There have been recent important changes to charity law regarding charity registration, with regards to the Treasury Laws Amendment (Refining and Improving our Tax System) Act 2023, and charity fundraising.
What are the changes?
The Treasury Laws Amendment (Refining and Improving our Tax System) Act 2023, which came into law on 28 June 2023, has made some changes to charity registration. Currently, there are four DGR categories that are administered by government entities other than the Australian Taxation Office (‘ATO’), and all other DGR categories are administered by the ATO. These four organisations are: environmental organisations, harm prevention charities, cultural organisations, and overseas aid organisations. This means that these four organisations may only apply to be endorsed with DGR status if they apply to their relevant government entity. This new Act has made amendments to the Income Tax Assessment Act 1997, whereby administrative responsibility for these four organizations/charities has been transferred to the ATO.
This means that from 1 January 2024, the respective government entities for these four organisations will no longer assess or endorse applications for DGR status. Instead, these organisations will apply to the ATO to be endorsed for DGR status.
Additionally, the current law maintains that certain departments maintain registers of DGRs, such as the Register of Environmental Organisations (‘REO’), or the Register of Cultural Organisations (‘ROCO’). This new law abolishes these registers and the obligations of the various government departments to maintain the registers.
Importantly, this change will make all DGR categories consistent in administration. The expected result from this reform is that the time for organisations to obtain DGR status will be reduced from up to two years to around one month.
What are our recommendations for current applications?
In light of these recent reforms, there are questions surrounding the best path forward with regards to applying for DGR status right now. Your charity’s eligibility to apply for DGR status is not expected to change in light of this reform. It does, however, pose the question of what would be the most suitable way forward now your charity is ready to proceed with applying.
For Cultural/ Environmental Organisations, for example, the first option would be to proceed with applying to the ROCO or REO, respectively, which you are eligible to do up until 31 December 2023. In our experience, applications with the ROCO or REO take at least 12 months and even up to two years to be processed. Therefore, it is likely the application will not be assessed or endorsed by the time the reform takes place on 1 January 2024. The risk with this option is that there may be issues relating to transferring existing applications from the ROCO or REO to the ATO when the reform takes effect, which may cause further delays.
The second option would be to wait until 1 January 2024 when the changes take effect. That way we can apply directly to the ATO with a view of the application being assessed and endorsed in around one month.
We recommend the second option, as it is likely going to take just as long for the application to be assessed, and we can avoid unforeseen delays with transferring the application from the ROCO or REO, to the ATO.
For more information, please use the contact information below and would be happy to help with any inquiries.