Tax exemption considerations

Charities must be endorsed by the Australian Taxation Office (ATO) to claim tax exemptions. Section 426-45 of the Taxation Administration Act 1953 requires charities to notify the ATO immediately if they cease to be entitled to the exemptions.

10 considerations

• 1. Check the Australian Business Register to confirm that you are endorsed by the ATO.
• 2. Conduct a Self-Review using the worksheet templates available from the ATO website and submit the report for Board approval.
• 3. Be aware of the ATO Compliance Program, which sets out the ATO compliance priorities for the year and how they are addressing risks that concern them.
• 4. Are all your activities undertaken for your principal purpose? This is particularly important if you have merged, or are collaborating with another entity whose purposes may be different to yours. It may change your tax concession entitlements.
• 5. Have you changed your organisation’s name, the name of your public fund, or your Rules or Constitution? If this is the case you must notify the ATO and any other government department that has endorsed you for taxation concessions.
• 6. Changes in governance. Some charities are required to give notice to government departments when there is a change in the committee of management or Board (for example, harm prevention charities).
• 7. If you operate a public fund, are you still collecting donations from the public? If the fund is dormant it may no longer be entitled to DGR (donor gift recipient) status.
• 8. Have you complied with your annual reporting requirements? Cultural organisations and harm prevention charities are required to provide an audited financial statement and statistical information to the relevant government department about the donations and gifts received each year.
• 9. Are you a religious institution with employees who are receiving exempt fringe benefits? It would be prudent to review their role in the organisation to confirm that they still meet the requirements of a Minister of Religion set out in TR 92/17.
• 10. Have there been any changes to the law which have created new options for your organisation? Your organisation may consider the impact of the High Court decision in Aid/Watch Incorporated v Cmr of Taxation [2010] HCA 42 which has paved the way for charities to engage in public debate and advocacy on charitable issues.

Elizabeth Turnour is a lawyer at Moores Legal, which has one of the largest and most extensive practices in Australia in the not-for-profit and community sector.