Common GST categories
Gift-deductible recipient
A gift-deductible recipient is an organisation endorsed to receive donations that donors can claim as tax deductions, and it may also qualify for certain GST concessions.
A gift-deductible recipient, often shortened to DGR, is an organisation or fund that can receive gifts that donors are allowed to claim as a tax deduction. Examples include many charities, public benevolent institutions, school building funds, and some environmental and cultural organisations. The status is set by tax law, and organisations are generally either listed by name or endorsed by the ATO.
For donors, the main benefit is the ability to claim a deduction for gifts of money or certain property, as long as they meet the conditions, such as keeping a receipt and not receiving a material benefit in return. For the organisation, DGR status helps attract donations. It is not the same as being a charity, though many DGRs are also charities and many charities are DGRs.
The status is also relevant for GST. Gift-deductible entities are among the organisations that can access certain GST concessions, including the treatment of non-commercial activities as GST-free where the conditions are met. This can apply to activities such as supplying goods or services at well below market value. Whether a specific concession applies depends on the entity type and the details of the supply.
It is important to separate gifts from payments for supplies. A genuine gift is a voluntary transfer made without receiving anything of value in return, and generally has no GST consequence. If a supporter pays for tickets to a dinner, buys merchandise, or receives some other benefit, the payment might be a payment for a supply rather than a gift. Splitting such a payment can be complex, and the deductible portion may be limited.
Common misunderstandings include thinking that every non-profit is a DGR, or that DGR status means no GST obligations. A DGR that makes commercial supplies is still subject to normal GST rules, including registration if the turnover threshold is reached. Another is assuming a donor can claim a deduction for a payment that gave them a benefit. The donor should only claim the portion that is a genuine gift.
If you are a donor, keep receipts from the organisation and check that it is endorsed. If you manage a DGR, keep clear records of gifts, benefits provided and receipts issued. This page is general information only, so confirm your situation with the ATO or a registered tax professional.
Worked example
A supporter pays $200 for a fundraising dinner ticket, and the dinner is worth $80 including GST. Only the portion above the value of the benefit, $120, may be a gift. If the organisation is registered for GST and the dinner is a taxable supply, GST included on the $80 dinner value is $80 / 11 = $7.27.
Practical tips
- Check an organisation's DGR status before claiming a deduction for a gift, and keep the receipt it issues.
- If supporters receive a benefit, work out the gift portion and the supply portion separately before issuing receipts.
- Do not issue a gift receipt for payments that are really purchases, as this can cause problems for both you and the donor.