A Guide to DGR
In association with
A Guide to DGR Pack
Navigating DGR status doesn't have to be complicated.
In partnership with the Breakthrough Office, we've put together a plain-language guide to Deductible Gift Recipient (DGR) status in Australia. This resource covers what it is, how to apply, which category fits your organisation, and how to keep your endorsement.
Because more giving starts with making giving easier.
Deductible Gift Recipient (DGR) status
A Deductible Gift Recipient (DGR) is an organisation or fund entitled to receive gifts that are tax-deductible for the donor. The framework for DGRs is established under Division 30 of the Income Tax Assessment Act 1997 (‘ITAA 1997’).
This means that for donations above the value of $2, donors (individuals or businesses) can claim income tax deductions on their tax returns, as long as the gift meets Australian Taxation Office rules. For donors, this reduces their taxable income.
The benefit of DGR status is that organisations may find it easier to attract donations, as giving is more financially appealing to donors. Many grant-makers and philanthropic funders also prefer or require DGR status for organisations they support.
It is important to note that not every charity automatically gets DGR status. Generally, organisations need to fit into one of the specific DGR categories set out in Australian taxation law, meet eligibility requirements (e.g. being not-for-profit and having an Australian Business Number), and apply for endorsement through the relevant process. The endorsement process commonly involves either applying directly to the Australian Taxation Office or linking the application with the Australian Charities and Not-for-profit Commission charity registration.
There are two distinct pathways for an organisation to be recognised as a DGR:
1. ATO Endorsement
This is the most common method. An organisation must apply to the Australian Taxation Office and demonstrate that it fits within one of the thirteen DGR categories specified in law.
2. Specific Listing
In exceptional circumstances, where an organisation does not fit into a general DGR category, it may be specifically listed by name in the Income Tax Assessment Act 1997.
When applying for DGR endorsement, through either of the above pathways, endorsement can be sought in two ways, which affects how donations can be received:
Endorsement of the Organisation as a Whole:
If the entire organisation falls within a DGR category, all donations made directly to the organisation are potentially tax-deductible.
Endorsement for a Fund, Authority, or Institution:
If only a part of the organisation's operations qualifies, the organisation is endorsed only for that specific fund, authority, or institution. In this case, only gifts made specifically to that designated fund (‘gift fund’) are tax-deductible. Moreover, funds received into the gift fund must only be used for the principal purpose of the fund, authority or institution.
If an organisation is endorsed as a DGR for the operation of a fund, authority or institution and stops maintaining a gift fund, it stops being entitled to DGR endorsement. If this occurs, the organisation must notify the Australian Taxation Office in writing so that they can revoke your organisation's endorsement.
Under section 30-125 of the Income Tax Assessment Act 1997, an entity is entitled to be endorsed as a DGR if it satisfies several key requirements. These generally include the following items:
If your organisation is applying for charity registration, an application is made to the Australian Taxation Office in conjunction with an application for the registration with the Australian Charities and Not-for-profits Commission. Under this process, the application for assessment will be reviewed after the Australian Charities and Not-for-profits Commission have granted charity registration. For organisations that are already registered with the Australian Charities and Not-for-profits Commission, to obtain DGR status, you must complete the Application for endorsement as a deductible gift recipient form, which is available on the Australian Taxation Office website. To complete this form, you will require your organisation’s ABN, legal name, and postal address, as well as further information about what you are applying for. Within this form, you must nominate if you are applying for endorsement for your organisation as a whole, or endorsement of your organisation under a fund, authority, or institution. This form also requires you to provide endorsement information, which includes the DGR category you are applying under. |
Once an organisation obtains DGR status, it must meet several ongoing obligations to maintain its endorsement. This includes keeping records that explain all transactions relevant to its DGR status, demonstrating that donated funds are used only for the principal DGR purpose, and issuing receipts correctly in the name of the endorsed entity or fund to the applicable donors.
The organisation must also periodically review its operations and governing documents to confirm it continues to meet the eligibility requirements for its DGR category. If it ceases to be eligible, for example, due to a change in purpose or activities, it must notify the ATO in writing. Failure to meet these obligations may result in the ATO revoking the organisation's DGR endorsement.
For guidance on DGR eligibility and the application process, refer to Division 30 of the Income Tax Assessment Act 1997, particularly sections 30-15 to 30-130, as well as ATO publications and the ACNC website for charity registration requirements.
For DGR registration, your organisation's governing documents must require that any surplus assets of the gift fund be transferred to another gift deductible fund, authority or institution if the fund is wound up or its DGR endorsement is revoked. Where the fund is a registered charity, assets must transfer to a charity with similar charitable purposes.
Your governing documents should include a clause to this effect, for example:
If the organisation is wound up or its endorsement as a deductible gift recipient is revoked (whichever occurs first), any surplus of the following assets shall be transferred to another organisation with similar objects, which is charitable at law, to which income tax deductible gifts can be made:
- Gifts of money or property for the principal purpose of the organisation
- Contributions made in relation to an eligible fundraising event held for the principal purpose of the organisation
- Money received by the organisation because of such gifts and contributions.
Where an organisation holds DGR endorsement for more than one fund, surplus assets may transfer between those funds on winding up or revocation, if the governing rules permit.
This requirement does not apply to organisations established by an Act of the Commonwealth Parliament where that Act makes no provision for winding up or termination.
DGR Categories
To be endorsed by the ATO, an organisation must fall into one of the prescribed DGR categories. These are grouped thematically within Division 30 of the Income Tax Assessment Act 1997.
We have set out below the definition of each category and provided examples of some of the types of charities that can be registered under each one.
Section 30-20 of the Income Tax Assessment Act 1997 establishes the general categories of health-related organisations that are eligible to be endorsed as Deductible Gift Recipients.
The section covers public hospitals, ambulance services, public authorities engaged in health research, and charitable institutions whose principal activity is to promote the prevention or control of diseases in human beings.
A common registration type under this category is a Health Promotion Charity (Item No.: 1.1.6). A Health Promotion Charity is legally defined as 'a charitable institution whose principal activity is to promote the prevention or the control of diseases in human beings'. This definition is separate to that of a charity advancing general health and requires that an organisation under this subtype must focus its principal activity on the prevention or control of identifiable diseases.
Sections 30-35 to 30-37 of the Income Tax Assessment Act 1997 encompass higher education bodies such as public universities, TAFEs, and affiliated residential colleges. The list also includes public funds established for specific purposes, such as constructing school buildings, providing religious or ethics instruction in government schools, and operating government schools for students with disabilities. A final category covers public funds that are solely for providing scholarships, bursaries, or prizes.
A common special condition across most of these categories is that if the organisation is not an Australian government agency, it must be a registered charity to qualify for endorsement.
Section 30-40 of the Income Tax Assessment Act 1997 identifies the categories of research-related organisations that are eligible to be endorsed as Deductible Gift Recipients. The section is divided into two parts: general categories of research recipients and a list of specifically named research recipients.
Subsection 30-40(1) establishes a general category for approved research institutes. To qualify, an organisation must meet cumulative conditions relating to the institution itself and the purpose of the gift.
Sections 30-45 and 30-46 of the Income Tax Assessment Act 1997 establish the categories for 'Welfare and Rights' organisations eligible to be endorsed as Deductible Gift Recipients.
A Public Benevolent Institution (‘PBI’) is a key entity in this category. While not defined in the ITAA 1997, case law and ATO rulings establish it as a non-profit institution organised for the direct relief of poverty, sickness, suffering, distress, misfortune, or helplessness that arouses community compassion.
A 'Harm Prevention Charity' is another key category of Deductible Gift Recipient listed under in section 30-45(1). A Harm Prevention Charity is legally defined as:
...an institution whose principal activity is the promotion of the prevention or the control of behaviour that is harmful or abusive to human being.
Subsection 30-45(2) also contains a table listing specific organisations by name that are DGRs. These entities do not need to fit into a general category as their eligibility is legislated directly.
Section 30-50 of the Income Tax Assessment Act 1997 establishes the DGR categories for entities related to defence. This section covers the Commonwealth activities for defence, public institutions or funds for the comfort, recreation or welfare of members of the armed forces, and a public fund solely for the reconstruction or critical repair of a specific Australian war memorial.
Section 30-55 of the Income Tax Assessment Act 1997 outlines the DGR categories for environmental organisations. Notably, under this category, the gift itself must be received by the DGR's dedicated gift fund.
Section 30-65 of the Income Tax Assessment Act 1997 is comparatively brief and does not contain any general categories. It exclusively lists three specific organisations by name that are eligible for DGR endorsement.
Section 30-70 of the Income Tax Assessment Act 1997 provides DGR categories for entities involved in supporting families, including marriage education and family counselling services.
Section 30-80 of the Income Tax Assessment Act 1997 sets out two general categories for organisations involved in international aid and relief. To be eligible for endorsement, an organisation must fit into one of these categories and meet all associated special conditions.
Item 9.1.1 of subsection 30-80(1) establishes a general category for organisations engaged in overseas aid. It allows for the endorsement of public funds, institutions, and Australian government agencies whose principal purpose is to deliver development or humanitarian assistance in developing countries.
Section 30-90 of the Income Tax Assessment Act 1997 lists specific organisations related to sports and recreation that are endorsed as Deductible Gift Recipients. A gift made to an entity listed in this table is deductible, subject to any special conditions specified.
Section 30-95 of the Income Tax Assessment Act 1997 a list of specific philanthropic trusts that are endorsed as DGRs. Gifts made to these trusts are deductible, subject to any time-based or other special conditions.
Section 30-100 of the Income Tax Assessment Act 1997 is divided into two parts: one for general categories of cultural recipients and another for specific named recipients.
The general category within this section covers institutions or Australian government agencies whose main purpose is promoting cultural forms such as:
- Literature, music, performing or visual arts, craft, or design
- Film, video, television, or radio
- Community arts
- Arts or languages of Indigenous persons
- Movable cultural heritage.
There are specific conditions attached to both the institution and the gift itself.
Cultural organisations
Section 30-102 of the Income Tax Assessment Act 1997 sets out general categories of fire and emergency services organisations eligible to receive deductible gifts.
Section 30-105 of the Income Tax Assessment Act 1997 establishes Deductible Gift Recipient categories for a group of entities referred to as "Other recipients". It provides two pathways for an organisation to be a DGR under this section: by fitting into a general category of a "community charity", or by being specifically listed by name in the legislation.
The Community Charities subsection outlines DGR categories for community charities, which are structured as either trusts or corporations. These entities are often referred to as community foundations or public ancillary funds and typically serve as conduits for philanthropy, collecting donations to distribute to other DGRs or to conduct charitable activities themselves.