In the last month of the financial year, a client said:
I want to set up a charity that will help people aged 25-55 by buying them the medical equipment and aides they need to live a more independent life.
Complete Accounting agreed to help them with the set up and straight away got the details of the 5-member group.
Having met all the requirements, we proceeded to apply for the group to become an incorporated association.
Boneyard Equipment Inc was born.
it was decided the association was going to be funded by private beneficiaries so it needed to register with the ACNC and gain DGR status.
Once this decision was made we frantically investigated the requirements needed to apply for Boneyard Equipment’s ABN, a requirement for DGR status.
Dealing with the ABR and obtaining an ABN
When we reached the ABR website we applied for an ABN under the business, super fund & charities section from here the ABN application process ran smoothly once you select other incorporated entity. Our first attempt failed miserably – The ABR won’t let an ABN application go through if you use the Tax Professional Section.
Once we registered the organisation for the ABN, it was back to the ACNC website, to register as a charity and DGR status. The application was going great (see page 4 of ACNC registration application guide). A decision was required, would Boneyard be:
- a Public Benevolent institution or
- a health promotion charity?
Benevolent Institution (PBI) or a Charity?
Upon reading the links in the guide we decided that Boneyard would apply as a health promotion charity. As a part of the application process you will undertake a phone meeting with the ACNC.
The ACNC will explain that if we choose to be a Public Benevolent Institution our application would go through easier. We accepted the recommendation and now Boneyard Equipment is now a PBI.
Important Sections of the Registration
Page 7 – Financial Institutions
See page 7 of the ACNC registration application guide Page 7 – Financial Institution
This section of the ACNC application helps to identify where the organisation gets its funds how it spends the funds.
The ACNC use the details to help them understand how you achieve your charitable purpose.
Additionally, this section is an estimate of the expected current financial year including percentage income from donations, fundraising or government agents.
In Boneyard’s case – this amount was $0 because we hadn’t commenced operations.
Page 8 – Endorsement For Concessions
See page 8 of the ACNC registration application guide Page 8 Endorsement for conclusions.
To gain the benefits like income tax exception, the $150,000 turnover threshold for GST purposes and the fringe benefits tax concession this where these selections were made.
Page 9 – Endorsement as a Deductible Gift Recipient
See page 9 of the ACNC registration application guide- Page 9 Endorsement as a Deductible Gift Recipient. (DGR)
The final item Boneyard Equipment needed was DGR status, this would allow the organisation to receive Tax Deductible gifts from the public.
Boneyard Equipment qualified under item 1 of the Income Tax Assessment Act 1997 resulting from their Public Benevolent Institution status. Thank goodness that ACNC suggested we become a PBI.
With application now complete we carefully reviewed all 12 sections to ensure all required items were complete and crossed our fingers and pressed submit. Even with guidance from the ACNC’s helpful website the whole process took us 12 hours.
The committee members of Boneyard Equipment made a very smart choice engaging the team at Complete Accounting to prepare their application.
Questioning the Tax Office regarding the amount of time to obtain DGR status, we discovered the best scenario was 10 days, however it may be as long as 28 days.
The application was lodged on the 21 June 2017, after a few minor changes and phone calls to and from the ACNC, was approved in the first week of August.
The lessons we learnt
- The application process will take time! Give yourself plenty of time between commencing the application and when you want the charity to begin or start your operation.
- Your charitable and DGR status commences from the date you submit a successful application.
The second point becomes very important since you need to be registered before June 30th to secure an end of financial year generous donation.
It is truly a great thing you and your members are considering doing. There are a lot of vulnerable, sick, injured and neglected people in our society that need a hand.
After reading this article we hope you take the plunge and set up a charity to help your fellow human beings.
Keeping in mind that your time is better spent on the organisational planning, marketing and promotion, engaging our expertise at Complete Accounting to take care of the set up and consequently, your focus remains your objective.
As a special bonus if you your details into our Contact Us section below and indicate you want to know more about charity set up we will give you a complimentary setting up a charity session.
- Discussion on whether a charity is the right set up for your organisation.
- What you will need to successfully set up a charity.
- Answer your questions about the set up process and how to get the best out of your organisation.
Normally $330, we would you like to have it as our gift to you for inquiring about helping your fellow human beings.
In conclusion, If you are feeling charitable why not click on this link https://the.boneyard.asn.au
To see what our clients charity is up to.