Deductable Gift Recipients

DGR status means that you are able to offer donors the benefit of getting a tax deduction for donations made.

To get DGR status, you must be a not-for-profit entity incorporated in Australia, and established for the purpose of undertaking certain “charitable” activities. For most of our clients, that will mean that they are involved in cultural endeavours.

The process is as follows, for cultural organisations:

Check your constitution to ensure that the wording of your objects clearly indicates a cultural purpose. For example, the Objects for a contemporary art space might be “the promotion of contemporary art in the community, the presentation of public exhibitions of contemporary art and research, review and publication of contemporary art practice”. Culture, in this context, includes literature, music, one or more of the performing arts, one or more of the visual arts, one or more crafts, design, film, video, television, radio, community arts, Aboriginal arts and movable cultural heritage.

Ensure that your constitution provides that “in the event of the winding up of the Company/Association, if there remains, after satisfaction of all debts and liabilities, any property whatsoever, the same shall not be distributed to the members of the Company/Association but shall be given or transferred to some other institution or institutions having Objects similar to the Objects of this Company/Association, and which shall prohibit the distribution of its or their property and income to its or their members, and such institution shall also be eligible for tax deductibility of donations under the provisions of Section 30-100 of the Income Tax Assessment Act 1997, and which shall also be listed on the Register of Cultural Organisations maintained under the provisions of that Act”.

Add a clause to provide for the establishment of the “……… Public Donations Fund”. The Fund is held and managed separately from the organizations operating account/s and can only receive donations and the income, such as interest earned, on those donations. The purpose of this is to clearly identify donations received, and the purpose/s to which those donations have been applied.

Have the constitution amended at either an AGM or at an Extraordinary General Meeting of members.

Notify the appropriate government department (ASIC, Office of fair Trading, ORATSIC) of the changes to the constitution.

Open the bank account, the signatories to which must be people of “good standing” in the community. This could include senior academics, MP’s, Solicitors and Barristers, Accountants, Local Government senior executives and Office Holders, community leaders, and so on.

Write to
Register of Cultural Organisations
Dept of Environment, Water, Heritage and the Arts
GPO Box 2154
Canberra ACT 2601

requesting that your organisation be placed on the Register. You should also include a copy of the amended constitution, details of the Board/Committee, who will supervise the Fund, the name of the Donations Fund bank account, the bank which will hold the funds and number of that account. You would also confirm that you are a not-for-profit entity, that your constitution provides the required prohibitions on distribution of profit to members and the required limitations on dissolution distributions, and that you will comply with the requirements of the Legislation.

The Department will assess your application and will forward it to the Minister for approval (if you meet the requirements).

In due course you will be placed on the Register, will be endorsed as a DGR and as an Income Tax Exempt Charity.

All donations must be properly receipted and MUST be banked into the Fund. Banking donations in your general account may invalidate the tax deductible status of that gift. Funds may be withdrawn for use by the entity in the furtherance of its Objects.

You will be required to supply statistical returns of donations received, and prolonged absence of donations may give rise to withdrawal of the DGR status.

See also The 75% Rule and GST-free Supplies
See also Fringe Benefits Tax
See also Salary Sacrificing