In this edition
In this edition, we explore the latest developments shaping the charity and not-for-profit landscape.
Our feature article examines charity mergers and acquisitions, including structuring considerations, purpose alignment and the unique issues that arise when charities acquire for-profit entities.
We also bring you sector updates including:
- removal of the $2 tax deductible gift requirement for donations from 1 July 2024
- updated ACNC guidance on safeguarding vulnerable people
- release of TD 2026/3, clarifying when ancillary funds ‘provide’ a ‘benefit’ and confirming the broad scope of prohibited related-party transactions
- Treasury consultation on the proposed minimum tax on discretionary trusts
- upcoming events, including the Charity Law Association of Australian and New Zealand (CLAANZ) Annual Conference, which is being hosted at Gilbert + Tobin’s Sydney office next week, and the ACNC Governing for Good Forum.
As always, please reach out if we can support you as you pursue your purpose.
Happy reading!
Research and resources
Merging for impact: structuring charity and not-for-profit mergers and acquisitions
Charities and not-for-profits pursue mergers and acquisitions to maximise impact, strengthen capability and build long-term sustainability.
Whether through asset transfers or membership and share acquisitions, the preferred structure depends on each organisation’s circumstances and objectives. Purpose alignment is critical to ensuring charitable purposes remain consistent with regulatory requirements. Where a charity considers acquiring a for-profit entity, additional issues arise, including governance, tax and maintaining charitable status.
Click here to read our article: Merging for impact: structuring charity and not-for-profit mergers and acquisitions.
Announcements and reminders
Removal of the $2 tax deductible gift requirement
The government has removed the $2 minimum threshold for claiming tax deductible gifts made to deductible gift recipients (DGRs). The change implements a recommendation from the Productivity Commission’s May 2024 review of philanthropy, and aims to encourage low-value donations increasingly prevalent through point-of-sale round-up schemes offered by retailers and online vendors.
The amendments apply from 1 July 2026 but apply retrospectively to gifts made on or after 1 July 2024. This means donors who have already given to DGRs since that date can benefit from the retrospective application. Donors who make multiple low-value gifts to the same DGR in one income year can aggregate those donations and claim the total amount. The changes do not apply to political donations.
Click here for further information on gifts and donations.
Governance Toolkit: Safeguarding vulnerable people
The ACNC has updated its Governance Toolkit with new guidance on safeguarding vulnerable people. The update encourages charities to review their safeguarding policies and procedures regularly and provides practical steps to identify and manage safeguarding risks.
It reminds charities that safeguarding obligations extend beyond beneficiaries (including children, seniors and people with impaired functioning) to staff, volunteers and people connected through suppliers and partners.
The updated guidance outlines charities’ legal obligations under the Governance Standards and External Conduct Standards, and recommends seven steps to manage safeguarding risks: identify and assess risks, commit to managing them, prevent harm through clear policies, engage people to adhere to those policies, detect instances of harm, take action when concerns arise, and assure the board that risks are being managed.
The ACNC has published resources to support compliance, including a safeguarding assessment, checklist, template safeguarding policy, incident response plan template, and an online safeguarding governance tool.
Click here to access the governance toolkit and further resources.
TD 2026/3: when does an ancillary fund 'provide' a 'benefit'?
The ATO has published new guidance on when a private or public ancillary fund is taken to 'provide' a 'benefit' under the Taxation Administration (Private Ancillary Fund) Guidelines 2019 and the Taxation Administration (Public Ancillary Fund) Guidelines 2022 (together the Guidelines).
Taxation Determination TD 2026/3 Income tax: when does a private or public ancillary fund 'provide' a 'benefit'? (TD 2026/3) interprets 'benefit' broadly, extending the meaning beyond just money or property to include any advantage, profit or gain, such as discounted leases, below-market loans, loan guarantees and relief from obligations. Benefits can also be provided by omission, such as not enforcing a penalty clause or waiving rent owed by a related entity. The Determination applies both before and after its date of issue.
For DGRs, a key takeaway is that non-binding pledges of future payment, such as multi-year grant commitments, do not constitute 'distributions' until paid. Each instalment is recognised only in the income year the ancillary fund makes the payment, meaning pledged funding is not guaranteed and cannot count toward an ancillary fund's minimum distribution requirements until payment is made.
The Determination also confirms that the prohibition on benefits to related entities (trustees, donors, founders, their relatives and associates) extends to indirect benefits. For example, a DGR that engages a contractor owned by a founder's spouse at market rates may provide a prohibited benefit because the related entity is placed in a position to earn a profit. Parties must carefully structure shared arrangements such as co-leasing to avoid disproportionate benefits, as even cash-flow advantages can trigger penalties equal to the value of the benefit.
Charities and not-for-profits that receive funding from ancillary funds, or that interact with ancillary funds through shared arrangements, should review their current arrangements to consider how the Determination may affect them.
Click here to read TD 2026/3.
Consultation open: minimum tax on discretionary trusts
As part of the Federal Budget in May 2026, the government announced changes to the taxation of discretionary trusts by introducing a 30% minimum tax on distributions from 1 July 2028.
With the aim of making the tax system fairer and more sustainable, the changes have left many individuals and advisers in the not-for-profit and philanthropic space concerned about the impact these changes may have on charitable giving.
Treasury has invited feedback on key aspects of the proposed changes, including:
- expanded rollover relief to support restructuring out of discretionary trusts (available for three years from 1 July 2027)
- treatment of excess franking credits (refund vs carry-forward options)
- collection mechanisms, including PAYG instalments and director liability for corporate trustees.
Importantly, charitable trusts are excluded from the minimum tax. However, discretionary trusts that distribute to income tax-exempt beneficiaries (including charities) will be affected, as these beneficiaries cannot use the non-refundable minimum tax offset. Treasury is seeking feedback on the appropriate treatment of distributions to income tax-exempt entities.
Submissions close 31 July 2026.
Click here to read the consultation paper and submit a response to Treasury.
Lodge your FY 2025-26 NFP self-review return
If your not-for-profit (NFP) with an active ABN is self-assessing as income tax exempt, it’s time to lodge your self-review return. To check if you need to lodge, visit the ATO’s guidance on NFP self-review return reporting requirements.
The annual NFP self-review return is due between 1 July and 31 October, unless your organisation has a substituted accounting period. If you have previous year returns to lodge, you will need to submit them before lodging your 2025–26 return. Late lodgment penalties may apply for overdue returns, so don’t delay getting on top of your obligations.
Click here for more information about self-assessment returns, including step-by-step guidance on setting up access to ATO online services.
Upcoming events
2026 CLAANZ Annual Conference
Gilbert + Tobin is excited to host this year’s CLAANZ Annual Conference next week (Thursday 23 July – Friday 24 July 2026). The theme is Towards Solutions: Pressing Issues in Charity Law.
Charities and Social Sector Partner Darren Fittler will deliver the keynote address on pressing issues in charity law. The program also features panels led by practitioners and industry leaders, covering compliance, AI, taxation, gifts and bequests and mergers and restructures. G+T’s Elizabeth Wighton will join the mergers and acquisitions panel, with Kaushalya Mataraaratchi will join the charitable bequests panel.
Event details
Date: Thursday 23 July – Friday 24 July 2026
Format: In-person (Gilbert + Tobin, Sydney) and online
Cost: Varied depending on membership
Click here to register.
ACNC Governing for Good Forum 2026
The Australian Charities and Not-for-profits Commission’s annual governance event brings together charities, government agencies, sector representatives, and charity law and accounting professionals. The forum aims to strengthen governance across the charity and not-for-profit sector and provides an opportunity to reflect on the sector’s regulatory environment and discuss current challenges.
In-person spots fill quickly, so register early.
Event details
Date: Friday 14 August 2026
Time: 10am to 3pm (Sydney/Melbourne time)
Format: Online and in-person in Melbourne (The Event Centre, Tower 2, Level 5, 747 Collins Square, Docklands)
Cost: Free
Click here to register for the ACNC forum.