It is proposed that, from 1 July 2019, non-government DGRs will be required to be a registered charity or operated by a registered charity. The reform will only impact a limited number of DGRs as the majority of non-government DGRs are already required to be a registered charity or be operated by a registered charity.
As 11 of the 51 general categories of DGRs under the Income Tax Assessment Act 1997 currently do not have to have charity registration, this leads to inconsistent governance and reporting requirements. Making charity registration a prerequisite for DGR status will improve the consistency of regulation and oversight.
These DGRs would then become subject to ACNC requirements such as reporting obligations and governance standards.
It is proposed that transitional arrangements will be available to assist affected DGRs that are endorsed as at 30 June 2019 to register as a charity and comply with charity obligations. Eligible DGRs will have a 12 month period commencing 1 July 2019 and ending 30 June 2020 to register as a charity with the ACNC or apply for an exemption from the Commission of Taxation. Failure to do so would mean the Commission of Taxation could revoke the entity’s DGR status.
During the 12 month transitional period, non-government DGRs eligible for transition will not need to be a registered charity to retain their DGR status. The reporting requirements during this period will also remain unchanged. After this period, DGRs that have accessed transitional arrangements and registered as a charity will be required to comply with ACNC regulation.