From 1 October 2020, community sheds (such as men’s sheds and women’s sheds) are now eligible for endorsement as a deductible gift recipient (DGR) where they satisfy certain requirements.
This amendment is welcome news amid the COVID-19 era where research is increasingly showing people are at a higher risk of experiencing mental health issues and social isolation.
Prior to this amendment, while community sheds were able to be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC), they did not qualify for highly sought after DGR status, which allows donors making donations of $2 or more a tax deduction.
This change allows community sheds greater opportunities to obtain monetary support from the wider community, business and corporates to fund essential purchases and additional programs. It will also potentially allow community sheds to access a range of grants and payments, which are made available to not-for-profit or charitable organisations but require DGR status as a condition of application.
Eligibility criteria
To be eligible to apply, the organisation must be a ‘public institution’ (i.e. company limited by guarantee, trust or incorporated association) and it must be able to show that:
- it has the characteristics of a community shed;
- is located in Australia;
- is registered with the ACNC; and
- its governing documents must contain a suitable DGR winding up and revocation clause.
Characteristics of community shed
A public institution seeking endorsement under the community shed DGR category must:
- have a dominant purpose of advancing mental health and preventing or relieving social isolation;
- its purposes must be advanced principally by providing a physical location and supporting individuals to work on projects or undertake other activities in the company of others at that location; and
- it must have either open membership, or membership open to persons of a particular gender or with Indigenous heritage or both.
Next steps
If you think your organisation qualifies for the new DGR category, HopgoodGanim Lawyers can assist you with:
- reviewing your governing documents and ensuring they meet the DGR requirements, including advising on membership and DGR revocation clauses;
- preparing and providing advice on making an application to the ACNC as a registered charity;
- providing advice on satisfying the governance requirements and DGR requirements once registered with the ACNC; and
- if the organisation is already registered with the ACNC, providing advice and assistance in relation to making an application to the Australian Taxation Office for endorsement under the community sheds DGR category.
Our Taxation team has extensive experience in advising charities and not-for-profits with all aspects of their establishment (including structuring and governance) and registration with the ACNC and the ATO.
If you would like further information or to discuss your organisation’s circumstances, please contact our Taxation team.