The recent draft Taxation Ruling: the “in Australia” requirement for certain deductible gift recipients (DGR) and income tax exempt entities (TR 2018/D1) may have left some people scratching their heads.
After all, isn’t it obvious what “in Australia” means? And why is the tax ruling so important?
In fact, the definition of “in Australia” may have a significant impact on whether a not-for-profit or charitable organisation continues to qualify for DGR status.
When an entity registers with the Australian Charities and Not-for-profits Commission (ACNC) for charity/DGR status, it must show that it meets certain conditions.
One of these is the “in Australia” condition. This is important in certain circumstances if you want to:
- be registered as a charity and not pay tax
- be registered as a DGR, meaning donations are tax deductible plus other benefits
- be able to get a refund of franking credits when you are a charity or DGR.
This condition must not only be met at registration time but continuously over the life of the charity/DGR. If it isn’t, then an entity may lose its charity/DGR status.
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