Published on 20 June 2026 by Ramy Hanna
Primary keyword: DGR endorsement Australia
DGR Status, Tax Concessions and the ATO: A Director's Guide for 2026
Your charity is registered with the ACNC. But are you endorsed for tax concessions? Do you have Deductible Gift Recipient (DGR) status? Do you understand the difference?
Many board members assume that ACNC registration automatically gives you tax concessions. It doesn't. Tax concessions are a separate process, managed by the Australian Taxation Office (ATO). Get it wrong, and you lose donations, GST exemptions, and other benefits.
This guide explains DGR status, tax concessions, and what your board needs to do to maintain them.
Quick Summary
- **ACNC registration** means you're a registered charity (governance and compliance)
- **Tax concessions** include income tax exemption, GST exemption, and FBT exemption
- **DGR status** means donors can claim a tax deduction for donations to your charity
- **Separate processes**: ACNC registration and tax concessions are managed by different regulators
- **Compliance required**: You must meet both ACNC and ATO requirements to maintain all benefits
The Difference Between ACNC Registration and Tax Concessions
ACNC Registration
ACNC registration means your charity is registered with the Australian Charities and Not-for-profits Commission. This is a governance and compliance requirement. Most registered charities must, unless an exemption applies:
- Meet the Governance Standards for the Charitable Sector
- Lodge an Annual Information Statement
- Comply with record-keeping and reporting requirements
ACNC registration does NOT automatically give you tax concessions.
Tax Concessions
Tax concessions are benefits granted by the ATO. They include:
- **Income tax exemption**: Your charity doesn't pay income tax
- **GST exemption**: You don't pay GST on most purchases
- **FBT exemption**: You don't pay Fringe Benefits Tax on staff benefits
- **DGR status**: Donors can claim a tax deduction for donations
Tax concessions are granted separately by the ATO and must be applied for.
DGR Status: What It Is and Why It Matters
What Is DGR Status?
DGR stands for Deductible Gift Recipient. DGR endorsement is a tax status decided by the Australian Taxation Office (ATO); if your charity is endorsed, donors can claim a tax deduction for donations they make to you.
Example: A donor gives your charity $1,000. If you have DGR status, the donor can claim a $1,000 tax deduction. If you don't have DGR status, the donor can't claim a deduction.
Why It Matters
DGR status is a powerful fundraising tool. Donors are more likely to give if they can claim a tax deduction. Studies show that DGR status can increase donations by 20–50%.
For your charity, DGR status means:
- More donations (because donors get a tax benefit)
- Larger donations (because donors can afford to give more if they get a tax deduction)
- Easier grant applications (many funders require DGR status)
Who Can Get DGR Status?
Not all charities can get DGR status. You must be:
- Registered with the ACNC
- Endorsed by the ATO as a charity
- Listed on the Australian Charities Register
- Operating in one of the "DGR categories" (education, health, research, public benefit, etc.)
The ATO decides whether an organisation qualifies for DGR endorsement; some charities may not qualify (e.g., charities that primarily benefit members, charities that operate only for political advocacy).
Types of Tax Concessions
1. Income Tax Exemption
Charities endorsed by the ATO don't pay income tax on income derived from charitable activities.
What this means: If your charity earns income from grants, donations, fees, or fundraising, you don't pay income tax on that income (provided it's used for charitable purposes).
Important: If your charity earns income from non-charitable activities (e.g., unrelated business income), you may need to pay tax on that income.
2. GST Exemption
Charities endorsed by the ATO are exempt from paying GST on most purchases.
What this means: When you buy supplies, equipment, or services, you don't pay the 10% GST. This saves money.
Important: You must be registered with the ATO for GST exemption to apply. Some charities are too small to register (under $150k turnover), but if you do register, you get the exemption.
3. FBT Exemption
Charities endorsed by the ATO don't pay Fringe Benefits Tax on certain staff benefits.
What this means: You can provide staff with benefits (e.g., free meals, gym memberships, professional development) without paying FBT, provided the benefits are reasonable and related to your charitable work.
Important: FBT exemption only applies to benefits provided to staff, not to board members or volunteers.
4. DGR Status
As discussed, DGR status allows donors to claim a tax deduction for donations.
What this means: Donors are more likely to give, and they may give more.
Important: DGR status is separate from income tax exemption. You can have one without the other (though most charities have both).
How to Get Tax Concessions
Step 1: Register with the ACNC
You must be registered with the ACNC before you can apply for tax concessions. If you're not already registered, apply at www.acnc.gov.au.
Step 2: Apply for ATO Endorsement
Once you're registered with the ACNC, you can apply for ATO endorsement. This is the process of getting tax concessions.
You can apply online via the ATO's e-tax portal or by paper form. The application includes:
- Details of your charity and governance
- Your constitution or rules
- Details of your charitable activities
- Financial information
Step 3: Provide Supporting Documentation
The ATO may ask for:
- Board minutes showing governance decisions
- Financial statements
- Evidence of charitable activities (e.g., program reports, photos)
- Details of any related entities
Step 4: ATO Review and Decision
The ATO reviews your application and makes a decision. This typically takes 4–8 weeks.
If approved, you're endorsed as a charity and receive tax concessions. If the ATO has questions, they'll contact you.
Step 5: Maintain Compliance
Once endorsed, you must maintain compliance:
- Lodge an Annual Information Statement with the ACNC where required
- Notify the ATO of any significant changes (e.g., change of constitution, change of purpose)
- Keep records of your charitable activities
- Ensure your income is used for charitable purposes
Common Mistakes That Cost You Tax Concessions
Mistake 1: Not Applying for Tax Concessions
Many charities assume ACNC registration automatically gives them tax concessions. It doesn't. You must apply to the ATO separately.
How to avoid it: After ACNC registration, apply for ATO endorsement. Don't assume you have it.
Mistake 2: Using Charitable Income for Non-Charitable Purposes
If you use charitable income for purposes that aren't charitable, you risk losing your endorsement.
Example: Your charity receives a grant to provide meals to homeless people. You use some of the grant to pay for a staff member's holiday. This is a non-charitable use of charitable income.
How to avoid it: Ensure all income is used for your stated charitable purposes. Keep records showing how money was spent.
Mistake 3: Not Notifying the ATO of Changes
If your charity's constitution changes, your purposes change, or your governance changes significantly, you must notify the ATO.
How to avoid it: After any significant change, notify the ATO in writing. Include a copy of the updated constitution or board minutes.
Mistake 4: Allowing Endorsement to Lapse
If you are required to lodge an Annual Information Statement and do not do so, your registration may be cancelled, which can affect your tax concessions.
How to avoid it: Lodge your AIS on time, every year. Set a calendar reminder.
Mistake 5: Mixing Charitable and Non-Charitable Activities
If your charity engages in significant non-charitable activities, you may lose tax concessions on the non-charitable income.
Example: Your charity runs a training program (charitable) and a commercial consulting service (non-charitable). You must keep these separate and pay tax on the consulting income.
How to avoid it: Keep charitable and non-charitable activities separate. Consult your accountant on tax treatment.
What Your Board Should Ask
1. Are we registered with the ACNC? If not, why not?
2. Are we endorsed by the ATO for tax concessions? If not, why not? What's our plan to apply?
3. Do we have DGR endorsement from the ATO? If not, are we eligible? What's our plan to apply?
4. Have we notified the ATO of any significant changes? (Constitution, governance, purposes, related entities)
5. Are we using all charitable income for charitable purposes? How do we monitor this?
6. Do we have a process to maintain compliance? (AIS lodgement, record-keeping, governance)
Frequently Asked Questions
Q: How long does ATO endorsement take? A: Typically 4–8 weeks. Complex applications may take longer. You can check the status of your application online.
Q: Do we need to reapply for endorsement every year? A: No. Once endorsed, you keep your endorsement as long as you remain compliant. You don't need to reapply annually.
Q: What if the ATO rejects our application? A: The ATO will explain why. Common reasons include: not meeting the definition of charity, governance concerns, or insufficient evidence of charitable activities. You can address the issues and reapply.
Q: Can we have DGR status but not income tax exemption? A: Yes, though it's rare. You could have DGR status (allowing donors to claim deductions) but still pay income tax on certain income. Consult your accountant.
Q: What happens if we lose our endorsement? A: You lose all tax concessions. Donors can't claim deductions. You pay income tax and GST. This is serious. Avoid it by maintaining compliance.
The Bottom Line
Tax concessions are valuable. They reduce your costs, increase donations, and help your charity operate more efficiently. But they're not automatic. You must apply for them and maintain compliance.
Ensure your board understands the difference between ACNC registration and tax concessions. Apply for endorsement if you haven't already. Maintain compliance. And if anything changes, notify the ATO.
Book a Free 30-Minute Board Briefing to discuss your tax concessions and compliance strategy. Book now →
References
[1] Australian Taxation Office. (2026). Tax Concessions for Charities. https://www.ato.gov.au/ [2] Australian Charities and Not-for-profits Commission. (2026). ACNC Registration. https://www.acnc.gov.au/
Ramy Hanna
FIPA · FTIA · NTAA · Xero Certified Advisor
Principal & Virtual CFO, VCFO+ Not-for-Profit Australia
Ramy has worked with Australian charities, independent schools, foundations and faith-based organisations since 2003. As Principal of Trinity Accounting Practice and lead Virtual CFO at VCFO+, he helps boards translate financial data into governance decisions they can act on — clearer board packs, stronger reserves, audit-ready books and ACNC-confident compliance.