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What is DGR status? How does the ATO treat charities?

August 7, 2022   Philip EvangelouRaphaella Revis

DGR status, formally known as Deductible Gift Recipient, is a status which all Australian charities require since amendments in 2021. The exceptions to this are tax law listed DGRs and ancillary funds. 

What is DGR?

DGR status allows people who donate to your charity to have their donations be tax deductible. This works as an incentive for them to donate, in turn benefitting both them and your charity. The money received would be in a dedicated gift fund, where only DGR donations are processed. 

Do I have to be a charity?

Before September 2021, most but not all DGR categories had to be charities. After this date, the law has amended so that all DGR categories must be either a registered charity or government agency. If a DGR previously had this status and was not a registered charity, they now need to register with Australian Charities and Not-for-profits Commission (ACNC) before 14 December 2022. If you an already registered DGR, transitional arrangements and extensions for becoming a registered charity may be available.

To be a DGR one must be a registered charity, but not all charities are eligible for the status. The eligible categories of charities are;

  • Education
  • Research
  • Health
  • Defence
  • Welfare and rights
  • Environment
  • International affairs
  • The family
  • Sports and recreation
  • Ancillary funds
  • Cultural organisations
  • Fire and emergency services

How does the ATO treat charities?

If a charity is registered with ACNC, they can apply to receive a range of charity tax concessions – this includes an exemption from paying income tax, GST concessions (depending on the nature of the charity), franking credits and other concessions. One of the most prominent concessions is the DGR status, but as mentioned this depends on category eligibility as mentioned.

What’s Next?

DGR status can be very beneficial to an eligible charity because of the way it incentivises people to donate to your organisation. It is essential for you to know the changed regulations around obtaining the status for the first time or upholding it to avoid losing it before the transition date.For more information or assistance, get in touch with our team via the contact form or by calling 1300 337 997.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.

About Raphaella Revis

Raphaella RevisRaphaella is a legal intern at OpenLegal and is currently a second year student studying Bachelor of Law and Science in Information Technology at UTS. Her interests are legal tech, contracts and IP.