There are a number of tax concessions available to charities, both from the Australian Taxation Office (ATO) and from relevant state and territory governments.
Organisations must be registered with the ACNC to apply for charity tax concessions from the ATO.
It is important to note that while the ACNC registers organisations as charities for Commonwealth purposes, the ATO remains responsible for tax - including the decision to endorse charities for tax concessions.
For more information, read the ATO's guidance on charity tax concessions for not-for-profits.
All charities that are registered with the ACNC can apply for the following 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. Being income tax exempt means that your charity does not need to pay income tax or lodge income tax returns, unless the ATO specifically asks it to.
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. Read more about accessing refunds on franking credits on the ATO website.
Goods and services tax concessions
Goods and services tax (GST) is a tax on transactions. When 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 - for example, the use of a work car, a work phone, or other expense-related benefits. Registered charities can apply for an FBT rebate.
The following tax concessions are available to selected charities registered with the ACNC.
Fringe benefits tax exemption
While all registered charities can apply for an FBT rebate, only 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 deductible gift recipient. To check if a charity is endorsed as a DGR, check the Australian Business Register's ABN Lookup.
To be eligible for DGR endorsement, an organisation must meet the specific requirements for a DGR category.
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 DGR 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.
Applying for tax concessions from the ATO
You can apply for charity tax concessions from the ATO when completing the ACNC's charity registration application.
The ATO still decides on charity tax concessions, but applying when completing the ACNC charity registration form means that you do not have to complete a separate application with the ATO. Instead, you just need to complete the tax concessions section contained in the ACNC application.
After the ACNC registers your organisation as a charity, we forward the application for tax concessions to the ATO. The ATO then asseses your eligibility for charity tax concessions, and will inform you of the decision.
If you don't apply for charity tax concessions through the ACNC charity registration application, you can apply directly through the ATO at a later date.
Concessions from state, territory and local governments
State, territory and local governments may offer several concessions to charities.
These concessions may be available to a wider number of not-for-profit organisations, whether they are registered as charities with the ACNC or not.
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. Our guidance on other regulators includes details of the state and territory agencies responsible for charity tax concessions.