Matt Crichton:

Hello everyone and welcome to today’s Webinar, which is, as you can see on the screen, about charity tax concessions and endorsement. My name is Matt Crichton and I’m from the ACNCs guidance and education team. And joining me to present today’s Webinar is a colleague from the ATO who as the title on the screen says is a not for profit technical, in from the not for profit technical advice area, Mel Knight. Hello Mel.

Mel Knight:

Hi Matt, how are you/?

Matt:

Very good. And you?

Mel:

I’m good, thanks for having me.

Matt:

Always a pleasure to have you on to talk about this important topic. And we’ve got a lot of people joining us today as usual for the tax concessions Webinar. Just before we do get into the content proper, just a few little admin things to let you know about. You can ask questions as we go through the broadcast using the navigation panel in the go to Webinar, the go to Webinar’s navigation panel. We have a couple colleagues, Chris and Bree, awaiting your questions as we go. So if something pops up in your head and you want to ask about it at the time, feel free to send us a question, we’ll do our best to get back to you. If there are really lots of questions that come through we might take a little while to get back to you, but nonetheless we will endeavour to get back to everyone. If you do, if you’d rather watch the presentation first and ask questions later we will allow 10 or 15 minutes or so at the end to have just a question and answer session. And in that bit we will take some of the questions that we feel are probably, have a broader relevance to other people and answer them live.

If you, if the question is a little bit too specific for your organisation it’s probably best to give us or the ATO a call or a separate email even if you want some more specific advice. We may be able to help you with some general stuff during the Webinar. But yeah, for some, the really specific stuff it’s probably best to get in touch with us separately. And if you’re having trouble listening to the audio as we go through, there is an option to dial in to the Webinar and listen via a phone. When you signed up you would have received a confirmation email which has some of the details of that, you call up a number and you can effectively use your phone to listen into the audio if you’re having trouble over Wi-Fi or your internet connection. And finally this Webinar is being recorded and will be published on our website and on our YouTube page as all of them are. So if you miss something or if there’s a slide with some information that you didn’t get a chance to jot down or something like that, never fear you’ll be able to look at it later. We publish all our Webinars on our website. And we will send you a follow up email to let you know when that has been published. And that will include many of the links that we present in the Webinar today. So no need to jot down everything you see frantically. You will be able to do that later and get an email with all the links in there later as well.

OK. That out the way, let’s move on to today’s presentation. And we’ll just go over what we will cover today. First we will have a look at just general charity tax concessions, what they include. We’ll just let you know a little bit about how the ACNC and the ATO work together. There’s a fair bit of collaboration and crossover with some of this. And I’ve come across some misconceptions about which responsibilities lie where and it will be worth clarifying that for you I think. The third dot point there is deductive gift recipients and that’s a big one. A lot of people want to know about this particular tax concession and we will go over that in some detail. And finally we’ll touch on a couple of specific charity categories that come with certain tax concessions of their own called health promotion charities and public benevolent institutions. And we’ll just take you through some of the details of those two categories.

OK, so the first one, ACNC and charity tax concessions. First it’s worth pointing out that the ACNC is the national charity regulator, and the ACNCs job is to register organisations as charities. That has a knock-on effect to eligibility for tax concessions. But the ACNCs role isn’t to endorse tax concessions. Where the connection is, is as the second dot point here shows, that charities must be registered with the ACNC to access Commonwealth charity tax concessions from the ATO. So while the ACNC will decide on an organisations eligibility to be registered as a charity, it is still the realm of the ATO to then endorse whatever tax concessions it may be eligible for. And of course some tax concessions are only available for particular types of charities. We will get onto this in a little bit more detail later, but it is important to bear in mind that just because your organisation is registered as a charity doesn’t mean it automatically comes with every tax concession you’ve ever heard of. There are certain categories and certain types of tax concessions that are only allowed for certain types of charities. But as I said, we’ll get into a bit of this in a little bit.

So now I will pass over. I’ll stop talking, I’ve been talking a lot and you’re probably sick of my voice. I’ll pass over to Mel to take us over some of the role of the Australian Tax Office in this whole collaboration with the ACNC and charity registration. Over to you Mel. What does the ATO do in this partnership?

Mel:

So our role as it’s stated there is to administer the tax systems in Australia and also to administer the tax concessions that are available to all not for profits and in particular charities that we’re talking about today. So after the ACNC has decided on charity status, then your application usually comes over to the ATO and we will then make a decision about whether or not an organisation is eligible for tax concessions. And with some of those tax concessions as well there are some special conditions that need to be met before we can actually endorse you. And we’ll talk about them I think in a little bit more detail when we get to the tax concessions. I just want to make a point, too, like while we’re at this stage that if you are a charity or your organisation has a charitable purpose, you’re not able to self-assess your income tax exemption or any of the other concessions. So there is a requirement under the law that you are registered with the ACNC and then endorsed by the ATO for the tax concessions.

Matt:

And that’s relevant because previously it was a little bit different, right?

Mel:

Yeah, and I think there is some confusion as well because in the tax law there are certain types of not for profit organisations that can self-assess their income tax exemption. So if they’ve got you know other purposes, maybe sporting clubs or community service type organisations and there’s no requirement for them to actually go through this registration process obviously with the ACNC because they’re not charitable. But you know, no need to be endorsed by the ACNC. So I think the point here is that if your organisation has a charitable purpose you have to be registered with the ACNC and endorsed by the ATO otherwise we consider you to be taxable.

Matt:

Right, excuse me. And just here on the bottom of this slide we have a link to the ABN look-up, which is http://www.abr.business.gov.au. The relevance of that is that entities are listed on here according to their Australian Business Number, it will show what, whether it’s endorsed for certain tax concessions. While the ACNC charity register will show that an organisation’s registered as a charity, it doesn’t go into the details of certain tax concessions that it has. So the business register website has some more of those details.

Mel:

Yeah, that’s right.

Matt:

Now we’ll just have a look at how the ACNC and the ATO work together. So as Mel said, organisations can apply for tax concessions when applying to register with the ACNC that the significance of this means that you don’t need to do two separate applications to two separate government departments. You apply for charity registration with the ACNC and within that form there’s a section there that asks you whether you want some tax concessions for your organisation if it is registered and eligible. And then once the ACNC has said yes to the charity part of it, it passes on the application to the ATO to assess the tax concessions. And then, if the organisation’s eligible, to endorse it. But also ad I’ll pass this over to you Mel to explain a little bit, but the third dot point as you can see here says that charities can also apply for tax concessions at any time directly from the ATO. This is I suppose a little bit of a different stream. And this is where an organisation may already be registered with the ACNC, right?

Mel:

Yeah, that’s right. So the tax concessions that we’re talking about today there is a prerequisite. But organisations are registered charities. So if you have already gone through that process with the ACNC and you need to either change or apply for new endorsements you can do that directly with the ATO.

Matt:

And that would be a form from the ATO to the ATO and just the ATO to assess that, there’s generally not a requirement to come back through the ACNC for this, right?

Mel:

No, that’s right. So we have some endorsement forms available on our website for tax concessions and or deductible gift recipient status so they can be filled out and sent directly to the ATO. But obviously if you haven’t been through your registration process with the ACNC we would need to send you back through that channel.

Matt:

And just getting on to the charity tax concessions, the general ones now, let’s have a look at what they actually are and what they entail. So the first one here, Mel, it mentions that tax concessions are available to registered charities. And this I suppose is what we would refer to as maybe the standard suite of tax concessions. I’ll let you talk about each one as they come up. We’ve got income tax exemption here.

Mel:

Yes, so this is the one that general applies to everyone. So it means, income tax exemption when you’re endorsed by us, it means that all of your income, both ordinary income and any kind of statutory income, is exempt from income tax and you will not need to lodge a tax return with us on an annual basis. So what we do when we process that role is you know give you income tax exemption and essentially switch off any requirement to lodge an income tax return. Now that doesn’t mean the commissioner might you know come to you at a later date and actually lodge you a return, but it… generally speaking it means you know there’s no obligation for you to lodge or pay income tax.

Matt:

And the second one here, goods and services tax concession.

Mel:

Probably the most misunderstood concession. So this, goods and services tax concession is like a suite of concessions. A lot of people misunderstand it and think it means that they’re actually exempt or their organisation is exempt from paying GST on things that they buy. So it doesn’t mean that. What the concessions involves, so first of all is a higher GST registration threshold. So not for profits are not required to register for GST until their turnover is 150,000. So that’s different to normal business entities. And then the other concessions really depend on what your organisation does. So it allows you to calculate the GST payable on supplies that you make in a different way. So for charities some of the examples are that you know if you have non-commercial activities, so you might be providing things at you know 75% of their actual market value, you can actually treat that sale as GST free which means that you won’t need to collect or pay GST. There are some GST concessions for things like when you’re selling donated second-hand goods. So there’s a whole list of different concessions that are available and it really depends on kind of what you do as to whether or not they’re going to be applicable to you. But it definitely does not exempt you from paying GST.

Matt:

Right, OK. So it sounds like there’s a few things that may apply or may not apply to certain organisations.

Mel:

Yeah.

Matt:

But the point of it not being an exemption is really important.

Mel:

Yeah. And I guess like with this one our website has a lot of information about GST concessions just in a very simple kind of table. So if you’re unsure about it, I think first visit there and then later on we’ll give you our phone number and you can give us a ring if you’ve still got questions.

Matt:

And the last one here, we’ve got fringe benefits tax, and it has two options, a rebate and an exemption.

Mel:

Yes. So the fringe benefits tax concessions, and this, we will go into detail a little bit later when we talk about those particular charity types. But these two… so a rebate, if you provide things other than salary and wages to your employees, so you’re providing kind of non-cash benefits in place of salary and wages, you may be entitled to a rebate of the FBT payable on those non-cash benefits. And the exemption just allows you to provide exempt benefits to an employee up to a capped amount. So I kind of think the rebate is like a discount on the tax that your organisation would have to pay and the exemption allows you to just provide exempt benefits and you won’t pay any FBT as long as you stay under a capped amount for each employee.

Matt:

Right. And I did say that that was the last one but there’s actually a fourth. And this one says refund of franking credits.

Mel:

Yeah, so refund of franking credits, they’re available, it’s quite a topical thing at the moment I think just coming out of the election. But this concession allows charities that receive franking credits to claim a refund of those franking credits from the ATO. Obviously it’s only applicable like if you receive those credits. But there are a number of eligibility criteria to claiming them as well.

Matt:

And we will get into to some of the eligibility criteria a little bit later on. Not all charities are eligible for all the things. It does depend on the type of charity that you are. The big one, deductible gift recipients, this is the one that a lot of people in organisation or charities want to know about. So we’ll go through this in a little bit of detail. Charities endorsed as a deductible gift recipient can receive tax deductible donations. So this is… actually Mel, I’ll let you explain what that means.

Mel:

Yeah, so what it means is that you can receive gifts from donors that will be tax deductible to the donor. So it’s quite a sought-after endorsement from the ATO. It makes your fundraising I think a little bit easier if you know you’re eligible to be endorsed. And so that second point there is just, the donation is tax deductible. So donors can deduct an amount from their income tax when they lodge their tax returns. So there are, and a lot of people are surprised by this, there are about 50 different categories of DGR and each one of them has their own very specific set of requirements. Matt, do you want me to give a couple of examples do you think or…?

Matt:

Yeah, sure. I think it’s worth pointing them out and a couple of examples will help I think. Because there is that misconception that once an organisation is registered as a charity it’s therefore automatically eligible for these tax deductible donations and people think that they can then offer that tax deduction on donations as soon as they’re registered as a charity. But it’s definitely not the case, is it?

Mel:

Yeah, and it is a common misconception. So there are some very definite kind of charitable subtypes with the ACNC. And you know we are going to talk about the PBIs and HPCs later on. But they are a definite kind of category that you can be registered with the ACNC with that will then enable you to be endorsed as a DGR under those categories. And then we have categories like school building funds, public libraries, public museums. Another large category that we look after are animal welfare charities. And I think they’re worth talking about because you can be registered with the ACNC under a charitable subtype you know that indicates that you’re looking after animals and caring for them but it might not necessarily mean that you’re eligible for DGR endorsement. So our eligibility requirements for that category depend on your meeting some specific activity tests that you know you need to be looking after animals that are lost or mistreated without owners. So it’s kind of like a direct activity test that we lay over the DGR endorsement.

So they’re just a few of the categories. All of the categories are listed on our website. And some of them are really specific, like war memorial repair funds. And then some of the categories are more general.

Matt:

And just this third dot point here, well actually it’s worth mentioning the second one we had there, that only 38% of registered charities are endorsed as DGRs. Which may be a surprising stat for a lot of people because as we mention that misconception that all registered charities are allowed to offer tax deductible donations, and it’s not the case. And actually a minority are eligible to do that. The third dot point here about DGR endorsement is decided by the ATO. Just follows on from what you just said, Mel, about having different requirements, particularly the animal welfare charity example being a good one, different requirements to the ACNC. So it’s worth reiterating that the ACNC will decide on an organisation’s eligibility to be registered as a charity. So if we take the animal welfare example, an organisation may have all the right things in place to get that endorsement or get that registration as a charity for that purpose. But that doesn’t necessarily mean that it also ticks off all the boxes that the ATO requires for endorsement for a particular tax concession. And that’s a way to I suppose highlight the line between the two agency’s collaboration in this area is that the ACNC will do the first step of deciding whether or not your organisation is eligible as a charity according to charity law. And then it’s passed to the ATO to figure out whether it’s eligible for a tax endorsement based on different rules. And many of these rules will cross over or many of the requirements will cross over about certain activities and whatnot. But they are distinct and separate.

OK, let’s have a look at government DGR registers now. It’s a particular type of organisation that comes with a particular DGR endorsement. And there are four of them and I’ll let Mel, I’ll let you talk about each one, we’ll do one by one.

Mel:

Sure.

Matt:

So firstly, what are they?

Mel:

What are they? So they are four, I mentioned we have 50 categories of DGR endorsement, and the ATO makes the decision pretty much on most of them except for these four and another category that is about approved research institutes. But these four are looked after by separate government departments, and they actually make the decision about whether or not your organisation is eligible to be entered onto their register. And then obviously it will come to the ATO after that for us to then finalise the endorsement for you. So the four categories are register of environmental organisations, the register of cultural organisations, register of harm prevention charities, and the overseas a gift deduction scheme. So they’re looked after by the Department of the Environment, the Department of Communications and the Arts, Department of Social Services, and then lastly that one is looked after by DFAT. The Department of Foreign Affairs and Trade.

Now these register endorsements, because they’re being made by the different government departments they all require like a ministerial sign off. So the minister responsible for those departments needs to sign off on you know the application. And then the application has to go through to treasury. Usually for the assistant treasurer to sign off as well. So they require like a two minister sign off and then it comes to the ATO for us to just do the last bit. So they can be lengthy applications and you know I’m not quite sure of what the current time frames are but you know because it is requiring ministerial sign off it can take quite a while for this to go through.

Matt:

So the way this would work in practice for example, if an organisation is set up, say it’s an environmental organisation and it wants a DGR, they would come to the ATO… well first the DGR would have some conditions right and the conditions may say that one, of course you need to be registered as a charity, and the second one may say that you need to be registered with the register of environmental organisations.

Mel:

That’s right.

Matt:

And then once you’ve gotten those two, so you’ve got the charity thing from the ACNC, you’ve gone to the register of environmental organisations from that department, then it’s to the ATO to finally endorse the DGR.

Mel:

Yes, that’s right. And luckily for us when it finally gets to us, we’re not really making a decision because it’s already been made in that process and all we’re doing is just giving effect to your endorsement, really updating the system so your DGR endorsement displays on that public ABN look up. So once it gets to us it only takes a day or so. But it’s just that process I think in between that can be lengthy for applicants.

Matt:

And that depends on the organisation itself, too. It might be quicker for some and longer for others.

Mel:

Yeah, yeah.

Matt:

Just one last point on this slide. We’ve got down here at the bottom, it says pending changes mean these registers will be integrated with the ACNC charity register. Can you just give us a bit of an explanation of this, Mel?

Mel:

Yes. So back in, I think it was back in December 2017 the government actually made an announcement for a suite of DGR reforms and reforms to the government registers were one of those things. So there, it was supposed to start on 1 July 2019, so this year. But we had an announcement at the end of last year that it’s actually going to be pushed back now to 1 July 2020. So what will happen is that, or the intention of these reforms is that these government registers will no longer be the responsibility of the individual government departments. And those people that have already been endorsed or on that register will come over and just be part of the ACNCs register. It will also mean that all new DGR applications will be assessed by the ATO, so they won’t go through that lengthy ministerial sign off process. But as yet there’s still un-enacted reforms and at the moment, like the start date for those is set to be 1 July 2020.

Matt:

OK, let’s get on to those two specific categories that we mentioned earlier, the health promotion charities and the public benevolent institutions. Mel did mention briefly that certain types of charities come, or certain types of DGR categories require an organisation to be registered as a particular type of charity and two of the most common ones are the health promotion charities and public benevolent institutions. Mel, what are the requirements broadly speaking for the DGR for these two?

Mel:

Yeah, so the main requirement is that you are registered with the ACNC under those subtypes, the health promotion charity or public benevolent institution. And the next thing that happens when your application comes through to the ATO is that we will just make sure that you have an appropriate winding up and revocation clause in your governing rules and that makes sure that any kind of surplus gifts or assets are transferred to another deductible gift recipient if your endorsement is revoked or if you wind up.

Matt:

OK, and we’ll just…

Mel:

It’s probably like next to the register ones it’s one of the easiest DGR endorsements that we have to do because we don’t assess your purposes or what your organisation does because the ACNCs already done that for us.

Matt:

Yeah, and this is where there is a little bit of maybe misconception with whether roles and responsibilities lie, again it’s that two-step process from charity endorsement to tax endorsement. And just with… the difference with these two is that once you’re endorsed as one of these two types of charities, there’s a DGR endorsement waiting for you at the tax office. So there is I suppose a desire to be registered as one of these two charities at the ACNC stage. It means that the ACNC will look at these applications carefully and make sure that an organisation does meet the requirements to be registered as either a health promotion charity or a public benevolent institution. And if they do jump that hurdle and they are registered or they are eligible to be registered and the ACNC registers them as one of these two types of charities we, the ACNC, pass that application or that notification over to the ATO and then it’s up to the ATO to endorse the DGR. So again it’s a collaboration between the ACNC and the ATO I suppose as the whole process. But the DGR endorsement requiring you to be registered as one of these types of charities means that there’s a lot of focus and a lot of assessment done at the charity stage before the DGR endorsement comes in.

Mel:

It might also be worth mentioning here as well that if you are registered with the ACNC under those two subtypes you’re also eligible for the FBT exemption. So when we were talking about those FBT concessions before, that exemption is only available to those two charitable subtype as well as hospital employees as well. So that enables PBIs and HPCs to provide up to $30,000 like grossed up of exempt fringe benefits to each employee. So it’s quite a good tax concession to have.

Matt:

Yeah, for sure. And it might be worth just mentioning here, because we have the first dot point here that says registered charities can apply to change their subtype through the ACNC charity portal online. The relevance of that is that as Mel mentioned earlier there are some cases where a charity may already be registered with the ACNC but they would like to have different or more extensive tax concessions that they want to apply for those directly through the ATO. And of course that’s the process that you would take. However if the tax concession that you’re applying for through the ATO requires you to be a particular type of charity then in that case there may be a requirement that you have to come back to the ACNC and have your charity registration changed which will involve a reassessment before the ATO will allow you to or will endorse any tax concessions. And that’s because the condition on the tax concessions that you’re applying for has particular requirements of the type of charity that your organisation is.

OK, that’s the presentation proper. I know there have been lots of questions that have come through throughout the broadcast and our colleagues Chris and Bree have been typing away madly trying to answer all your questions. We thought, we’ve had a few come through that we thought would be worth answering during the main broadcast because there might be some, it might be relevant for a lot of people. So we might go through some of them now and Mel this is going to place you in the hot seat because predictably all the questions are about particular tax concessions. So if you don’t mind jumping in the hot seat…

Mel:

I love it.

Matt:

Great. I will throw you a couple of questions. OK. We’ve had one on GST, actually it mentions GST exempt. So it might be worth reiterating the rules on this but the question is that they’re a new charity and they’ve been given GST exemption, I think this may be referring to a concession, do we pay GST and reclaim it or tell suppliers not to charge us? Do you want to have a go at answering this? So it seems as though there may be a little bit of confusion about the GST concession.

Mel:

Yeah. I think that as we were talking about before there is confusion about the concession and that the concession is not an exemption from paying GST. So you can’t get a supplier not to charge you GST. It just, you know it doesn’t work like that. So if you have paid GST on things that you have purchased what you might want to do as an organisation is have a look and see whether it is beneficial for you to register for GST you know and you do that by determining like what your threshold is and what kind of sales you actually make and whether or not you’d need to collect GST as well. But sometimes that enables you to claim back the GST that you’ve paid on supplies. Those GST concessions, like we were talking about before, really relate to the things that your organisation does and whether or not there’s some concessional treatment that can be applied to the way that you charge for goods that you know that you supply. We have a lot of information on our website about GST concessions and it’s really clearly laid out there. And what I’d suggest is if you can’t find the information that you need, actually call the ATO on our not for profit line which we’ll give you at the end.

Matt:

Another question here on DGR school building fund. We’ve had a couple of questions on this so I think it might be worth mentioning it, apologies to those for which it’s not relevant. But we will try and be quick about this. But there’s a question about the use of DGR school building fund donations and what is deductible and what isn’t.

Mel:

Yeah, so again, like we’ve got a lot of information on the ATO website about school building funds and we’ve also got a really good ruling that goes over in detail and provides a lot of examples about what a school building fund can use their money for. In a nutshell, there has to be a school in the ordinary sense of the word, so… and that fund can only use, be used for the building, construction, and maintenance of a school building. So you can’t use it to pay teachers wages or for you know general school supplies. It has to be used for the building and for its maintenance. I might just put a plug in that because about three weeks about we did, four weeks ago we did, we did a school building fund Webinar and the recording for that is actually up on the ATO TV site. And it’s really good. We go into a lot of detail about school building funds, exactly what you can use them for, and just some tips for organisations to ensure that you’ve got good governance as well.

Matt:

Sounds good, where can they find that? So just ATO TV is a good search they can do?

Mel:

Yeah, even if you go onto the ato.gov.au website and just put ATO TV in the search engine it will come up. And when you get onto ATO TV you can then choose to go into the not for profit related, there’s Webinar recordings and some videos and things like that. So you’ll find the school building one there and it’s the most recent one that we’ve done.

Matt:

OK. And there’s a question here about parent organisation having DGR and then the, I suppose the sub organisation or the child organisation also applying separately for it. The question is can it be done? And I suppose the follow up to that would be, is that common or should it be done?

Mel:

Look, I would say it actually depends. So if the sub organisation is a separate entity in its own right, so you’ve got to… because one of the requirements is you know you need an ABN, and then that entity is actually doing the things it needs to do to have DGR endorsement then it’s possible. You might want to just investigate your structure. And look, if you’re not sure just to give us a call on our not for profit line and we can talk you through your eligibility.

Matt:

Good advice, that’s generally the best way for real specific things I think. We can give you some broad suggestions here but if you’re really getting into the nitty and gritty of your organisation’s finances and whatnot and structure you best the ATO a call or us depending on if it affects your charity status.

A question here for FBT concessions for religious ministers and the reason I bring it up, we’ve had a few questions about it so I think it must be relevant for some people. But again, apologies if it’s not relevant for a number of you, but we’ll be quick about it again. The question asks about how to move from FBT rebateable to exemption.

Mel:

OK, so most churches are eligible for FBT rebate and that’s for all of their employees. But there are some very specific FBT concessions available for religious practitioners that are provided to them in the course of their, you know, religious duties. And so basically those benefits are exempt. Now it’s probably good timing that whoever asked this question did because the ATO is soon to release a final version of an updated ruling on, for religious practitioners and the provision of exempt fringe benefits. So if anyone’s interested in that I’d probably suggest subscribing to our not for profit news service because there will be a notification come out when that ruling is released and it goes over when you can provide exempt benefits to religious practitioners.

Matt:

We’ve got one question here, we’ll go through a couple more, I think we’ve got a few minutes to spare, there’s one question here that touches on DGR reform I think. But it seems to display maybe a common misconception about endorsement and assessment of applications. But the questions asks whether the, if the proposal that the ACNC be empowered to determine DGR applications instead of the ATO is going ahead and if so what’s the timetable? As you mentioned Mel there are proposals to sort of reform the way certain DGRs are, or certain eligibility is assessed, but that’s not quite the same as removing it from the ATO, right?

Mel:

No, and if I can just like really like simply say that those DGR endorsement and tax concessions are part of the tax law and they’re administrated by the ATO. So while there might be some eligibility requirement that’s decided by the ACNC, that decision about DGR endorsement will always sit with the ATO.

Matt:

And the reform itself is, I think this is what the question is referring to, but the reform itself is the thing that was supposed to at one stage go ahead this year but has been put back a year and that’s where the four different DGR registers will be integrated within the charity register.

Mel:

Yeah. And the other big part of that reform was that all non-government DGRs would be required to be registered as charities. So I think sometimes that’s where that confusion comes in as well. So the reform is really just making it fair for everybody and putting that requirement in there that all DGRs need to be registered charities.

Matt:

Two more I think. And then we’ll finish up. I’m sure everyone’s hungry, we’ve gone over lunch time. A question here which may be a bit heavy on the technical tax I suppose, well it is for me, but it says, well it’s asking about the evidence required when removing GST from an expense that’s considered below commercial rate when determining not to charge GST. Maybe can you simplify that for people, Mel, and provide a commentary on it?

Mel:

Yeah, I think this person might be talking about non-commercial activities of a charity. So basically if you are providing something that is like less than 75% of the normal market value then you can treat that as GST free. So like some examples, so providing of accommodation at less than market value. So I think that’s what they’re talking about. If you need help in determining you know when that might be applicable, that’s a really tax specific question, so I’d probably suggest giving the ATO a call just to talk about your particular circumstance.

Matt:

And just one more, a question about tax deductibility for charity fundraising in Australia when all the funds are spent on environmental activities overseas. I think there may be some confusion about tax deductibility if funds are either, if funds are raised here and used overseas. Is there a distinction that the ATO makes for those situations?

Mel:

Look, the distinction usually comes at the point when we’re endorsing someone. So charities need to meet an in-Australia requirement. And for most categories that requirement is that the charity is established and operated in Australia. But its purpose and beneficiaries can be outside of Australia. So it is possible to you know raise tax deductible funds and then use them for your purpose, like for the purpose you’ve been endorsed, outside of Australia. There’s only a couple of categories that there is a very specific restriction that the recipients need to be in Australia. Example of those are you know Australian disaster relief funds, and also circumstance funds. So the DGR category itself actually you know specifies where your recipients need to be. But it is possible if you know the organisation’s DGR endorsed, like maybe an environmental organisation, and it can provide funds to do things outside of Australia as long as it’s within its purpose.

Matt:

I hope that clears that one up for the people that asked it. But again, if you’re not sure about the particulars of your situation feel free to give us a call. When I say us it’s the ACNC and for more tax specific matters give the ATO a call. And the ATO< we’ll show you the phone numbers in a minute, but the ATO has a specific phone line dedicated to not for profit tax. So it’s worth jotting that one down.

OK, here are some resources that you may find useful for this topic today. As I said at the beginning, we will include all of these links in a follow up email so no need to frantically jot all these down now. It’s just a few of the higher level ones that you may want to have a look at, particular fact sheets on tax concessions and registering as particular types of charities to be endorsed as certain tax concessions. And Mel, some ATO resources that people might find useful.

Mel:

Yeah, we’ve got a few there. So we’ve got our not for profit home page on ato.gov.au. So if you go onto the main ATO website you’ll see that there’s a not for profit tab, that opens up into a whole lot of very useful information right from getting started to the different types of tax concessions that are available. Also some help if you’ve got any obligations or you’ve got employees or anything like that, it’s very good. We did talk about ATO TV, so the address for that is tv.ato.gov.au. And keep an eye out for the not for profit tab to take you to our specific recordings that we’ve got there. We have our not for profit information line. So the number there is 1300130248. Our, it’s a small team. But they’re also the team that do all the endorsements as well. So they’re knowledgeable on all that type of stuff. Matt was asking me before like how long the wait time is, so usually your call will be answered you know within 30 seconds to a minute. So you’re not going to need to wait too long.

We answer calls that have to do with general not for profit inquiries, tax related things, and its advice only. So if you do need to have any kind of updates to your accounts maybe contact information or to talk about loading an activity statement or something like that you can choose that option when you ring that 1300 number as well. We’ve also got a really useful handover checklist for not for profit administrators which goes over kind of a lot of tax related details that you might want to keep year to year. Particularly you know when you’re having your annual general meeting or your, you know, changing your committee members. We’ve got a self-governance checklist for not for profit organisations. And then last of all which I kind of you know always need to give this a plug, we’ve got our not for profit news service. So we send out alerts and you know our regular newsletter when things change or if there’s any kind of updates to tax law, if we’ve got new rulings coming out or even you know when we’re running a Webinar. So that will kind of let you know what’s going on in tax land.

Matt:

Excellent. And you can stay in touch with the stuff regarding the ACNC. We’ve got commissioners columns and email updates that go out regularly, lots of web guidance, video content, and podcasts on the website. The Webinars is at acnc.gov.au/webinars, that hosts all our broadcasted Webinars and they’re listed there with the slides and whatever else may have been included in a particular Webinar. And if you have any particular queries about your organisation and its tax, sorry not tax, but its charity registration send us an email to advice@acnc.gov.au. And we’re pretty active on social media. We generally get these recordings published within a day of the broadcast. So we will send you out a follow up email with lots of these links and resources and whatnot. Look out for that in the next day or so.

Now just before we go, if you have any feedback about the Webinar specifically or any other sort of online guidance or education material, send us your feedback to education@acnc.goc.au. We do enjoy receiving any comments there. And on that note just before you do finish this Webinar at the end there’s a very short survey, I think it’s only two maybe three questions, usually you can do it 20 seconds. If you can fill in that survey we’d really appreciate it. We get a lot out of the feedback that we get from the surveys at the end of a Webinar. So if you do have an extra 30 seconds that would be great if you could just complete that for us.

OK, thank you for attending. We really appreciate your attendance today. We hope you got something out of it. Thanks Mel for helping us out and providing all the brains for this one.

Mel:

Pleasure, thanks for having me.

Matt:

And thanks to Chris and Bree who have been frantically answering all your questions as we’ve gone along. And we look forward to your attendance.

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