Government Introduces New DGR Category for Community Sheds
Following a previous announcement in the 2019-20 Budget, the Federal Government has recently introduced a new category of deductible gift recipient (DGR) to enable community sheds (such as Men’s Sheds and Women’s Sheds) to access the DGR concession.
The Treasury Laws Amendment (2020 Measures No. 2) Act 2020, which amends the Income Tax Assessment Act 1997 to include the changes, received royal assent on 3 September 2020 and the new category will be available to community sheds from 1 October 2020. Donations of $2 or more to an endorsed community shed will generally be tax deductible.
To be eligible for endorsement, the organisation must be a public institution that satisfies the characteristics of a community shed. The organisation’s dominant purpose(s) must be toward advancing health and the prevention or relief of social isolation, and the organisation must advance these purpose(s) principally by providing a physical location and supporting individuals to work on projects (or undertake other activities) in the company of others at that location. The organisation must have either open membership, or membership that is open to persons of a particular gender or indigenous heritage (or both).
In addition, an organisation applying for DGR endorsement as a community shed must:
have an active ABN;
be located in Australia;
be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC). This requires, among other things, that all the purposes of your organisation are charitable, and your organisation is not-for-profit; and
have a DGR winding up and revocation clause.
If an organisation is already registered as a charity with the ACNC, but not as a Health Promotion Charity (HPC) or Public Benevolent Institution (PBI), then it can apply directly to the ATO to have it’s community shed endorsed under the new DGR category. However, if your organisation is currently registered as a HPC or PBI, the ACNC encourages you to re-assess whether your organisation is still entitled to be registered as such or whether your organisation should update registration and apply to the ATO under the new endorsement category.
If you have any questions on how the new endorsement category might apply to your organisation, please do not hesitate to contact our team of specialists in this area:
Paul Gray
Principal
T: 03 5225 5231
E: pgray@ha.legal
Alexander Gulli
Lawyer
T: 03 5226 8573
E: agulli@ha.legal
