ATO to control all DGR categories under proposed reform

Current proposals out for consultation are aimed at de-politicising DGR eligibility, says assistant charities minister Andrew Leigh.

The Australian Taxation Office (ATO) will be responsible for the administration of the full suite of Deductible Gift Recipient (DGR) categories, under a new reform currently open for public consultation.

There are 52 categories of DGR, which allow organisations to receive tax deductible donations from the public, providing a supportive funding stream and increasing opportunities for grants and philanthropy.

Assistant charities minister Andrew Leigh said the proposed change aims to prevent the government from withholding DGR status from charities which may go against their interests and agenda.

“We’re obviously doing a consultation in order to garner peoples’ views but the aim is to simplify the process for charities getting tax deductibility status, and to remove the possibility that a worthy charity misses out on tax deductibility status simply because a conservative government doesn’t like them,” Leigh told Pro Bono News.

“Charities should get tax deductibility status based on the quality of their work, and whether they match the requirements of the category.

“We’re clear eyed in the goal we’re trying to achieve, which is to make life easier for charities. We’ve had a nine year long Liberal war on charities, and part of that was preventing worthy charities getting tax deductibility status because Liberal ministers just didn’t like them.”

See more: Community foundations granted access to DGR

The proposed reform will see the tax office manage the eligibility assessment of four DGR categories that are currently administered by other government agencies, including:

• Environmental organisations, administered by the Department of Climate Change, Energy, the Environment and Water. 
• Harm prevention charities, administered by the Department of Social Services. 
• Cultural organisations, administered by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts. 
• Overseas aid organisations, administered by the Department of Foreign Affairs and Trade.

In doing so, the ATO will become responsible for both the endorsement and administration of all 52 DGR categories, helping to create consistency across the system and reduce red tape.

See more: Exclusive: “Unfinished business” for not for profit tax system

The change will also simplify the application process and reporting requirements for organisations looking to obtain DGR status, which is anticipated to decrease the approval time from up to two years to around one month.

But while the reform promises to streamline the DGR system, it does not address limitations to the categories themselves, which stop some for-purpose organisations from accessing a critically reliable funding source.

See more: DGR status could safeguard vulnerable news sector

Leigh explained that while this proposed reform has a specific focus, the federal government is committed to ensuring “the categories of tax deductibility are fit for purpose”.

“If we were writing the DGR categories afresh today, they certainly wouldn’t look exactly the way they do now,” continued Leigh.

“The challenge is to make sure that we’re modernising and updating those categories, and reflecting the valuable work that Australia’s charities do.

“Australia’s charities are too busy to be fighting ideological games with governments that don’t respect them. What they’ve got in the Labor government is a government that wants to work in partnership with charities, respects their work, and is looking to streamline their paperwork, not to put more burdens on an already overworked charity sector.”

Public consultation on the Deductible Gift Recipient (DGR) Registers Reform is open until 19 February 2023.