DGR discussion paper released

The federal treasury has released a discussion paper outlining several proposals to strengthen deductible-gift-recipient governance, reduce administrative complexity and ensure that an organisation’s DGR eligibility is up to date.

Around 20,500 of 28,000 DGRs are registered charities.  DGR status entitles donors to claim tax deductions on their donations.  The tax concessions amount to more than $1.3 billion a year and are a significant part of the government’s efforts to encourage philanthropy and support NFPs.

A significant proposed reform in Tax Deductible Gift Recipient – Reform Opportunities would require DGRs to be registered with the ACNC.  Benefits flowing from such a move would include:

  • The increased credibility and transparency that comes with being a registered charity and being listed on the ACNC’s charity register
  • Access to the Charity Passport – a ‘report once, use often’ framework
  • Other red-tape reductions, including streamlined reporting across jurisdictions
  • Regulation under a set of core, minimum, governance standards, which are the basis for strong internal governance, and
  • The ACNC’s free education, guidance and support.

The paper was based on intensive consultation. Among questions asked were:

  • What are stakeholders’ views on a requirement for a DGR (other than a government one) to be a registered charity for it to be eligible for DGR status?  What issues could arise?
  • Are there likely to be DGRs (other than government DGRs) that could not meet this requirement and, if so, why?
  • Are there particular privacy concerns associated with this proposal for private ancillary funds and DGRs more broadly?
  • Should the ACNC require additional information from all charities about their advocacy activities?
  • Is the annual information statement the appropriate vehicle for collecting this information?
  • What is the best way to collect the information without imposing a significant additional reporting burden?
  • What are stakeholders’ views on the proposal to transfer the administration of the four DGR registers to the ATO?  Are there any specific issues that need consideration?
  • What are stakeholders’ views on the proposal to remove the public-fund requirements for charities and allow organisations to be endorsed in multiple DGR categories?  Are regulatory compliance savings likely to arise for charities that are also DGRs?
  • What are stakeholders’ views on the introduction of a formal rolling review program and the proposals to require DGRs to make annual certifications?  Are there other approaches that could be considered?
  • What are stakeholders’ views on who should be reviewed in the first instance?  What should be considered when determining this?
  • What are stakeholders’ views on the idea of having a general sunset rule of five years for specifically listed DGRs?  Should listings be reviewed at least once every five years to ensure that they continue to meet the ‘exceptional circumstances’ policy requirement for listing?
  • Stakeholders’ views are sought on requiring environmental organisations to commit no less than 25 per cent of their annual expenditure from their public fund to environmental remediation, and whether a higher limit, such as 50 per cent.  What are the potential benefits and the potential regulatory burden?  How could the proposal be implemented to minimise the burden?
  • Stakeholders’ views are sought on the need for sanctions.  Would the proposal to require DGRs to be ACNC-registered charities and therefore subject to ACNC’s governance standards and supervision ensure that environmental DGRs are operating lawfully?

Submissions closed on 14 August.
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