBI) Must be a registered PBI Does not limit purposes and beneficiaries to Australia No special conditions For guidance on what a PBI is and how to apply for registration as a PBI, refer to the ACNC website at UNCLASSIFIED Applying for DGR endorsement 12

13 Endorsement example Necessitous circumstances fund Must be for the relief of necessitous circumstances QC Exclusively or chiefly! note some DGR categories require solely or principally Limits purposes and beneficiaries to Australia Public fund requirement QC Special conditions - be a registered charity or not be an ACNC type of entity UNCLASSIFIED Applying for DGR endorsement 13

14 Endorsement example Necessitous circumstances fund meaning of public fund The rules of your public fund should reflect the following: Refer to QC objects clearly setting out the purpose of the fund the public is invited to contribute to the fund (and in fact does) the fund is managed by members of a committee, a majority of whom have a degree of responsibility to the general community - unless the fund is established and controlled by government or a governmental authority the fund operates on a non-profit basis gifts and deductible contributions to the fund are kept separate from any other funds of the sponsoring organisation (if there is one) receipts must be issued in the name of the fund any surplus money or other assets must be transferred to some other gift deductible fund maintained by a DGR if the fund is wound up. The ATO will be notified of any changes to the fund's constitution or other founding documents. UNCLASSIFIED Applying for DGR endorsement 14

15 Endorsement example Necessitous circumstances fund special conditions Special conditions: Registered charity, sometimes operated by a registered charity Not an ACNC type of entity Be an Australian Government agency UNCLASSIFIED Applying for DGR endorsement 15

16 Endorsement Recap Before you apply you must ensure you organisation meets all these requirements General requirements Australian business number (ABN) Fall within a category of DGR described in the DGR table because Your organisation falls into a DGR category as a whole a part of your organisation fall in the description of a fund, authority or institution covered in a category Be 'in Australia Have a revocation clause Gift fund if seeking endorsement for a part of it that falls within a DGR category (unless an exception applies) Register with the ACNC (if required) Then apply to the ATO for DGR endorsement! UNCLASSIFIED Applying for DGR endorsement 16

17 Endorsement Before you apply Be clear about the purposes/activities of your organisation Not all charities are DGRs Make sure you understand the requirements of the DGR category Remember there are - General conditions that apply to all DGRs Amendments to governing documents may may be required purposes, revocation clause, gift fund and public fund requirements Special conditions that may apply to specific categories of DGR Registered charity/operated by a registered charity/not an ACNC type of entity Extent of purposes must they be principally, solely Institution Public fund UNCLASSIFIED Applying for DGR endorsement 17

18 Common problems encountered Charitable DGRs Some things to watch out for: Charity subtype and DGR category Assessed separately by the ACNC and ATO PBI/HPC special case Revocation clauses ATO/ACNC requirements, QC Sample ACNC DGR revocation clause at acnc.gov.au/notforprofit ACNC/Public Fund - responsible persons QC UNCLASSIFIED Applying for DGR endorsement 18

19 Special charity subtypes Public Benevolent Institution (PBI) and Health Promotion Charity (HPC) Public Benevolent Institution (PBI): A public benevolent institution is a type of charitable institution whose main purpose is to relieve poverty or distress (such as sickness, disability, destitution, suffering, misfortune or helplessness). acnc.gov.au/pbi Health Promotion Charity (HPC): A health promotion charity is a charitable institution whose principal activity is to promote the prevention or the control of diseases in human beings. acnc.gov.au/hpc UNCLASSIFIED Applying for DGR endorsement 19

20 DGR endorsement Applying to ACNC If your organisation wants/needs to register as a charity You can apply for charity registration and DGR endorsement in the same online registration form with the ACNC ACNC registration application guide For assistance call or advice@acnc.gov.au UNCLASSIFIED Applying for DGR endorsement 20

21 After you submit your application ACNC A registration analyst will Contact you Ask you for any extra information needed Answer your questions about your application If successful You will receive a Charity Pack: If unsuccessful We will tell you why You can ask for our decision to be reviewed see our guidance on review of ACNC decisions Generally determined within 28 days of us receiving all information If you have applied for DGR endorsement your application will be passed on to the ATO to consider UNCLASSIFIED Applying for DGR endorsement 21

22 DGR Endorsement Applying to the ATO If your organisation already has an ABN and is either already a registered charity or not required to be a registered charity for DGR endorsement, you can apply for DGR endorsement on the form Application for endorsement as a deductible gift recipient (NAT 2948). You may also need to complete a schedule with the application form for certain DGR categories QC Instructions for endorsement as a deductible gift recipient QC UNCLASSIFIED Applying for DGR endorsement 22

23 After you submit your application ATO A case officer will Contact you Ask you for any extra information needed Answer your questions about your application When we have processed your application, we will send you written confirmation that your organisation either: endorsed as a DGR has been refused endorsement. Applications are generally determined within 14 days of us receiving all information if you apply through the ACNC or 28 days if you apply directly to the AT) If your organisation is endorsed, donors can claim income tax deductions for gifts made from the date the endorsement starts. If refused we will provide you with a clear explanation of our decision. you also have the right to ask us for a review by lodging an objection QC UNCLASSIFIED Applying for DGR endorsement 23

24 Where to go for further assistance ATO NFP info line (8am 6pm, Monday Friday (local time) except national public holidays) ATO website UNCLASSIFIED Applying for DGR endorsement 24

25 Q&A Any Questions? UNCLASSIFIED Applying for DGR endorsement 25