If you manage a charity that protects and cares for animals, you must apply for Deductible Gift Recipient (DGR) status from the Australian Tax Office (ATO) if you wish to receive tax concessions. This step takes place after you have registered with the Australian Charities and Not-for-Profits Commission (ACNC). This article explains how you apply for DGR status as an animal welfare charity.
Step 1: Have the Right Principal Activity
To gain DGR status, the principal activity of your organisation has to be at least one of:
- providing short-term direct care to animals that have been lost or mistreated or who are without owners; or
- rehabilitating orphaned, sick or injured animals that have been lost or mistreated or are without owners.
A standard veterinary clinic will not be able to obtain DGR status, as the animals that the clinic treats will have owners. But a clinic that assists abandoned, lost or mistreated animals may qualify. These can be native as well as non-native wildlife.
You can also conduct more than one activity, such as animal welfare advocacy work. However, to gain DGR status, your principal activity must be care or rehabilitation.
Step 2: Register with the ACNC
To register as a charity with the ACNC, your organisation must:
- have a legitimate charitable purpose; and
- be a not-for-profit.
A Legitimate Charitable Purpose
Under the Charities Act 2013 (Cth), preventing or relieving the suffering of animals is a legitimate charitable purpose. Your animal welfare charity must direct its activities towards that purpose. Your organisation’s governing documents, annual reports, website and other publications must also reflect this purpose.
In addition to this, you must ensure that you do not:
- engage in or promote activities that are unlawful or against public policy; or
- promote or oppose a political party or candidate for political office.
These purposes are not charitable. Therefore, your activities, governing documents and other materials that your organisation publishes cannot promote the above causes.
To have “charitable purposes” your organisation must be a not-for-profit. Your organisation must direct all the monies it receives — whether through donations or payment for goods or services — solely towards furthering its charitable purposes.
If you do make a profit, it must be directed back into the organisation’s charitable purposes. You can’t distribute the profit back to directors, members or committee members, other than for payment for goods or services to meet the charitable purposes. Your governing documents should also state that your organisation will use its profit for the charitable purposes.
Step 3: Apply to the ATO
There are a number of requirements that your organisation will need to satisfy before obtaining DGR endorsement from the ATO.
At a minimum, your charity must:
- have a DGR winding up clause;
- be established and operated in Australia; and
- have an ABN.
DGR Winding Up Clause
Your governing documents must contain a complying DGR winding up clause. The clause must state that, on the winding up of your organisation, any surplus funds or assets of your organisation will be provided to another DGR entity.
Established and Operated in Australia
Your organisation must be both established in and operate in Australia. However, the ATO allows an animal welfare charity to have overseas beneficiaries. For example, part of your funding may go towards caring for migratory birds.
The ATO gives examples of charities that meet this requirement, as well as example DGR winding up clauses.
You should already have an ABN if you have applied for registration as a charity with the ACNC. Having one is also a requirement for DGR status.
To obtain DGR status as an animal welfare charity, you must register with two government bodies: the ACNC and the ATO. Each has specific requirements for their application process. Fortunately, you can meet most of these requirements by drafting your governing documents correctly.
It’s important to get advice from a charities lawyer before you start your animal welfare charity. Otherwise, you may have to change your governing documents before you can apply to obtain DGR status. To understand more about the application process, check the ATO for further information.
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