Reforming administration of tax deductible gift recipients

The Turnbull Government will reform the administration and oversight of organisations with Deductible Gift Recipient (DGR) status, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP announced.

“These sensible reforms will enhance the role of the Australian Charities and Not-for-profits Commission (ACNC), strengthen governance arrangements, reduce administrative complexity and ensure continued trust and confidence in the sector,” Minister O’Dwyer said.

Australians who support not-for-profit organisations with DGR status receive a tax deduction. The cost to the Commonwealth of deductions from donations to DGR organisations was $1.31 billion in 2016-17.

Receiving broad support during public consultation earlier this year, all non-government DGRs will be automatically registered as a charity with the ACNC from 1 July 2019 with a 12 month transitional period to assist current non-charity DGRs with compliance. In addition, the Commissioner of Taxation will have the power to exempt DGRs from this requirement in certain circumstances. Public fund requirements will be abolished.

The DGR registers and Overseas Aid Gift Deduction Scheme will be integrated with the ACNC charity register and duplicative reporting requirements will be abolished. The ACNC will also provide a central location for applications and reporting and will work with the ATO to provide a streamlined experience.

The ACNC and ATO will receive additional funding to review a greater number of DGRs for ongoing eligibility, where risks are identified.

To strengthen oversight of overseas activities, the Government will issue External Conduct Standards to be enforced by the ACNC as recommended by the ACNC and the AUSTRAC’s report of 28 August 2017: Australia’s non-profit organisation sector: money laundering and terrorism financing risk assessment report.

The ACNC has also been asked to publish charities’ declarations of political expenditure to the Australian Electoral Commission and relevant criminal activities of charities’ staff or Responsible Persons through the Annual Information Statement.

The Government has stated that it will consult on details of the implementation of the DGR reforms. The ACNC said they will keep charities informed of the impact of the reforms as more information becomes available.