Deductible gift recipient update

This article provides an overview of the updated deductible gift recipient (DGR ) category of harm prevention charities, including the requirements and processes for registration and the types of activities these entities undertake:

What is DGR endorsement?

In general terms, organisations (or funds) with DGR endorsement are permitted to receive gifts of money or property from donors and issue a tax-deductible receipt. This allows a donor to claim certain donations as a deduction when lodging a personal income tax return, which can therefore help attract more donations. DGRs may also be eligible to receive funds from a number of philanthropic bodies (such as ancillary funds) which are restricted to only donating to certain types of DGRs.

What is a harm prevention charity?

A harm prevention charity is an institution which carries out activities to promote the prevention or control of behaviour that is harmful or abusive to human beings.

To be eligible for DGR endorsement as a harm prevention charity, the entity must:

• Have an active Australian Business Number (ABN).

• Have the characteristics of a harm prevention charity, namely:

• Be an institution registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC).
• Have a principal activity which is the promotion of the prevention or the control of behaviour that is harmful or abusive to human beings.
• Have a policy of not acting as a mere conduit for the donation of money or property to other organisations, bodies or persons.
• Maintain a gift fund with an appropriate DGR winding-up and revocation clause, and

The ATO notes that while the organisation must be located and have its operations in Australia, beneficiaries may be in countries located overseas.

What is the principal activity of harm prevention charities?

An organisation qualifies as a harm prevention charity only if it meets the 'activity test'. That is, its principal activity must be 'the promotion of the prevention or the control of behaviour that is harmful or abusive to human beings'.