- ACNC registration allows an organisation to access Commonwealth charity tax concessions from the Australian Taxation Office (ATO).
- Charity tax concessions are endorsed and administered at a federal level by the ATO, not the ACNC.
- Not all charities are eligible for endorsement as a Deductible Gift Recipient (DGR) from the ATO. Just over 38% of registered charities are endorsed as DGRs.
- Small charities should be mindful of the work required to apply for and receive DGR endorsement.
- Charities can also access tax concessions from state, territory, and local governments.
Charity tax concessions from the ATO
Charities registered with the ACNC - including those classed as small charities - can apply for charity tax concessions from the ATO.
While the ACNC registers organisations as charities, the ATO is responsible for administering tax law, which includes deciding an organisation’s eligibility for tax concessions.
The tax concessions available to registered charities might include:
- Income Tax exemption
- Goods and Services Tax concession
- Fringe Benefits Tax rebate/exemption
The non-profit section of the ATO website provides a list of Commonwealth tax concessions available for charities.
Deductible Gift Recipient (DGR) endorsement
Endorsement as a Deductible Gift Recipient (DGR) allows donors to make tax-deductible donations to a charity.
If a donation is tax-deductible, donors can deduct the amount of their donation from their personal taxable income when they lodge their tax return.
The ATO has different categories of DGR, each with their own eligibility requirements.
There are DGR categories specifically for charities registered as a Health Promotion Charity or a Public Benevolent Institution with the ACNC.
If seeking DGR endorsement, a charity already registered with the ACNC can apply directly to the ATO.
An organisation applying for charity registration can use the ACNC’s application form to apply for DGR endorsement from the ATO. The ACNC will pass on the information to the ATO, who will then make a decision.
It is important to remember that not all charities are eligible for endorsement as a DGR. In fact, just over 38% of registered charities are endorsed as DGRs.
Being registered as a charity with the ACNC and endorsed as a DGR by the ATO are two very different things – and charities need to be very aware of the differences and the steps involved in the process.
Small charities should carefully consider whether they are eligible for DGR endorsement, and be mindful of the amount of work required to apply for and gain that endorsement.
Tax concessions from state, territory and local governments
There are tax concessions available to charities from state, territory and local governments. These are not administered by the ATO. An organisation may 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 charities to access these concessions.
Local governments may also give concessions to charities (for example, on rates or by offering so-called peppercorn rental arrangements).