Tax deductible gifts

As your Small Town Transformations project proceeds you may wish to raise additional funds from individuals and businesses in the community to support your work.

While partners and supporters can make cash or in-kind contributions whenever they please, you may wish to offer a tax-deduction as an incentive for some donors. The Australian Tax Office (ATO) regulates the ability of organisations to offer a tax-deductible receipt in return for gifts.

Deductible Gift Recipient Endorsement

Organisations that can offer tax deductions are said to have Deductible Gift Recipient (DGR) endorsement. You can check if your organisation has DGR endorsement on the Australian Business Register using your ABN.

Regional Arts Victoria's DGR status listing on the business register indicating it's endorsed

Regional Arts Victoria's DGR status listing on the business register indicating it's endorsed

In order to receive DGR endorsement, an organisation’s objectives as stated in its constitution must fit in one of the categories defined in the DGR table. For most arts and cultural organisations, this means applying to be accepted on the Register of Cultural Organisations maintained by the Ministry for the Arts.

In addition, the organisations must fulfill structural requirements such as:

  • Maintaining a separate public fund to receive donations
  • Ensuring your constitution prevents the distribution of profits to members
  • Limiting what may happen to its assets when winding up
  •  Applying to the Australian Charities & Not-For-Profits Commission for registration

Click here for the full list of requirements.

In short – getting DGR endorsement is a very involved process that you should only embark upon if you feel the effort is justified by the potential reward. It’s likely this isn’t practical or necessary for you in the short term.

There is an easier way to offer donors a tax deduction - by working with an auspicing body.

Auspicing Bodies

Creative Partnerships Australia runs the Australian Cultural Fund (ACF) under a special structure approved by the ATO. Any practicing individual artist or not-for-profit arts organisation can register a project with the ACF for which they plan to raise funds. Once approved, donors give their gift to the ACF in return for a tax-deductible receipt. The ACF is then able to grant the donations received to the organisation.

Using this structure, organisations are able to access the benefits of offering a tax deduction without going through the process of gaining DGR endorsement for themselves.

You can find out more about the Australian Cultural Fund on its website here, or by contacting the fund manager Esther Gyorki.

A few notes about gifts

In considering whether you would like to offer a tax deductible receipt as an incentive, it’s important to know what qualifies as a ‘gift’. There is a set of technical limitations about what constitutes a ‘gift’ for tax purposes. A gift:

  • Must be given with no expectation of a material return
  • Must be money, a financial asset (eg. shares) or property
  • Cannot be given by a project team member or their immediate family

Gifts are not donations of goods and services, prizes or money paid for tickets / dinners / raffles etc. Click here for the ATO’s guidance on all things gifts.

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