Edited version of private advice

Authorisation Number: 1051837487685

Date of advice: 12 May 2021

Ruling

Subject: Deductible gift recipient endorsement

Question 1 (please refer to below)

Question 2

If the Company is endorsed as a DGR, would the proposed acquisition, development and use of the Property effect a change to the Company's entitlement to endorsement as a DGR?

Answer

No

Question 3

If the company is endorsed as a DGR, would the proposed auspicing arrangement with the Trust to fund the development of the Property, and the Company's use of the Property, effect a change to the Company's entitlement to endorsement as a DGR?

Answer

No

This ruling applies for the following period:

Income year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The Company is registered as a charity with the ACNC.

The Company has commenced steps to change its charity registration with the ACNC to 'sub-type' public benevolent institution.

If the ACNC registers the Company as a public benevolent institution, it will apply for endorsement by the Commissioner as a deductible gift recipient (DGR).

The Company operates from premises owned by the Trust (the Property).

The only asset of the Trust is the Property.

The Property has been used for relious purposes and to undertake the activities of the Company.

The Trust has demolished the buildings on the Property.

A new building will be erected on the Property.

The company is considering funding the development of the Property by one of two options.

Relevant legislative provisions

Paragraph 359-35(2)(a) of Schedule 1 to the Taxation Administration Act 1953

Division 426 of Schedule 1 to the Taxation Administration Act 1953

Division 30 of the Income Tax Assessment Act 1997

section 30-120 of the Income Tax Assessment Act 1997

Section 30-125 of the Income Tax Assessment Act 1997

Reasons for decision

Questions 2 and 3

Section 30-125 of the ITAA 1997 sets out the requirements that must be satisfied for an entity to be entitled to be endorsed as a DGR. An entity will be entitled to be endorsed as a DGR public benevolent institution where it:

•         is registered by the ACNC as a registered public benevolent institution

•         has an ABN

•         is 'in Australia'

•         has acceptable rules for transferring surplus gifts and deductible contributions on winding up or revocation of endorsement,

Where an entity meets the conditions in section 30-125 of the ITAA 1997 and is endorsed as a DGR under section 30-120 of the ITAA 1997, the entity will continue to be endorsed as a DGR for as long as they meet the conditions in section 30-125.

As such, if the Company is endorsed as a DGR, it will continue to be entitled to the endorsement provided it remains registered as a public benevolent institution with the ACNC and satisfies the other requirements in section 30-125.

The nature of the transactions that make up options for funding the development of the new building would not impact on the Company's entitlement to endorsement unless they cause the ACNC to deregister the Company as a charity.

Matters we have not ruled on

We have not ruled on all of your questions. Here, we list each question that we have not been able to rule on, and explain why.

Question 1

If IDCA is registered with the Australian Charities and Not-for-profit Commission (ACNC) as a charity with the sub-category of public benevolent institution, and satisfies the requirements of section 30-125 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997), will the Commissioner endorse IDCA Inc. under Sub-division 30-BA of the ITAA 1997 as a DGR under Item 1 in the table in section 30-15 of the ITAA 1997?

We are declining to give you a private ruling on this matter because we consider that making the ruling may prejudice or restrict our administration of the law.

Reasons for decision

Paragraph 359-35(2)(a) of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) states that the Commissioner may decline to make a private ruling if the Commissioner considers that making the ruling would prejudice or unduly restrict the administration of a taxation law.

To be endorsed as deductible gift recipient an entity must make an application to the Commissioner of Taxation under Division 426 of Schedule 1 to the TAA 1953. If the entity is entitled to be endorsed, the Commissioner must endorse the entity under Division 30 of the Income Tax Assessment Act 1997.

The Commissioner therefore declines to rule on whether IDCA will be endorsed as a deductible gift recipient.

General guidance

Whilst we decline to rule, we provide you with the following general guidance in relation to endorsement as a deductible gift.

The following information is general guidance and is not subject to any formal review rights. Formal review rights are only available under the endorsement process when an entity has been refused endorsement or has had its endorsement revoked. Given this necessary reservation, the following information is provided for your assistance.

To be endorsed as a deductible gift recipient as a public benevolent institution an entity must meet all of these requirements:

•         it must have an Australian business number (ABN)

•         it must be registered by the ACNC as a registered public benevolent institution

•         it must be 'in Australia'

•         it must have acceptable rules for transferring surplus gifts and deductible contributions on winding up or revocation of endorsement, and

•         it then must apply to the ATO for endorsement.

Further information about endorsement as a deductible gift recipient and the requirements is available at www.ato.gov.au.

If an organisation applies for registration as a charity with the ACNC, it can also apply to the ATO for endorsement as a deductible gift recipient on the ACNC's registration application form. The ACNC will consider the application for registration as a charity (including as a public benevolent institution) and will then forward the endorsement part of the application to the ATO for consideration.

When the ATO has considered the endorsement application, we will send written confirmation that the organisation either is endorsed as a DGR or has been refused endorsement.

If an organisation is endorsed, donors can claim income tax deductions for gifts made from the date the endorsement starts.

If an application for endorsement is refused, we will provide a clear explanation of our decision. At an organisation's request, we will review any of our decisions or actions affecting the organisation and try to resolve any problems quickly and informally. An organisation also has the right under the law to ask us for a review by lodging an objection against the refusal, or deemed refusal.

Review rights when we have declined to make a ruling

We have declined to make your private ruling, and have given you the reasons. This decision may be reviewable under the Administrative Decisions (Judicial Review) Act 1977 (ADJR).

The ADJR provides you with two main rights.

1. You can send a written notice to the Commissioner requiring him to provide a written statement of:

- the findings of material questions of fact

- the evidence these findings were based upon, and

- the reasons for his decision.

2. You can apply to the Federal Court of Australia or the Federal Circuit Court for a review of the decision.

If you decide to apply to the Federal Court or the Federal Circuit Court for a review of the decision, we suggest you seek professional advice on how to progress. In addition, the Court will be able to provide you with some direction and assistance about the process.

An application must be lodged within 28 days of the issue date on your Notice of private ruling.

You may lodge your application for review at the Federal Court or Federal Circuit Court in the State or Territory in which you ordinarily reside, or the State or Territory listed in the address for the ATO shown on your Notice of private ruling.

You can find more information on the Federal Court website www.fedcourt.gov.au, or the Federal Circuit Court federalcircuitcourt.gov.au

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).