There are a number of tax concessions available to charities from the Australian Taxation Office (ATO) and from relevant state and territory governments. Your organisation must be registered with the ACNC to apply for charity tax concessions from the ATO.
The ACNC registers organisations as charities for Commonwealth purposes while the ATO remains responsible for tax, including the decision to endorse your organisation for tax concessions.
Read more in the ATO's guidance on charity tax concessions for not-for-profits.
All charities that register with the ACNC can apply for these tax concessions.
Income tax exemptions and franking credits
Income tax applies to any taxable income received by organisations. All charities registered with the ACNC can apply for income tax exemption (which, if endorsed, means they do not have to pay income tax).
Charities that are endorsed by the ATO as exempt from income tax may also be eligible to receive refunds on franking credits. This applies if your charity holds shares in a company that provides franked dividends. The ATO provides more information about accessing refunds on franking credits.
Goods and services tax concessions
Goods and services tax (GST) is a tax on transactions. Where goods and services are sold, the amount received for the sale may be subject to GST. Similarly, where goods and services are purchased, the purchaser may be able to claim a GST credit for the GST included in the amount paid. Registered charities can apply for GST concessions.
Fringe benefits tax rebates
Fringe benefits tax (FBT) is a tax paid on any benefits that an employer provides to their employees outside of their salary or their superannuation. Such benefits may include the use of a work car, a work phone, or other expense-related benefits. Registered charities can apply for an FBT rebate.
While all registered charities can apply for an FBT rebate, certain charities can apply for an FBT exemption. This exemption may be available for charities that are Public Benevolent Institutions (PBIs), Health Promotion Charities (HPCs), not-for-profit hospitals and, in some cases, charities advancing religion (subject to certain conditions).
For more on FBT exemption, see the ATO's guidance for not-for-profits.
Deductible gift recipient (DGR)
Being a deductible gift recipient (DGR) allows donors to make tax-deductible donations to a charity. This means that donors can deduct the amount of their donation from their own taxable income when they lodge their tax return. For more on how this works for a donor, see the ATO's guidance on making tax deductible gifts and contributions.
Not all charities are eligible for endorsement as a DGR.
There are quite a few DGR categories and each one has specific requirements for eligibility. In many cases, registration with the ACNC as a charity is part of the eligibility requirements. However, this doesn't mean that all charities are eligible for DGR endorsement - the categories are specific and only available to certain types of charities.
Public Benevolent Institutions (PBIs) and Health Promotion Charities (HPCs) have their own DGR category. Registration with the ACNC as either a PBI or HPC generally provides access to DGR endorsement from the ATO.
You can see all the DGR categories and the eligibility requirements in the DGR Table on the ATO's website.
You can apply for charity tax concessions from the ATO in the ACNC's registration application. The charity registration application contains a section for tax concessions so you don't need to apply separately to the ATO.
After we register your organisation as a charity, we send the application for tax concessions to the ATO to decide whether your charity is eligible. The ATO will decide on your charity's eligibility and inform you of the decision.
If you don't use the charity registration application to apply for tax concessions, you can apply for them directly with the ATO at a later date.
There are a number of tax concessions available to charities from state, territory and local governments. In most cases, your organisation does not need to be registered with the ACNC to receive state and territory or local government tax concessions.
Concessions may be available on taxes such as stamp duty, payroll tax, and land tax. Each state and territory has different requirements for accessing these concessions.
Local governments may also give concessions to charities (for example, on rates).
To find out more about how to access concessions available to your charity, contact your local government or your state or territory revenue office.