The Minister noted that donations to DGR organisations were approximately $1.31 billion in 2016-17 and it is important for both, the generous donors, and taxpayers (who share the cost of the donations being deductible), that DGR status organisations are subject to appropriate oversight with minimal complexity.
The key changes announced, included the following.
- All non-government DGRs will be automatically registered as a charity, with the ACNC, from 1 July 2019 with a 12 month transitional period to assist current non-charity DGRs with compliance.
- In addition, the Commissioner of Taxation will have the power to exempt DGRs from this requirement in certain circumstances.
- Public fund requirements will be abolished.
- The ‘DGR registers’ and ‘Overseas Aid Gift Deduction Scheme’ will be integrated with the ACNC charity register and double reporting requirements will be abolished.
- The ACNC will also provide a central location for applications and reporting and will work with the ATO to provide a streamlined experience.
- The ACNC and ATO will receive additional funding to review a greater number of DGRs for ongoing eligibility, where risks are identified.
- To strengthen oversight of overseas activities, the Government will issue External Conduct Standards to be enforced by the ACNC as recommended by the ACNC and the AUSTRAC’s report of 28 August 2017: Australia’s non-profit organisation sector: money laundering and terrorism financing risk assessment report (see related Tax Month article).
- The Government will not proceed with the unlegislated 2009-10 Budget measure Philanthropy – reforming the ‘in Australia’ requirements that apply to tax exempt entities. The unenacted measure could prevent many DGRs from conducting legitimate activities outside Australia such as visits to foreign medical institutions or participating in international cultural or sporting events and would not provide appropriate oversight of the overseas activities of exempted organisations such as overseas disaster relief funds.
- The DGR discussion paper identified a number of proposals drawing on various past reviews, including the 2016 Inquiry into the Register of Environmental Organisations. The Government will not mandate a level of remediation by environmental organisations. However, the existing reporting requirements of DGRs currently on the four departmental registers, including environmental reporting requirements, will be collected by the ACNC in the Annual Information Statement.
- In addition, to improve transparency for both the ACNC and Australian donors, the ACNC will publish charities’ declarations of political expenditure to the Australian Electoral Commission and relevant criminal activities of charities’ staff or responsible persons in the Annual Information Statement.
- As part of this package of reforms the Register of Cultural Organisations’ (ROCO) eligibility criteria will be amended to enable organisations that promote Indigenous languages to be endorsed as DGRs. Explicit recognition of Indigenous languages among the forms of cultural activity supported through the DGR tax arrangements will align with current policies and be a valued public statement of the heritage and living value of Indigenous languages to all Australians.
The Government will consult on details of the implementation of the DGR reforms and continue to support the not-for-profit sector and the generosity of its millions of donors and volunteers.