Animal welfare charities and good governance What Not-For-Profits need to know Webinar presented by: Melinda Knight NFP Advice Team Members 4 June 2019
Overview What you need to know about animal welfare charities We will cover � What attracts our attention? � DGR endorsement � What is an Animal Welfare Charity � Characteristics of an animal welfare charity � What you can use the funds for � Record keeping � Reviewing your endorsement UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 2
How to search for information Quick codes QC 26500 UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 3
What attracts our attention Generally, animal welfare charities that attract our attention are those that: � don’t meet the criteria of an animal We know that most animal welfare charity welfare charities want to do the � have a committee that is made up exclusively of family members or close right thing and meet their tax friends obligations � use funds for purposes other than the principal activities of an animal welfare charity � provide private benefits to members, including using organisation funds to care for your own animals UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 4
Deductible gift recipient (DGR) Endorsement In order to receive tax There are two types of DGR There are many DGR categories deductible gifts an endorsement: and each have their own organisation needs to be requirements � where an organisation as a endorsed as a deductible whole falls within a DGR gift recipient (DGR) category � where a fund, authority or institution that is operated by an organisation falls within a DGR category Types of DGRs QC 46213 UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 5
What is an Animal Welfare Charity? . An animal welfare charity is an institution and will be endorsed in full. Section 30-45 Income Tax Assessment Act 1997 UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 6
Characteristics of an animal welfare charity 1. It is a charity that is registered with the ACNC. 2. It is an institution whose principal activity is one or both of the following: providing short-term direct care to animals (but not only native wildlife) that ̵ have been lost or mistreated or are without owners; rehabilitating orphaned, sick or injured animals (but not only native wildlife) ̵ that have been lost or mistreated or are without owners Animal Welfare Charities QC 26500 UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 7
Registering with the ACNC This requirement is different to the ATOs ‘principal activity’ test For DGR endorsement Animal welfare groups may be able to register with the ACNC under the ‘preventing or relieving the suffering of animals’. They may also select other recognised charitable purposes they have or charitable activities they engage in such as research or environmental programs • ACNC registration is based on purpose • Not all animal welfare groups registered with the ACNC will be eligible for DGR endorsement The ATOs ‘principal activity test’ means that animal welfare groups must • undertake specific types of activities to be eligible for DGR UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 8
Institution requirement The characterisation of a charity as an institution is a Animal welfare charities must be operating in an institution-like question of fact manner. Whether an institution exists will depend on the circumstances. The relevant factors that we consider include an organisation’s activities, size, permanence and the way it is recognised Organisations that have a small and exclusive membership (family and close friends) and carry on limited activities will not meet the institution requirement. UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 9
For both types of Principal activity activities, care must be provided to animals that are lost, mistreated or are An animal welfare charity’s principal activity must be either or both of: without owners. Short term direct care Rehabilitation Examples include: Examples include: Vet services for injuries and illnesses • Training orphaned animals to • First aid and transport of injured • interact with humans animals Providing care to return animals to • Feeding and sheltering animals while • health new homes are found If one or both of these are the sole activity, it will qualify as an animal welfare charity. If not, at least one of these activities must outweigh all other activities. UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 10
What activities do not qualify? Characteristics of an animal welfare charity � If animals are not recovering from injury or sickness and are not in need of rehabilitation, ongoing care for them will not qualify. Long-term care provided after the animals have been rehabilitated � does not qualify. Activities or organisations that do not qualify are: � - lobbying and public education activities - breeding and showing activities - training veterinarians, veterinary nurses and animal carers - organisations such as nature reserves, animal sanctuaries and zoos. UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 11
Case studies Street Smart Cats Sylvia and her mother Julie establish a not-for-profit organisation called ‘Street Smart Cats’ to rescue and care for stray cats in the inner city. Sylvia and Julie are the only committee members and they have successfully registered with the ACNC. As well as caring for the animals in their home, they have a network of foster carers and have set up a website to find forever homes for the cats. Although Street Smart Cats meets the principal activity test, it is not eligible for DGR endorsement as it is not operating in an institution like manner. Its membership is made up of close family members only. UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 12
Case studies Pets in Need Pets in Need is a registered charity and their main purpose is to provide financial assistance pet owners that have been affected by natural disasters. Pets in Need pays the veterinary bills for injured pets when their owners can’t afford necessary treatment. Pets in need is not eligible for endorsement as it doesn’t meet the principal activity requirement. The organisations must provide direct care and the animals being treated must be lost, mistreated or without owners. UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 13
Case studies Forever Home Finder Forever Home Finder is an organisation that has been established to connect animal welfare charities with people looking to adopt pets. They have registered with the ACNC. Forever home finder does not have a physical location or provide direct care to animals. They have set up a website and provide a facility for the public to search for pets available for adoption from their partners. Potential pet owners can lodge an application through their website and this is forwarded to the animal welfare charities for consideration. Forever Home Finder is not eligible for DGR endorsement as it doesn’t meet the principal activity requirement. They are not providing direct care or rehabilitation. UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 14
Case studies The Grass is Greener Maggie owns a large property and has established a charity with some folks from her community. They care for animals that have been surrendered by people that can no longer care for them. They organise vet care for the animals that need it and also provide behavioural training for dogs so they can be safely rehomed. Maggie has set up a Facebook page for The Grass is Greener to reach out to potential pet owners and rehomes an average of 6 pets a month. The Grass is Greener is eligible for DGR endorsement as it is operating as an institution and meets the principal activity requirement. UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 15
Record Keeping The Taxation Administration Act 1953 The records must: requires that DGRs keep records that 1. be retained for at least 5 years after explain all transactions and other acts the transaction to which the record they engage in that relate to their DGR relates. status 2. be in English (or easily convertible into English) and show that the DGR has used its deductible gifts for school building fund purposes Reference Subdivision 382-B of Schedule 1 of The Taxation Administration Act 1953 UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 16
Receiving deductible gifts For a gift to be deductible For a donor to be entitled to Volunteer carers are not for the donor it must be an a tax deduction for their able to claim a tax allowable gift type and donation, their gift must be deduction for the costs they received by the DGR unconditional and voluntary incur e.g. purchasing food. Reference Taxation ruling TR 2005/13 Income Tax: tax deductible gifts – what is a gift UNCLASSIFIED | ANIMAL WELFARE ORGANISATIONS JUNE 2019 | PAGE 17
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