Tax Office DGR Survey - Annual Donor Report?

The Australian Tax Office is considering obtaining annual donor reports from charities to include in what is says is a streamlining process to make electronic tax returns for individuals easier.

The ATO proposal is to ‘pre-populate gift labels on e-tax returns’ – that is, getting information from charities or other sources and placing that data automatically on the partly completed tax form. The idea is to make it easier for individuals when they are lodging their returns.

So if you made $100 donation to Charity A in August and a $50 donation to Charity B the following January, each charity would supply that information to the tax office in an annual donor report and those donations would automatically appear when you started to complete an electronic tax return after June 30th of that year.

The question is will it be easy for the charities to comply? Early anecdotal evidence suggests that the Not for Profit sector is not impressed.

The ATO is conducting an online survey to gauge the sector’s opinion on the various issues that this concept raises. The Fundraising Institute Australia has prepared a submission which was put to it’s board last week.

The ATO says that at least one overseas revenue authority ‘pre-populates gift labels’ on electronic returns for individuals.

This is achieved by approved deductible gift recipients (DGRs) lodging annual donor reports with the revenue authority. Data from the reports are then ‘loaded’ into e-tax returns and appear when a person logs in to complete the return.

In the Australian context the ATO’s expectation is that such a system could only work effectively if data were provided electronically, with a unique identifier (probably the tax file number) for each person.

The ATO admits that such a practice would of course raise a number of issues on the feasibility of a similar system in Australia, whether it would be of benefit to donors, and any impacts it may have on the operations of DGRs.

The ATO is particularly interested about the capacity of DGRs to collect such data now and into the future, compliance costs, transitional costs, the likely impact of costs on DGR operations, and the problems likely to be faced by DGRs collecting and storing sensitive data such as donor tax file numbers (recognising of course that donors can choose not to provide their tax file number).

The FIA CEO, Sue-Anne Wallace says in discussions with many fundraisers, the feeling is that the proposal will inhibit their ability to collect funds.

The sticking point would be in obtaining tax file numbers.

Wallace says the Tax Office should be trying to facilitate and enhance the sector. On first indications this proposal does neither.

The ATO says it has made no decision to proceed with this practice. The purpose of this survey is to seek preliminary views.

Charities can log onto the ATO Not for Profit site and vote in favour or against the concept or provide ‘other’ information. The voting system is linked to an email where participants can add their views.

To take part in the survey go to : www.ato.gov.au.