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Cultural organisations

Gifts to cultural organisations may be tax deductible if they are endorsed as a deductible gift recipient (DGR).

Last updated 1 January 2024

Overview

Cultural organisations promote one or more of the specified cultural forms. They include choirs, dance groups, festivals, theatre groups and art exhibition venues.

Changes to the Register of Cultural Organisations

Prior to 1 January 2024, cultural organisations and their public fund had to be registered on the Register of Cultural Organisations, which was administered by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts, to have their public fund endorsed as a deductible gift recipient (DGR).

From 1 January 2024, we administer the DGR category for cultural organisations (item number 12.1.1) and assess eligibility for endorsement.

If you were endorsed as a public fund on the Register of Cultural Organisations prior to 1 January 2024, transitional provisions apply.

Eligibility criteria

To be eligible for DGR endorsement as a cultural organisation the entity must:

Characteristics

To be eligible for DGR endorsement as a cultural organisation the entity must have the characteristics of a cultural organisation.

Institution

A cultural organisation that is registered with the ACNC as a charity must also be an institution.

An institution is an organisation established to promote a defined purpose, especially one of public or general utility. An institution carries out activities that translates its purpose into a living and active principle, and can take the legal form of a trust, company or incorporated or unincorporated association. An institution is identified by its activities, size, permanence and recognition.

An institution is not:

  • a fund – for example, a trust merely to manage or hold trust property to make distributions to other entities or people
  • a structure with a small and exclusive membership that is controlled and operated by family members and friends and carries out limited activities.

Principal purpose

A cultural organisation's principal purpose is the main or dominant purpose for which the organisation exists. A cultural organisation can have other purposes which are incidental, ancillary, or secondary to its principal purpose.

The principal purpose must be the promotion of one or more of the specified cultural forms:

  • literature
  • music
  • a performing art
  • a visual art
  • a craft
  • design
  • film
  • video
  • television
  • radio
  • community arts
  • arts or languages of Indigenous persons
  • movable cultural heritage.

We take a holistic approach in determining the substance and reality of the organisation's purpose. The objects in the organisation's constituent or governing document, and the activities by which those objects are achieved, are the main factors considered when determining the purpose of the organisation. Other relevant factors can include:

  • other elements in the constituent documents of the institution such as its powers, rules, not for profit and winding up clauses, and clauses governing who can benefit from the institution's activities and in what ways
  • how the institution is operated
  • any legislation governing its operation
  • the circumstances in which it was formed
  • its history
  • its control.

Organisations that are not cultural organisations

Organisations with a principal purpose outside of the promotion of the specified cultural forms are not considered as cultural organisations - including the promotion of other matters that may be considered ‘cultural’ in other contexts, such as traditions, norms, languages and religions.

Direct and indirect activities

The term promotion is not defined by the legislation and has its ordinary meaning. The definition of promotion includes furtherance or encouragement.

The use of the word 'promotion' means that cultural organisations may promote their specified cultural form(s) in a wide variety of ways, which can be directly or indirectly.

Direct activities may include (but are not limited to):

  • creating or producing art and culture for a public audience
  • presenting or exhibiting art, culture and movable cultural heritage created or produced by others
  • educating the public about a specified cultural form, including through research and publishing
  • providing training in an art, craft or cultural form
  • preserving works of art or items of movable cultural heritage.

Indirect activities may include (but are not limited to):

  • awards, scholarships, grants, commissions or prizes to artists or practitioners
  • direct partnerships with individuals or organisations
  • raising funds to purchase or create an asset or property that will be owned by, or transferred to, another entity.

Gift fund

Cultural organisations must maintain a gift fund, and gifts must be received by the organisation’s gift fund. A cultural organisation must use its gift fund for its principal purpose only.

The following gift fund requirements must be met:

  • it is a fund
  • it has a name
  • it is maintained and used only for the principal purpose of the organisation
  • all gifts and deductible contributions of money or property for that purpose are made to it
  • any money received by the organisation, because of such gifts or deductible contributions, is credited to it
  • it does not receive any other money or property.

Most organisations must be required by a law, its constituent documents or governing rules – to transfer any surplus assets of the gift fund to another gift deductible fund, authority or institution when the organisation is wound up or the DGR endorsement is revoked, whichever occurs first (DGR winding up and revocation requirement). This requirement can be met by including a DGR winding up and revocation clause in the rules of the gift fund.

Sample DGR winding up and revocation clause

If the organisation is wound up or if the endorsement (if any) of the organisation as a deductible gift recipient is revoked, any surplus assets of the gift fund remaining after the payment of liabilities attributable to it, shall be transferred to a fund, authority or institution to which income tax-deductible gifts can be made.

End of example

If the organisation is a registered charity, the clause must state that the surplus assets of the gift fund shall be transferred to a charity with a similar charitable purpose to which income tax-deductible gifts can be made to.

Organisations do not need to meet the DGR winding up and revocation requirement if they are established by an Act of the Commonwealth Parliament, and that Act, or another Act, does not provide for the winding up or termination of the entity. A gift fund is still required.

Applying to be DGR endorsed

There are 2 ways to apply to be registered as a DGR under Item 12.1.1 - Cultural organisation:

  • If you are currently applying for registration as a charity with the Australian Charities and Not-for-profits Commission (ACNC), you can apply to us for DGR endorsement on the ACNC's registration application form – the ACNC will send your DGR application to us once your charity is registered.
  • If you have an ABN, and you're either already registered as a charity or are an Australian government agency, you can complete our Application for endorsement as a deductible gift recipient form.

In your application, you will have to include:

  • a completed Cultural organisation schedule for deductible gift recipient applicants
  • evidence documents (if applicable)
  • a copy of your constituent or governing documents in either a Word or PDF file format. Image files may cause issues and may delay your application.

After you apply

What you can expect when we process your DGR application:

  • we will contact you to confirm we have received your application, and if we require further information
  • while your application is being processed, donations you receive are not tax deductible
  • after receiving all required information, it may take up to 28 days for us to process your application
  • you will receive a notification of your application outcome in the mail.

Once you are DGR endorsed:

  • your DGR status will be added to the ABN lookupExternal Link on the Australian Business Register so donors can confirm your cultural organisation can receive tax-deductible gifts
  • you can update your website or material advising of your tax-deductible status.

Responsibilities as a DGR endorsed cultural organisation

It is important to make sure you are meeting your responsibilities as a DGR endorsed cultural organisation.

You must keep records that explain all transactions and activities relevant to your organisation's status as a DGR.

Your records must show that you have used all your gifts and deductible contributions for your principal purpose.

Receipts for donations must be issued in the name of the organisation not the gift fund. You should consider whether you need to be registered for goods and services tax (GST), fringe benefits tax (FBT) or PAYG withholding.

If your organisation is registered with the ACNC, you must keep records, report each year to the ACNC via the Annual information statementExternal Link and tell us if your charity’s details change.

We recommend you conduct a review of your organisation's eligibility for DGR status each year or when there is a substantial change in your activities. You can use our worksheet to review your DGR status.

You must tell us in writing if your organisation is no longer entitled to DGR endorsement. You must do this before, or as soon as possible after, the entitlement ends.

Tax-deductible gifts and donations

Once you are DGR endorsed, people who donate to your cultural organisation can seek a tax deduction. Donations can be either money or property.

There are some requirements that donations need to meet to be tax deductible.

The donation must be a gift, not a contribution:

  • A gift is where a donor does not receive a material benefit in return (for example, a donor puts $5 in a collection box).
  • A contribution is where a donor receives a material benefit in return (for example, membership fees or purchasing a ticket to a fundraising dinner).

If you provide the donor with a small token of appreciation for their donation – such as a sticker, or a mention in a newsletter – the donation can still be considered a gift. However, if your acknowledgment is larger and the donor can use or benefit from it, this may prevent the donation being considered a gift.

It is the responsibility of the donor to determine whether the donation is a tax-deductible gift.

The types of donations that can be tax deductible gifts include:

  • money of $2 or more
  • property that is purchased during the 12 months before making the gift or that we value at more than $5,000
  • trading stock.

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