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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1051361136295

Date of advice: 17 April 2018

Ruling

Subject: Section 30-15 Deductible Gift Recipient (DGR) registration

Question

If the Entity makes a financial grant to an overseas based research institute for medical research, will it maintain its entitlement to endorsement as a DGR under section 30-125 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes, providing the Entity maintains its registration with the Australian Charities and Not-for-profits Commission (ACNC) as a Health Promotion Charity.

This ruling applies for the following period:

1 July 2017 to June 2027

The scheme commences on:

1 July 2017

Relevant facts and circumstances

    ● The Entity is an Australian Public Company that registered with ASIC.

    ● The Entity is described in item 1 of the table in section 30-15 of the ITAA 1997.

    ● The Entity is a Health Promotion Charity registered with the ACNC as defined in the table in Subdivision 30-B of the ITAA 1997.

    ● The Entity is endorsed as a DGR under section 30-120 of the ITAA 1997.

    ● The Entity’s constitution outlines its objects as follows:

      1) to foster research into health disorders;

      2) to provide education relating to health disorders; and

      3) to provide support for sufferers of health disorders and their families.

    ● The constitution further provides that if the Entity is wound up or endorsement as a DGR is revoked, any property or surplus gifts that remain after satisfaction of all debts and liabilities must not be distributed among members but must be transferred to another institution that has similar objects to the Entity and to which tax deductible gifts can be made.

    ● The Entity’s board of directors, offices and assets are in Australia.

    ● Historically, the Entity has issued financial grants to medical researchers located and working in Australia.

Relevant legislative provisions

Section 30-15 of the Income Tax Assessment Act 1997

Section 30-20 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

Subdivision 30-B of the Income Tax Assessment Act 1997

Reasons for decision

The Entity is entitled to endorsement as a DGR under section 30-125 of the ITAA 1997 if the Entity:

    ● has an Australian Business Number (ABN);

    ● is described in item 1 of the table in section 30-15 of the ITAA 1997;

    ● meets the relevant conditions (if any) identified in the column headed “Special conditions” of the item of that table; and

    ● is governed by documents which provide that gifts of money or property upon winding up or revocation of DGR status are made to another DGR.

The Entity has an ABN.

The Entity is described in item 1 of the table in section 30-15 of the ITAA 1997 by virtue of being registered as a Health Promotion Charity with the ACNC as identified at item 1.1.6 of the table in subsection section 30-20 (1) of the ITAA 1997.

The only relevant special condition is that it meets the ‘in Australia’ requirement under item 1 in the table in section 30-15. This section requires that the DGR ‘must be in Australia’.

The words ‘be in’ are not defined in the law and take their ordinary meaning. ‘Australia’ means within the Australian territorial and offshore boundaries according sections 960-500 and 960-505 of the ITAA 1997.

Demonstrating the ‘in Australia’ requirement has two parts. First, the Entity must be established or legally recognised in Australia. The Entity is incorporated in Australia under the Corporations Act 2001 and registered as a charity with the ACNC. Therefore, this establishes the legal requirement.

Secondly, the Entity must operate ‘in Australia’. The Entity is managed in Australia on a day to day basis by the board of directors. The Entity’s purposes and beneficiaries need not be in Australia to satisfy the ‘in Australia’ requirement.

The Entity will be making a grant to an overseas based research project. However, it is established and operates in Australia and therefore has satisfied the ‘in Australia’ requirement in the “Special conditions” in item 1 of the table in section 30-15 of the ITAA 1997. Therefore, making a grant to an overseas based research project will not impact the ‘in Australia’ requirement.

The governing documents include a condition that if the Entity is wound up or endorsement as a DGR is revoked, any property or surplus gifts that remain after satisfaction of all debts and liabilities must not be distributed among members, but must be transferred to another institution that has similar objects to the Entity and to which tax deductible gifts can be made.

Conclusion

The Entity is registered with the Australian Charities and Not-for-profits Commission (ACNC) as a Health Promotion Charity and providing the Entity maintains this registration, it will be remain entitled to DGR endorsement.


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