Applying for DGR endorsement is a relatively simple procedure. The following provides a guideline for the procedure to apply for DGR endorsement:
- If your organisation is registered as a charity but is not a DGR, you can apply directly to the ATO from their website
- If your organisation is not registered as a charity, you can do so by registering with the Australian Charities and Not-for-profits Commission (ACNC). You will also be able to apply for DGR endorsement through this form and the request will be automatically referred to the ATO for evaluation.
If your organisation does not fall within an established ATO DGR category, you must apply for your organisation’s category to be listed. To do this, you will need to apply to the Treasury’s DGR specific webpage – however these are only granted in exceptional circumstances and are uncommon.
What is a DGR?
Deductible Gift Recipients (DGRs) are organisations that can receive tax deductible donations. This means that anyone who donates to the organisation can deduct that donation amount from their taxable income when lodging a tax return.
Who is Eligible for DGR Status?
DGRs can be categorised into two types:
- Endorsed by the Australian Tax Office (ATO)
- Listed by name under tax law
Organisations that are endorsed by the ATO or named in tax law are able to receive:
- Tax deductible gifts e.g. financial donations; and
- Tax deductible contributions
Types of DGR Endorsement
The ATO can endorse your charity in two ways:
- Whole DGR endorsement – if your charity fits into a DGR category, it will be endorsed as a whole
- Part DGR endorsement – if certain activities of your charity attract DGR status, your charity will be endorsed for the part of the charity that falls into a DGR category
What are the Requirements Needed for DGR Endorsement?
There are specific requirements that must be fulfilled for the ATO to grant an endorsement. These include:
- Have an Australian Business Number (ABN)
- Fall within a DGR category either in whole or partially
- Have rules that comply with the transferring of surplus gifts and deductible contributions in the event the organisation winds up or has their DGR status revoked. This can be done either by:
- Having DGR revocation clauses inserted into governing documents e.g. constitution, a trust deed)
- By showing the organisation is required to do this by law
- If seeking endorsement for the operation of a fund, they need to show evidence of maintaining a gift fund
- Be established and operate Australia
Additional Requirements Needed for DGR Endorsement
Endorsement as a Whole DGR
When applying for an endorsement as a whole, you will need to show that your organisation has a ‘revocation clause’ included in its governing documents (e.g. the organisation’s constitution). The clause must state that if the organisation is wound up or has its endorsement revoked, that all remaining gifts, contributions and money received (as part of a gift or contribution) will be moved to another DGR with a similar charitable purpose.
Endorsement as a Part DGR
Similarly, you will need to confirm that the gift fund your organisation maintains has a revocation clause inserted into its governing documents. The clause must also state that any remaining surplus assets of a gift fund will be transferred to another DGR.
DGR status allows charities to receive tax deductible donations and only the ATO can grant DGR status. Organisations should ensure they meet the necessary requirements before attempting to apply for DGR endorsement. This may require seeking legal advice.