Thursday December 2011

The Federal Government has been working on the reform of the Charities and Not-For-Profit sector arduously before the Christmas break.

The Government has recently released 4 discussion papers and drafts for comment and passed legislation on issues affecting Not-For-Profit organisations and Charities.

In particular, the Government has released:

Many have an opinion about which charitable causes are more worthy of government support than others. However, the Australian Tax Office (ATO) has issued definite guidelines about which charities qualify as Public Benevolent Institutions (PBIs) and “deductible gift recipients” (DGRs) and can therefore grant tax deductible receipts to their donors. This is a critical endorsement for charities to obtain and the applicable principles which are applied must be carefully considered.

Example: The Bayside Leader article ATO must be dreaming by Jenny Ling (15 September 2011) raised the question “What kind of poverty, sickness, suffering, distress, misfortune, disability, destitution or helplessness arouses compassion in the community?”.

To be classified as a Public Benevolent Institution it is important to be clear as to the applicable principles

What type of DGR is involved?

One can only assume that the applicant applied for an endorsement of her organisation as a public benevolent institution.  There would be no other DGR category that would apply.  According to the ATO’s tax ruling on public benevolent institutions, such an organisation must direct its activities towards persons in need of relief.  The test for the acceptance of an organisation into the category of public benevolent institution depends on the suffering in question arousing compassion in the community.
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