The Government recently released a consultation paper on potential Deductible Gift Recipient (DGR) reforms.
Possible reforms include:
All DGRs, other than government entities, must register with the Australian Charities and Not-for-profits Commission (ACNC) as charities. Currently around 8% of non-government DGRs are not registered. One outcome of such a change would be that all non-government DGRs would need to comply with the ACNC’s governance standards and would need to complete an Annual Information Statement. Medium and large charities would also be required to lodge annual financial reports with the ACNC.
Four DGR categories currently require applications to be made to government departments other than the Australian Taxation Office (ATO) for inclusion on the relevant register. It is proposed to transfer the administration of these DGR categories, including the application process, to the ATO. The four registers are:
Overseas aid gift deduction scheme
Register of environmental organisations
Register of cultural organisations
Register for harm prevention charities
Remove the public fund requirement that currently exists for many charities. This would also mean that the definition of responsible person for DGRs would be the broader definition used by the ACNC and not the narrower definition used by the ATO. The current ATO requirement can make it difficult for some DGRs to find appropriate people willing to act as members of the public fund committee.
Require regular reviews of DGRs (possibly at least once every 5 years) to be undertaken by the ACNC and/or ATO to ensure an organisation’s DGR status is up to date.
Require DGRs to certify annually that they meet the DGR eligibility requirements.
Require environmental organisations to commit to a minimum percentage of their annual expenditure to environmental remediation. Suggested minimums are 25% or 50%.