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A new self-review reporting obligation introduced by the Australian Taxation Office (ATO) for non-charitable not-for-profit (NFP) organisations takes effect from the 2023-24 income year.
 
If your NFP has an active Australian Business Number (ABN), you must lodge an annual NFP self-review return to self-assess your income tax exemption status under one of eight specified categories.
 
The first self-review return is due by 31 October 2024, or after the end of your reporting year if you have an approved substituted accounting period.
 
Most NFPs will likely confirm their income tax exemption through this self-assessment. However, some may find they are taxable for the first time.
 
The NDA team is here to assist our clients through this process, and we will contact you with further details.

Organisations seeking or already having Deductible Gift Recipient (DGR) status should ensure they have sound accounting processes, as reforms aimed at strengthening DGR administration and oversight come into play. 

In late 2023, the Australian Government’s Productivity Commission released its ‘Future foundations for giving Draft report’ as part of its inquiry into philanthropy. The follow-up report is due in 2024. 

The inquiry into philanthropy has identified DGR status as a key proposed area for reform of philanthropic management, as we highlighted in our January 2024 article.

ACNC recommendations

The Australian Charities and Not-for-profits Commission (ACNC)  addressed non-compliance issues in the Commissioner’s March 2024 column, ‘With Charity Status Comes the Need For Accountability’, with links to a summary of their extensive Reviews of DGR-endorsed Charities.

Administrative issues noted in the overall outcomes of the ACNC reviews included:

• Governing documents that are inadequate or missing
• Failure to meet  the number of Responsible People required according to the charity’s legal structure
• Extra subtype registrations that did not appear to be connected to the charity’s purpose.

The ACNC recommends that charities take actions to avoid administration issues, including:

• Maintain entitlement to registration
• Update your charity’s information as it appears on the Charity Register
• Submit your charity’s Annual Information Statement on time.

ATO recommendations

With ongoing reforms to the NFP sector, the need for good records and transparent accounting processes is increasing. The ATO advises that NFPs prepare their organisations to enhance their transparency and integrity.

From 14 December 2021 Australian government legislation has required all non-government DGRs to register as a charity (with the only exceptions being for ancillary funds or DGRs specifically listed in tax law). Any previously issued extensions of time to meet the new requirements will close by 14 December 2025.

The ATO has revoked the DGR status of organisations that did not register as a charity by the required time. 

Reducing DGR complexity

To reduce DGR complexity, the ATO is continuing  to make the application process for organisations seeking DGR status simpler.  

Since 1 January 2024 the remaining four unique categories of the 52 general DGR categories (as per Division 30 of the Income Tax Assessment Act 1997) have been transferred to the ATO for administration purposes.

The Productivity Commission has also made a point of highlighting the complexity involved in becoming a DGR, and there may be more reforms in the future. Until the process become easier, your organisation may need accounting or legal advice in navigating the system.

Currently there are different online tools that could also help with your understanding of DGR status and compliance.

These include:

• Justice Connect – The DGR tool can help you work out if your organisation is eligible for DGR endorsement and the relevant DGR category.
• ACNC – a self-assessment tool can help DGR-endorsed charities check if they are complying with the ACNC’s key registration requirements.

Charity status is the first step. So if your charity is yet to obtain DGR status, start by applying to the ACNC and indicating on your form that you are seeking DGR status.

How Next Dimension Accounting can help

Next Dimension Accounting provides services to assist with your DGR requirements, including:

• The appropriate issuing of tax receipts
• Acting as your Agent when dealing with the ACNC
• Ensuring your information on the ACNC Charity Register is up to date
• Ensuring your ACNC Annual Information Statement is lodged on time
• Providing the right advice and technology recommendations to keep track of your compliance requirements.

Have your activities moved away from their original mission?

It is also recommended that you do an annual check-up of your DGR status.  

A particular problem with DGR status is that over time, a charity evolves, and its activities can move further away from the original mission and, therefore, may not be aligned with its registered charitable purpose.

Use your annual DGR self-check to ensure that your charity’s activities have remained consistent with the purpose statement you submitted for your DGR endorsement.

Sound accounting and internal processes for DGR will improve your organisation’s integrity and transparency, ensure compliance with ACNC and ATO measures, and support the common goal of increasing public trust and confidence in the charity sector.

Get in touch with our team to find out more.

The Australian Charities and Not-for-profits Commission (ACNC) has brought to light a significant governance issue in the non-profit sector: over-reliance on the organisation’s founders. This is a form of key person dependency where founders wield continual influence to the detriment of governance standards. In this comprehensive examination, we explore the ACNC’s review, its implications, and the risks associated with founders who retain key roles. We also consider how outsourcing crucial accounting functions can fortify an organisation’s governance structure and financial oversight, fostering sustainable operations that remain true to their charitable missions.

‘Key person dependency’ can create governance risks in organisations of any type or size. Reviews of the Australian NFP sector have noted a common pattern where a small charity’s dependence on its founders lacks balance and may pose risks. In these cases, the charity’s original founders still exert their influence on operations but do not uphold current governance standards, leaving the organisation exposed. 

ACNC Commissioner Sue Woodward wrote in the February 2024 Commissioner’s Column, “While founders often bring passion and drive to their charities, an imbalance of power and influence within the governance structure can pose risks. This imbalance, often stemming from excessive trust placed in one individual, can erode a charity’s culture, hinder its operational effectiveness, and jeopardise its sustainability.”

The ACNC Reviews

The ACNC has been undertaking compliance reviews of charities which shine a light on common compliance issues. Funded by the Australian government since 2020–2021, the reviews focus on charities at risk of failing to meet their obligations under ACNC governance standards or external conduct standards. 

Findings are published on the ACNC website and make valuable reading as they highlight issues that many charities struggle with, and offer insights on addressing them proactively through robust policies and procedures. The recent ACNC review ‘Risks to good governance where founders maintain key roles’ has identified potential issues for NFPs and measures that they could take to reduce risks by introducing “robust policies, procedures and processes to ensure good governance”.

Key findings on charities where founders maintain key roles

Instances where Australia’s charity founders maintain a substantial role beyond the charity’s initial phases are not unusual. Founders who continue to provide deep knowledge and a sound guiding hand make an important contribution to NFPs.

However, good governance often suffers when “founder’s syndrome” occurs and the founder maintains a “disproportionate power and influence over a charity and its board”, without formal processes. There is also a lack of guidance on, “what to do in circumstances where people – including founders – are not doing the right thing.”

 The ACNC review noted these specific risks associated with charity founders maintaining key roles:

• the founder appointing friends and family to boards
• charity activities evolving over time and not being aligned to the registered charitable purpose
• poor financial management
• failure to have, or adhere to, decision-making policies and procedures
• lack of objective and independent decision-making
• failure to recognise and manage conflicts of interest and related party transactions 
• remuneration paid to founders in paid positions lacked evidence of objective and independent decision-making
• failure to keep proper records.

There are ways for organisations to address problems related to founder dependency and the review reported that “In some cases, the founders themselves identified risks and took steps…”

How outsourced accounting is particularly suited to NFPs

Risks to good governance where founders maintain key roles related to financial management can be mitigated by stronger accounting procedures.

A charity that is serious about long-term sustainability and growth can draw on the expertise of an experienced outsourced accounting team to break the cycle of over-reliance on a founder.

The outsourced accounts service can provide a range of accounting functions that strengthen the organisation’s governance and processes, up to an on demand CEO service. 

Scenarios raised by the ACNC review

Good accounting can play a critical role in your organisation’s move to greater transparency and avoiding the inherent risks of undue reliance on founders. Outsourced accountants can provide solutions to address the following examples of poor practice raised in the ACNC review.  

• “Poor financial management practices, including a lack of independent and proper financial oversight, especially in the areas of charity income and expenditure.”

• An outsourced accounting team can provide impartial advice on income and expenditure. They also employ independent software that monitors expenditure in real-time and can automatically flag points of concern.

• “Substandard processes for proper tendering /or obtaining independent quotes for services,  automatically awarding contracts to related parties.”

• Related party transactions may be hard to avoid in smaller organisations, but you can take a transparent and proactive approach to managing related party transactions. Risk mitigation policies are essential.

• “Decisions about contracts awarded to, or remuneration paid to, founders or their family members lack transparency”

• “Founders holding paid position not managed by independent persons”

• An outsourced accounts team can provide the independent body that supervises and manages both contracts and remuneration.

• “The founder is responsible for oversight of expenditure and not subject to review from persons who are independent and have relevant skills.”

• In most situations a professional accounting service will have more targeted skills in bookkeeping, payroll, tax and financial reporting than the founder, as well as current knowledge of accounting software, and is ideally placed to conduct an oversight of expenditure and regular reviews. 

Outsourced accountants can contribute the independent, ethical and technically adept services that are essential for the future of NFPs that make a substantial contribution to the community. The input of professional accountants, combined with robust policies and procedures, can ensure your valued founders meet their compliance obligations effectively, and that the organisation is independent enough to endure and thrive.

In February, after enduring years of being politicised, debated and tossed from one side to another, the Stage 3 Tax Cuts ‘football’ was finally grounded. All tax payers will receive a cut in the tax they pay.

The Senate has passed the revised Stage 3 Tax cuts, so Australia’s new tax regime will come into effect from 1 July 2024. 

The legislated tax cuts incorporate recent revisions that are designed to spread benefits to low and middle income earners. 

Government announcements

The government stated in a press release, “Our tax cuts are good for middle Australia, good for women, good for helping with cost-of-living pressures, good for labour supply and good for the economy.”

The Senate also passed the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill 2024. It raises the low income threshold amounts for the Medicare levy and Medicare levy surcharge on individuals, families and individual taxpayers and families eligible for the seniors and pensioners tax offset.

What will the reformed tax schedule look like?

From 1 July 2024, the tax cuts will reduce the amount that everyone who is taxed pays, from low to high: 

The 19% tax rate reduces to 16%

The 32.5% tax rate reduces to 30%

The 37% tax rate will apply at a higher threshold –  $135,000 instead of $120,000.

The 45% tax rate will apply at a higher threshold –  $190,000 instead of $180,000.

For further information see the ATO website.

What general impacts are expected?

The key driver behind the tax cuts revision was the need to provide cost-of-living relief for Australians. The original proposed tax cuts were formulated pre-pandemic and would have seen tax payers on less than $45,000 per year receive no cut. Years later and with the cost-of-living crisis in full swing, revisions were designed so that low and middle income earners received a break. 

Both houses of parliament agreed to pass the revised tax cuts, with the general response being that the tax cuts will have mostly positive consequences. 

On the positive side, low-income workers will have more money in their pockets, and the tax cuts could encourage more workforce participation. The relief of some cost-of-living pressures should flow on to benefit the economy, including small businesses.

On the negative side, there may be a marginal effect on inflation. However, Treasurer Jim Chalmers said that the Reserve Bank Governor indicated that she did not expect the revised tax cuts would “alter the Reserve Bank’s forecasts or expectations for inflation.” In the Treasury advice on the tax cuts it describes the expected impact: “This option is broadly revenue neutral, will not add to inflationary pressures and will support labour supply.”

On the Medicare levy changes, the government press release stated: “This will benefit more than a million Australians, ensuring people on lower incomes continue to pay a reduced levy rate or are exempt from the Medicare levy.”

Potential impact on the charity sector

One of the few negative issues that could affect NFPs is that they may lose some volunteers who re-join the paid workforce because the new tax cuts are favourable for their personal circumstances. 

Otherwise, the overall contribution to cost-of-living relief – through the tax-cuts and Medicare threshold changes – should be beneficial for NFPs that depend on public donations to keep doing their work.

Some key findings on donations in Australia presented recently by Martin Paul, an NFP fundraising and marketing consultant, indicate that charities are increasingly reliant on a dwindling number of the same donors for support. The majority, which includes below-average income earners, have been forced to tighten their belts – four out of five Australians surveyed have adjusted their lifestyles in response to the higher cost of living. While wealthier donors are driving an increase in annual giving, the actual level of online giving has declined over the last year. 

With below average income earners better off after 1 July, the prospects for community donations to NFPs look brighter.

Grant-giving organisations often ask for details about in-kind contributions in project budgets.  Many NFPs struggle to consider the value they will assign to in-kind and are also unsure how to maintain record keeping for acquittal purposes.

Our team has compiled some handy hints to help you develop the perfect budget for your next grant application.

Typical In-kind contributions

Some common in-kind contributions may include:

• Volunteer specialised labour, such as videographer,  IT or legal services
• Free venue hire, such as free office or meeting space
• Free equipment hire, such as marquees or lighting at launch events
• Donated goods or property, such as computers, medical supplies or food
• Free marketing includes newspaper and online advertisements, logo designs or brochure printing.

Where to itemise in-kind contributions

A grant application form usually asks you to itemise the relevant in-kind contributions within your proposed project budget. 

Some applications require the completion of a specific In-kind Contributions Worksheet. For example, a community infrastructure project may ask for minimum matched contributions for the funding categories.

When you draw up a budget, list the in-kind contribution values under both income and expenditure.

Record keeping in your organisation

Written records of the contribution, such as a letter of donation or receipts, may not need to be submitted with the application. However, you should ensure that this evidence is available on request, as your organisation is responsible for keeping records of in-kind support committed or received. 

For accounting purposes, in-kind contribution records for NFPs should follow Australian Accounting Standards Board (AASB) regulations. AASB 1058 requires NFPs to record the value of gifts in accounts, recognising assets at fair value. 

Pertinent records can become a time-saving tool. As part of your organisation’s internal procedures, maintain a list of standard market prices and fees for valuing the types of contributions that often feature in your project events. If you must apply for a grant at short notice, this list will help you formulate a realistic budget more rapidly.

Putting a value on an in-kind contribution

Where the value is not clear, it is the donor’s responsibility to advise the recipient of the donation’s market value.

When developing your grant application for a proposed project, using standard fees for contributions can help you draft the budget. 

Standard fees (example: current guides provided by Victorian government) could start with:

• Volunteer general labour – $20 per hour
• Volunteer specialist labour – $45 per hour
• Donated goods should be calculated at the price you would pay for them (market value).

Note that if you want to include local council in-kind contributions to the project, for example, you must ensure the contribution requests – such as requesting council to contribute the venue hire or rubbish removal – are approved before inclusion in your budget. 

Deductible Gift Recipient (DGR) Status and GST

In-kind contribution donors will typically provide goods or services to the NFP for either no cost, or for some reduced cost. Note that your organisation must be endorsed by the ATO as a Deductible Gift Recipient (DGR) if donors of in-kind contributions are able to obtain a tax deduction. The ATO website has more information on DGR endorsement for NFPs.

The Arts Law Centre of Australia provides useful information about the GST and In-Kind support. It notes that, “Where both parties to the in-kind support are registered for GST, the supply by one party is generally a creditable acquisition by the other, so the GST is cancelled out.”

Case study:  

Your NFP is holding an event which will promote community health and wellbeing, and is applying for a grant to help with costs. 

In your proposed budget for the grant application, the in-kind contribution detail could include:

In-kind Contribution	Income	Expense
Posters promoting launch event • Design work – $75 • Printing – $250	$325	$325
Temporary shade sails hire	$150	$150
Portable PA system hire	$25	$25
General volunteer – staffing for reception desk 6 hours @ $20 per hour	$120	$120
Skilled volunteer – project management 10 hours @ $40 per hour	$400	$400
Skilled labour (setting up and operating PA system)  8 hours @ $40 per hour	$320	$320
Council special event bins and rubbish removal  • 5 bins delivered – $100 • 5 bins emptied – $150 (5 x $30)	$250	$250

There may be variables, for example:

• Check the grant funding guidelines first in case they exclude some types of in-kind contributions. Contact the grant funding body directly if you are still unsure of the eligibility of proposed in-kind contributions. 

Finalising the grant application budget

After drafting the in-kind contributions in your grant application budget, review all items and ensure you can back up their values with realistic quotes, market values or confirmation letters from donors. 

The Next Dimension team can work with you to develop a grant budget that is compliant and considers the most cost-effective way for your project to be shaped, boosting your chances of funding success.

Get in touch with us to find out how.

Community Refugee Sponsorship Australia (CRSA) is a relatively new independent charity with a big agenda, as it was appointed by the federal government to deliver Australia’s ground-breaking ‘Community Refugee Integration and Settlement Pilot’ (CRISP).

Next Dimension has worked with CRSA since the start-up phase, setting up the accounting systems and providing ongoing daily support.

Choosing Next Dimension

Before the CRSA was established in 2021, CEO Lisa Button and her team began looking for an outsourced accounting service.

For the start-up team, the priority was to obtain accounting systems that were robust, and would minimise complexities. As a registered charity with Public Benevolent Institution (PBI) status, CRSA also needed to work with accounting professionals who had a thorough understanding of the rules and regulations governing a PBI’s finances. In addition, their fledgling organisation required cost-effective accounting services. 

Looking into the experience and reputation which Next Dimension Accounting had in the NFP sector and assessing the accounting package offered to them, Next Dimension was the “no-brainer” choice, says Lisa. CRSA engaged Next Dimension to deliver outsourced accounting services.

Stand-up start

“Next Dimension’s outsourced accounting services offered us a system that was already reasonably adaptable to our needs,” says Lisa. “Next Dimension had established ways of working with NFPs using key software and platforms.” 

Integrations and apps such as Xero, Approval Max and Dext were key features in managing workflow and getting the start-up off and running. 

Staff training

“We were very new,” says Lisa, “so Next Dimension assisted in setting up systems for the team from scratch.” 

Next Dimension took on the day-to-day financial management, including bookkeeping, payroll and supplier payments, as well as budgeting and cashflow forecasting for phases of the program. 

Next Dimension introduces technology to clients that is user-friendly and has fully integrated systems so they can train or upskill the client’s staff quickly, resulting in a feeling of assurance with managing any new technology.

Lisa comments, “Next Dimension provided good instructions – we needed minimal staff training, Next Dimension was also there to guide us through on a task-by-task basis.” 

The benefits of outsourced accountants with NFP experience

Choosing an outsourced accounting arrangement provided a range of benefits to an organisation that was modest in size but had a big program to implement across Australia. 

Instead of relying on an inhouse bookkeeper they could access a whole team of qualified accountants with broader capabilities plus specific knowledge of the financial environment of PBIs. The accounting service also stays on top of new government and taxation requirements for NFPs and relevant technology updates, which relieves pressure on the client’s staff.

From the CEO’s perspective these were key benefits, “Being able to plug into established accounting systems supported growth. By choosing a good service we didn’t have to worry about them being up to date. We could also learn how other NFPs dealt with financial issues,” says Lisa.

CRSA benefited from the strategic guidance of Next Dimension and practical connections such as links with auditing firms.

The outsourced arrangement also provided the great quality of flexibility. “As a growing organisation it helps to have an outsourced accounting firm,” says Lisa, “as it gives us more resources when we need them.” An outsourcing arrangement can be adapted to suit both quiet times and busy times.

Confidence in partnership

Confidence is a critical quality that Next Dimension has provided. “Because Next Dimension specialise in NFPs we had confidence that our values aligned”, says Lisa. 

Demonstrating transparency, good ethics and values are the Next Dimension standard.

CRSA meeting challenges and achieving goals

CRSA is busy delivering an innovative approach to supporting refugees with federal government backing, and it has a lot to achieve over the next few years.

One of the challenges is “to get the word out to more and more Australians,” says Lisa. To inform the broadest possible section of the community, CRSA needs to engage people who are not already engaged with refugee issues. Ultimately, these people often rate their involvement in supporting refugees as the most rewarding experience.

CRSA’s outreach to all corners of Australia means reaching out to clubs, businesses, faith groups and schools to engage local citizens and support them as they welcome refugee newcomers into their cities and local communities. 

Lisa notes, “Having robust accounting systems and support means we can focus squarely on doing this.”

Since Next Dimension was founded in 2021 by Brendan Lucas, we’ve been able to expand the company sustainably by ensuring our team and our clients are prepared for change and equipped to grow. In 2023, this focus became especially important.

In our last update for 2023, we have pulled together some highlights from our articles, which reflect the year’s key developments that impacted our clients, with advice on accounting measures that support resilience and growth. 

Rebuilding after the pandemic years

With the new pressure of rising interest rates and without the safety net of pandemic-related government support, 2023 presented some new risks and major shifts for businesses and NFPs. Compliance measures essential for good governance in the NFP sector became tighter, and new federal government regulations further impacted small businesses and NFPs.

We investigated the ATO’s announcement of its plans to disrupt sham NFPs, meaning greater scrutiny of legitimate NFP activities. We also highlighted how to prepare for ATO changes to work-from-home deductions.
In April, we discussed new Related Party Transactions regulations preventing private benefit and conflict of interest and how they relate to Australian charities, NFPs established as a company or public companies. We recommended practical policies for disclosure, safeguarding the organisation’s interest and good communication.

In May, we showed how ongoing budget management is critical. We noted the common pitfalls like relegating budget tracking to the end of the year and highlighted preventive actions to avert budget crises, including frequent budget monitoring, using the right software, expert accounting input, and timely responses to reality with budget adjustments.

Emergency action plans were on the agenda, and in September, we looked at one solid move NFPs could make before inflation pressures escalated – developing an action plan to tackle inflation.

Not all change is negative, so organisations must be ready to make the most of positive change and ensure accounting processes will support future growth. 

In January, we highlighted official workplace giving programs, also known as “payroll giving”, as an increasingly popular tool to help Australia reach its national target for philanthropic giving. 

In 2023, many NFPs experienced a concerning decrease in potential donors and volunteers, as well as cost hikes in delivering services, staff shortages and the cyber risks that affected Australia’s business sector. Nevertheless, in April, we showcased the available tools and strategies for positive growth, namely grants and tenders offered by local, state and federal governments.

In May we reported on government measures to smooth the path of doing business, including the ‘Buy Australia Plan’ that will help businesses compete for tenders, update the AusTender system, and improve SME awareness of federal government contracts.

Importantly, we also highlighted that harnessing the skills of a CFO is one way for NFPs to grow. Based on the outsourced CFO service that Next Dimension provides through our On Demand CFO services.

Next Dimension’s Journey

Next Dimension has followed its advice by focusing on becoming resilient to change and preparing for expansion. 

We have increased the size of the company significantly since we started. We train our team members in the best technology so we can provide a full range of skills and knowledge to our clients. Our team’s collective experience puts us in a strong operating position to meet sudden changes in the future.

Many positive opportunities came our way in 2023, indicating that Next Dimension’s good reputation will continue to grow. Founder and Managing Director Brendan Lucas gave presentations, contributed to media interviews and articles and joined the Approval Max team. In October, he attended the launch and highlighted his involvement with Benefolk, a network of professionals supporting charities and NFPs with professional services.  It was also great to catch up with Community Transport providers at the ILLUMINATE conference.

The Next Dimension team members were delighted when we were named finalists in several categories at the Australian Accounting Awards in Sydney – Boutique Firm of the Year (less than 20 employees), Fastest-Growing Firm of the Year and Start-Up of the Year.

We look forward to an equally positive 2024. We hope you enjoy the festive season, the New Year and summer break. We’ll inform our clients of new developments in early 2024, including issues raised in the Productivity Commission’s Future Foundations for giving Draft report.

The Department of Social Services is currently co-ordinating a call for comment from Australian NFPs and charities to chart a better future for the sector. A Blueprint Expert Reference Group (BERG) has been established to develop the sector-led roadmap.

The Blueprint aims to establish a 10-year vision and priorities for action. It will become a roadmap for government reforms and sector-led initiatives to boost the sector’s capacity to support and reconnect Australian communities. There will also be a Review of Philanthropy to understand trends in philanthropic giving, with The Productivity Commission tasked with delivering an inquiry into philanthropy by May 2024.

In reviewing the document, we can highlight the following key points:

Discussion points for Australian NFPs

To develop a better future plan for NFPs, the issues paper raises general questions about the not-for-profit sector in Australia. It identifies these key areas for discussion:

• Measurement, outcomes and quality of services 
• Policy, advocacy, communications and engagement 
• Philanthropy and volunteering 
• Governance, organisation and legal environment 
• Leadership and staff development 
• Government funding, contracting and tendering 
• Information Technology, communication and marketing 
• Leveraging assets and social finance.

Highlights of the issues paper

The issues paper highlights some of the recurring pain points for NFP management – such as outcome measuring for grant funding, taxation transparency and unlocking the potential of assets – and makes some interesting observations. 

Outcomes based funding 

NFP funding is shifting to prioritise outcomes over projects, but there are financial burdens to the NFP from these outcomes-based funding approaches. 

The paper notes that measuring outcomes means new costs for the NFP in operations and service delivery. “Outcomes measurement requires new skills and organisational systems… New skills and systems needed are not broadly accessible to NFP organisations (Gilchrist 2020) and measurement expectations from funders are often not uniform.” It points to a lack of current models of sector-led coordination that build capacity and reduce costs in outcomes measurement. The collection of new outcomes data, “can create an administrative burden in terms of tracking outcomes and additional training and analysis costs. Recent research finds only 38% of NFP organisations collect any kind of outcomes data.”

Taxation inconsistencies and transparency

NFPs’ regulatory accountabilities sit across multiple levels of government, and this has led to inconsistencies in the sector in terms of accounting standards and taxation, the issues paper notes. 

“Unlike the United States, the United Kingdom and Canada, Australia does not have a bespoke accounting standard for charities, which limits consistency in accounting, reporting and auditing.” Inconsistencies in tax concessions are another feature. “Australia also has a history of discretionary application of concessions such as public benevolent institution status by political leaders.” And only half of Australian charities have Deductible Gift Recipient (DGR) status, which is the main mechanism through which the federal Government incentivises Australian taxpayers to donate. The paper notes, “This means the processes by which concessionary tax status are conferred are not always transparent to NFP organisations or taxpayers.”

Ways to unlock the benefits of assets

The NFP sector is host to considerable and growing material and financial assets, although assets are unevenly held across the sector. The paper asks, “How can NFPs best use their assets?”

Charities reported more than $422 billion in assets in the 2021 ACNC reporting period, an increase of nearly $31 billion from the previous reporting period. “The overall growth of sector assets raises a question of whether and how sector-level resources might be unlocked in support of a more financially resilient and operationally healthy sector.” 

Social impact investing (SII) is gaining attention as a means of leveraging capital across sectors to support social outcomes. “SII investments range from social impact bonds to payment by outcomes contracts, and layered or ‘blended’ financial products, which combine grants, loans and/or investments. A typical characteristic of many SII approaches is cross-sectoral partnership to support effective investment for specified outcomes.” However, the paper notes that many SII products are finance-driven –“not fit for the needs, structures and financial realities of the majority of NFPs and do not overcome some of the reasons why this sector makes relatively limited use of external finance.” Newer SII products are “providing more patient – or long term – capital and broader access to blended and grant finance than early SII products offered.”

Next Dimension Accounting will stay across these issues as they are developed as they ultimately strengthen our ability to work with clients to achieve the best outcomes in the existing or future environment.

How you can contribute

The issues paper contains relevant questions, the NFP Sector Development Blueprint Issues Paper and the NFP Sector Development Blueprint Issues Paper Summary Vision. 
NFP responses are due by 20 December 2023. You can answer their questions for NFPs via the guided questionnaire or by uploading a submission. Your submission will form part of the next phase of work on the NFP Sector Development Blueprint.

New industrial relations reforms in the Secure Jobs, Better Pay bill will impact NFP sectors and businesses.

The government’s new Secure Jobs, Better Pay bill, tabled on 27 October 2022, addresses several key issues affecting Australia’s workforce, including pay secrecy clauses and rolling fixed-term contracts.

Some of the proposed measures would have a significant effect on those organisations accustomed to having multiple staff working for them on a continuous contract basis.

Pay secrecy clauses banned

The bill includes a ban on ‘pay secrecy clauses’ in employment contracts.

Formerly, such clauses actively prevented employees from discussing how much they were paid with colleagues. A flow-on effect of preventing employees from comparing wages and salaries has been that it helped obscured the practice of employers who paid women less for the same job.

While imposing compulsory secrecy clauses in contracts or other written agreements will be prohibited, employees would still have the discretion to choose whether they share their salary information with colleagues.

Any contracts that were agreed to before the ban will be enforceable but only up to the point at which any variation to that contract was agreed upon.

It is hoped that the easier disclosure of salary information might help to reduce the gender pay gap.

Reduction of rolling fixed-term contracts

The new rule is that fixed term contracts cannot be used for more than two years, or more than two consecutive contracts – whichever is shorter.

The proposed amendments would target rolling contracts where the job or position was substantially the same.

Formerly, many organisations would renew fixed term contracts (such as 6 months or 1 year contracts) repeatedly, rather than engaging staff on a permanent basis. The effect of this on the employee would be like being placed on perpetual probation, with hardly any job security.

The amendments would result in changes to an employer’s ability to offer fixed term employment for periods of more than two years. However, it does not apply to casuals and there will be many exceptions that organisations can claim.

The large number of exceptions includes:

• Cases where the contract pays over the high income threshold (currently $162,000), or a pro rata amount for part-time or partial year employees
• Where the work is funded by a government funding scheme of a kind prescribed by regulations and the funding is payable for more than two years, but there is no reasonable prospect that the funding will be renewed beyond that period
• Where the work relates to a governance position that is time-limited by the governing rules of a corporation
• Where the employee is covering for another employee
• Where the contract engages the employee to perform only a distinct and identifiable task involving specialised skills.
• Where a modern award permits the arrangement expressly (such as the awards covering schools and higher education).

SMEs and NFPs that regularly engage staff members on rolling fixed term contracts will be affected, so a review of staffing and hiring practices is recommended. Consult an accountant about the most viable strategy for your organisation. For example, it may be cost effective to make use of indefinite contracts with provision for termination on notice.

Other industrial relations reforms

Some of the other reforms in the industrial relations overhaul include:

• Protection from sexual harassment extended – so that all workers, regardless of occupation, will have access to the same minimum protections
• Flexible working hours negotiations encouraged – so that employees balancing responsibilities outside work can negotiate agreed working hours with employers. Employees can involve the Fair Work Commission if a reasonable request is refused.
• Multiple employer collective bargaining encouraged – so that workers in sectors like childcare, who have a common enterprise but different employers, can negotiate a common pay deal
• Employment advertisements with illegal pay rates banned – to reduce job ads that mislead prospective employees.

There will financial implications for SMEs NFPs and other businesses if any or all the reforms are passed.

Employers and managers should get a handle on the key issues now, including a review of your organisation’s:

• Employment contracts
• Confidentiality agreements
• Pay rates
• Recruitment advertising.

The Industry Relations reforms are continuing through parliament, and we will provide more information about the laws that have been passed.

Talk to our team about your review, and how to steer the most effective financial course for your organisation. Contact Next Dimension Accounting today.

The Australian Government delivered the Federal Budget on 25 October 2022, the second federal budget for the year. In his budget speech the new government’s Treasurer, the Hon Dr Jim Chalmers MP, highlighted that the budget “does three things:

• It provides cost of living relief which is responsible, not reckless – to make life easier for Australians, without adding to inflation.
• It targets investments in a stronger, more resilient, more modern economy.
• And it begins the hard yards of Budget repair.”

Some budget changes that could impact SMEs or NFPs include the following.

For employers of skilled migrants

Skilled migration to address workforce shortages was a focus area of the budget. The government announced an increase in the permanent migration program  intake to 195,000 places in 2022–2023. More than 90 per cent of places will be for skilled migrants and more than 25 per cent of places will be targeted towards regional areas.

Work restrictions on holders of student and secondary training visas will be relaxed until 2023, allowing them to work additional hours in any sector. An extra 500 places will be added to the aged care training pathway for the Pacific Australia Labour Mobility scheme.

For new parents

Australia’s Paid Parental Leave (PPL) Scheme will be extended by two additional weeks per year until the scheme reaches a full 26 weeks by 1 July 2026. The leave entitlement can be shared by two parents (a proportion will be on a “use it or lose it” basis).

Reforms will allow either parent to claim the payment, and both birth parents and non-birth parents to receive it if they meet the eligibility criteria.

Eligibility for Childcare Subsidies (CCS) will be extended to families earning more than $356,756 (but less than $530,000) in household income.

For employers and fleet managers

Taxes on electric vehicles and import tariffs will be reduced from 1 July 2022. For employers, the exempt electric car fringe benefits must be included in an employee’s reportable fringe benefits amount.

Exemptions from FBT import tariffs can apply to battery, hydrogen fuel cell, and plug-in hybrid electric cars. However, the car must first have a retail price below the luxury car tax threshold ($84,916 for fuel efficient vehicles for the 2022–2023 income year and not have been held or used before 1 July 2022.

For NFPs

For NFPs some areas of focus for increased funding include:

• NDIS initiatives such as: fraud detection; an alternative dispute resolution pilot; NDIA staffing; and the NDIS review.

• Funding for fighting domestic violence has been allocated at 1.7 billion over six years.

• First Nations initiatives to receive funding include The Voice referendum, child health and education, and health clinics

• Funding was allocated to expand Headspace and support the mental health of communities in flood-affected NSW.

• Climate initiatives will receive significant funding of $25 billion in the years to 2030.

Key taxation items outside this budget

Other key items related to personal income/business income taxation that are not mentioned in this budget are already scheduled to take place:

• Introduction of Stage 3 tax cuts – from 1 July 2024
  (Incomes between $45,000 and $200,000 would be taxed at a flat rate of 30%)
• Expiration of temporary full expensing rules –  finishing 30
  June 2023
• Expiration of loss carry-back rules – finishing 30 June 2023
• Expiration of low-and-middle-income tax offset (LMITO) – finished on 30 June 2022.

In his speech the Treasurer noted that the budget “recognises that our best defence against uncertainty around the world is responsible economic management here at home.”

If you need to discuss economic management of your business or NFP, an accounting service can provide valuable advice. Contact Next Dimension Accounting.

Internal fraud poses a risk to NFPs and businesses of all sizes. Better accounting practices can help ensure that fraud is detected and your funds are protected.

‘Million Dollar Employee Fraud in Australia’, the seventh major fraud research study since 2008 from Warfield and Associates, looks at cases where employees were convicted of major fraud. The study compiled by the accounting and corporate investigations firm exposes the methods fraudsters used and the damage they caused. It recommends that “Being proactive with regards to fraud control is important for all sized organisations.”

The study findings act as a horrible but very useful warning, and may prompt NFPs and businesses to improve their systems to prevent internal fraud practices – or at least expose them early on.

There is a place for trusted outsourced accountants who can implement the best processes and technology to monitor and deter fraudulent practices within an organisation.

The serious impact of internal fraud

The ramifications of internal fraud can be devastating for NFPs and SMEs, even when the fraudulent practice has been detected and stopped. Quite often, the perpetrator is unable to repay the funds stolen. The Warfield study notes that, “The likelihood of repayment by the perpetrator/s was also diminished by the existence of a severe gambling problem, as most of the fraudulently obtained funds were used to gamble.”

Fraud-based losses can force organisations to downsize, sell assets or even liquidate. Associated impacts include employees retrenched and branches or stores closed. Longer term there can be issues with meeting payments, including extra mortgage costs or servicing the ATO debt for the diverted funds. There may also be difficulty obtaining insurance or an increase in insurance premiums. Uncovering the fraud itself involves additional costs, such as the extra staff time spent documenting the problem, forensic accounting fees and legal fees.

The study indicates that, “Small businesses or not-for-profit organisations may not be able to survive if the amount is large enough to deplete their financial resources.”

Other adverse impacts could be stress on owners and other staff members, plus reduced trust and dysfunctional relationships within the organisation.

The damage that fraud cases inflict on an organisation’s image can also be costly. For large organisations that might otherwise “absorb their frauds with little apparent impact on their operations”, negative publicity is actually a key concern. The study points out that, “The vast majority of the frauds included in this research were publicised by the media.” If it is a small business, that tarnished image may potentially lead to a loss of vital commercial opportunities. For NFPs, “Stakeholders, who provide grants or make donations, may also question their wisdom in choosing that organisation to contribute scarce resources.”

Given the heavy costs associated with internal fraud, outsourced accounting services that detect fraud or protect the organisation can be regarded as a valuable investment.

Protection against internal fraud

Businesses and NFPs can learn from the 102 cases of million-dollar fraud in the Warfield study and implement better ways to operate. Some key lessons that can be taken from the case studies of fraud-affected Australian organisations include:

• Don’t allow one person to count the cash takings, prepare the deposit slip and undertake the physical banking of cash.
• Scrutinise creditors to ensure payments are not being paid to fake creditors.
• Ensure there is segregation of duties in changing credit or bank account details.
• Introduce a reporting trigger to notify customers or management within the financial institution of reversing receipts for payments which puts accounts temporarily into a negative balance.
• Conduct background checking / pre-employment screening processes to identify staff with criminal history.
• Review controls over EFT with an expert who can spot where the systems can be manipulated.
• Train staff to be focused rather than blasé when conducting regular checks and balances.

An outsourced accounting service can help by increasing staff vigilance and teaching them how to spot the signs of fraud.

Making your organisation safer

As we noted in our recent article on payment redirection scams, to combat financial risks – whether they are external scams or inside jobs – your organisation can introduce accounting strategies that segregate duties and add controls.

Talk to us about how our outsourced accounts service can reduce the risk of fraud. From providing accurate and detailed budgets that highlight unusual expenditure to freeing up the CEO to monitor the business, our team can help make your organisation safer.

For more information, contact the Next Dimension team.

The first batch of 2021 Census data has been released, with important findings highlighting a long-term decline in volunteer numbers.

The eighteenth Census of Population and Housing in Australia was taken on 10 August 2021, when we were in the second year of the COVID-19 pandemic.

The first release of Census data encompasses topics such as age structure, household types, education levels, incomes, cultural diversity, disability and health, housing tenure and unpaid work.

Reversals to previous upwards trends are a notable feature of this Census. They include a decline in Australia’s unpaid workforce.

Changes to Australia’s unpaid workforce

Some key statistics on unpaid work between the 2016 and 2021 Census counts include:

• Volunteering rates have decreased from 19.0% in 2016 to 14.1% in 2021, a decline of 26%.
• Those volunteer rates have declined across all age brackets, with the decline most pronounced in the 35–54 age bracket.
• The number of people over 55 looking after children not their own (e.g. grandchildren) has declined. Around one in eight (12.6%) of Baby Boomers are looking after children not their own (e.g. grandchildren)

Lindsay Dawson, Philanthropy Research & Insights Manager at Perpetual Limited, has analysed the Census data on volunteers as part of the Perpetual Limited report, ‘Census 2021: Numbers that matter’[i].

Dawson notes “First we need to remember – and celebrate – how crucial volunteers are in everything from sport to the arts to life-saving and life-altering social services.”  

Covid restrictions have certainly impacted volunteering, and Dawson questions whether the disruption is more than temporary.

Dawson also points out that financial pressures also hurt volunteer engagement. “Financial stress is a factor. According to the Census, the number of mortgages with payments exceeding $5,000 a month increased 60% since 2016. Pressures on the home balance sheet mean more people are working full-time; however, research tells us that women working part-time do a vast amount of volunteering.”

Charities and their volunteer base

For those charities and NFPs that rely on volunteers, the decline of the unpaid workforce will have an ongoing impact.

Reports from Volunteering Australia and ANU Centre for Social Research and Methods show similar patterns to the Census data, finding that “the total number of hours of volunteering is estimated to have fallen by around 293 million hours over a 12-month period since COVID” and suggesting that “voluntary work has been impacted harder by the COVID-19 recession than paid work”.

Data from the Australian Charities and Not-for-profits Commission (ACNC) also corresponds with the Census information. The ACNC Australian Charities Report identified a consistent volunteer decline over several reporting periods. “3.4 million volunteers helped deliver services in the 2020 reporting period. While the total number remains high, it is a decrease of approximately 220,000 on the previous reporting period. This follows a similar decrease in the reporting period before last.”

The many smaller charities that make up the sector are vulnerable, especially as the majority rely solely on volunteers. “More charities operated without paid staff (51%) than with paid staff (49%),” according to the ACNC.

Reviving our unpaid workforce

A year on from the August 2021 Census, cost of living pressures (mortgages, inflation, fuel prices) have only intensified. At the same time, employment opportunities have increased throughout Australia. With these conditions prevailing, many families prioritise paid work over volunteer work.

At this critical point, any organisation that depends on volunteers to function would benefit from a financial review and advice. Strategies to increase organisational resilience in the future include financial restructures to bolster staffing and upgrade technology, adapting initiatives to smaller pools of volunteers and prioritising volunteer drives.

Contact Next Dimension for more information.

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[i] The 2022 report ‘Census 2021: Numbers that matter: A strategic compendium for Australia’s for-purpose leaders, boards and philanthropists ’, produced by Perpetual Limited, data powered by Seer Data & Analytics.

A Next Dimension Accounting survey of Australian businesses and not for profit organisations has confirmed trends towards a major shift in the local employment market.

The survey looked at Australian businesses representing a range of industries and sectors, including private companies and NFP organisations. The majority of respondents were employing entities.

Survey findings are reflective of the wider Australian business environment and highlight issues with understaffing, hiring plans, recruitment problems and projected pay increases.

Understaffing and jobs vacant

Half of the respondents to the Next Dimension survey indicated their business was currently understaffed and a further 20 per cent were unsure regarding staffing levels.

Understaffing is currently a key issue for Australian companies and NFPs, with persistently high Covid case numbers pushing absenteeism to levels that disrupt supply chains and essential services. The survey reflects Australian Bureau of Statistics (ABS) data that shows job vacancies climbed again to 480,000 in May 2022 – more than double the number of vacancies in February 2020, according to the Australian Bureau of Statistics. The spread of the vacancies is also noticeable, with a quarter of businesses reporting having at least one vacancy in May 2022 – more than double the pre-pandemic level (ABS).

Hiring intentions

Most respondents of the Next Dimension survey (60 per cent) indicated they are in the process of hiring more staff, confirming this encouraging trend.  

In a broader sense, in July 2022 labour market insights from the National Skills Commission revealed that “25% of employers expected to increase staffing levels over the next three months.” A report on the recruitment intentions of business leaders from talent solutions provider Robert Half indicates that “More than four in five businesses (82%) are planning to hire permanent employees in 2022, with 44% of Australian employers planning to maintain headcounts and 38% of business leaders planning to expand their workforces by actively adding new positions.” (January 2022)

Hiring difficulties

An overwhelming majority of the Next Dimension survey respondents (80 per cent) agreed that they are currently finding it difficult to recruit more staff. Hiring difficulties that are widely acknowledged in the business and NFP community are also relevant to the surveyed group of employers. With more Australians now in employment and the national unemployment rate dropping to 3.5% (ABS, June 2022 period) the pool of available local workers has shrunk. It has been reduced by shortages of skilled workers from overseas due to border closures during the global pandemic. Australia’s National Skills Commission found that in July 2022, “the recruitment difficulty rate increased by 8 percentage points to reach a record high of 75% of recruiting employers”. 

Imminent pay rises

Survey respondents were asked to look at the next three months and the results were striking. Within 3 months, most of the businesses surveyed (70 per cent) plan to give their staff pay rises.

Real wage increases across different industries have followed the national minimum wage increasing by $40 per week, set by the Fair Work Commission [in effect from 1 July 2022; or from 1 October 2022 for workers in aviation, tourism and hospitality]. Pay rises for workers above the minimum wage are also happening now and the RBA is forecasting “a lift in wages growth from the low rates of recent years as firms compete for staff in the tight labour market.” (RBA Media Release August 2022)

How outsourced accounting services can solve the problem

As a team of experienced outsourced accountants, understanding these pressures and actively shaping our services to address client challenges is a key focus.

The benefits of engaging the Next Dimension team include:

• Rather than relying on one person our clients are supported by a team of professionals
• We implement technology so that businesses and NFPs can make decisions by accessing and monitoring their financial position in real time
• Our costs are fixed for the term of our client’s contract

Get in touch with us to find out more.

There are several changes related to superannuation that apply from 1 July 2022.

One change relates to the super guarantee (SG) rate, which will increase from 10% of an employee’s ordinary time earnings to 10.5% on 1 July 2022.

The ATO advises that the new rate of 10.5% must be used to calculate employee super on or after 1 July, even if some of the work was undertaken before that date.

The removal of the threshold for paying the SG can also impact payroll and accounting systems, as more employees may become eligible for superannuation. From 1 July employees can be eligible for super regardless of how much they earn. The former $450 per month eligibility threshold no longer applies. However, workers under 18 only need to be paid super if they work more than 30 hours in a week.

More detail about changes to superannuation for employees is available from the ATO website. Further changes will be introduced by 2025, when the SG rate is legislated to increase to 12%.

If you have any questions, please get in touch.

Next Dimension Accounting is client and technology focused. We work hand in hand with many charities and not for profit organisations and we are always on the lookout for new methods and tools that support their growth and success.

Online giving has become an entrenched part of donating and NFPs using digital donation tools have seen substantial gains. These are some of the current benefits, trends and implications of digital fundraising options.

The charity sector embraces many forms of giving, from gold coins dropped in a bucket to sophisticated crowdfunding campaigns that raise thousands in minutes.

It is worth exploring the newer electronic forms of donation. Digital donations can reduce your organisation’s admin, plus streamline payments, accounting and tax processes for the donor too. They may also connect your cause with new realms of potential donors. However, also consider the implications for your organisation when you use digital donation tools.

Benefits

Digital donation tools offer a range of benefits, especially to charities operating on a shoestring.

Digital tools automate the donation process. Donors enters their details and the digital tool processes payments and then issues receipts and thank-you letters. This method increases the accuracy of donor information and expedites their receipts efficiently – which is a key concern for many donors. Your office also wins, with less paperwork and the funds transferred and received efficiently. Because automation makes donating easier, it encourages giving on an ongoing, regular basis.

Digital tools accomplish donation admin tasks in a timely way. Because processes are automated you don’t need to wait for someone to be in the office to take phone calls, open the post, or issue and then mail receipts. This is a big advantage towards the end of the financial year when donors want quick receipting for tax purposes.

Digital tools utilise common devices, such as mobile phones, that donors prefer to use for their daily transactions like shopping and paying bills. This makes it simpler for the public donor to act on an impulse to give.

For your accounting purposes, reporting is easier and quicker as the digital tools work from accurate data supplied by the donor and can generate informative reports automatically in your required format. Presenting information to the board becomes easier with the reports that are generated.

The integrations that come with fundraising tools are also worth reviewing. Useful integrations such as PayPal, Facebook or Mailchimp can help with admin and marketing. Integrations like Google Analytics, for example, can make it easier for you to analyse data and interpret giving patterns.

Once your organisation is active online – through tools or third-party platforms – you extend your NFP’s potential reach to the global online audience and can communicate your cause far more widely.

Remember though to consider the financial costs in terms of fees and pricing.

Digital tools and third-party platforms now trending

While many digital tools and third-party platforms are available, we have briefly examined a few that are popular with NFPs:

Shout

• Australian owned	•  QR codes
•  Plugin website integration	•  Online auction capabilities

Shout is an Australian business that offers: tools to fundraise for the web or app; hand-held terminals to accept cards and payments; easy plug-ins for website integration; SMS keyword options for donors, which are useful for large events; QR codes directing donors to your fundraising page with a scan from their mobile phone; and an online auction platform for charities to host silent or open auctions.

Donorbox

•  Overseas platform	•  Code for website embeds
•  Website pop-ups	•  Multiple currencies and languages

Donorbox is a platform that provides a smart donation form for NFPs that embeds directly into your website or as a pop-up. The fast checkout process makes online payments smooth and stress free. The platform offers great functionality with only 1 click to set up a recurring donation. By supporting more than 20 popular currencies  and 11 different languages this platform helps your NFP acquire a global reach. Marketing your campaign is also easier with pop-up donation forms, a donor wall and a goal meter to register fundraising progress – the meter can be within your form design or embedded separately. Crowdfunding campaign pages are also quick to set up and easy to personalise to encourage donors.

My Cause

•  Australian platform	•  No platform fee on donation forms, fundraising and campaigns
•  Provides fundraising tools, including event websites	•  Peer-to-peer fundraising options

My Cause is an Australian business that operates an online crowdfunding and fundraising platform. For Australian charities it provides free fundraising. Donation forms can be tailor-made with your organisation’s branding and colours. Options include SMS giving. Donor contributions are all receipted and the funds are sent directly to the charity. The campaign reach can be extended to family and friends. Event websites offer integrations with registrations, fundraising and merchandise, as well as phone, email and ticketing support to fundraisers and donors.

GoFundMe

•  Overseas platform	•  Expert advice
•  Mobile app to improve donor and organiser experience	•  Fraud protection with donor protection guarantee

GoFundMe is a well-known overseas based business, enabling millions of users to choose a charity and launch a fundraiser for them. It has provided fast and safe fundraising options for eight years. As an experienced market leader in the fundraising space, GoFundMe is able to offer expert customer service and advice around the clock. Its services are trusted by institutions around the world and backed by a donor protection guarantee. Its tools enable funds to be raised quickly, which allows communities to be supported as soon as possible when disasters strike.

RallyUp

•  Overseas platform	•  Caters for all-virtual event or ‘hybrid’ event – virtual and in-person attendance
•  Flexible tools for virtual fundraising events	•  Fundraising activities include silent auctions, raffles and trivia contests

RallyUp is an overseas business embracing new technology to provide interactive online fundraisers. It provides a platform for fundraising activities such as silent auctions, raffles, trivia contests and paddle raises. The tools enable you to manage the whole process of virtual fundraising, including the key event and donor contributions, as well as recurring giving.

Incorporating digital donations in your processes

To incorporate digital fundraising tools in your accounts procedures, keep up to date with advice from the Australian Charities and Not-for-profits Commission (ACNC), such as their crowdfunding guide, and act on these tips:

• Calculate the real costs, such as platform fees or percentage-based plans before you sign up
• If you are a deductible gift recipient (DGR), meet your ATO requirements, for example with the issuing of receipts
• Ensure your collection, storage and use of donor data complies with relevant privacy laws.
• Ensure your Australian charity complies with the different state and territory fundraising legislation.
• Feature your online fundraising facility prominently on the homepage of your website.
• Remember that donations are voluntary and however high-tech your tools are, you still need to communicate your story and explain the worth of your cause.

Recent changes to Australian charity and NFP remuneration reporting requirements will apply to the 2022 Annual Information Statement reporting period.

ACNC Commissioner Dr Gary Johns highlighted the new disclosure rules regarding the remuneration of ‘key management personnel’ in a recent column.

These rules apply to medium and large registered charities and NFPs in Australia that submit a General Purpose Financial Statement. More details of the key management personnel remuneration parameters are here, along with useful case studies.

From 1 July 2023 the ‘related party transactions’ of charities will be more prominently disclosed in the Annual Information Statement itself. 

Which staff does it apply to?

The remuneration disclosure will apply to the NFP’s key management personnel, such as senior staff, management and other responsible people like board members, trustees or committee members, where applicable.

If the NFP engages key management personnel from a separate management entity, such as an accounting service provider, they would report the cost of that key management personnel – calculated by the hour or as a percentage of the single fee, as relevant.

An NFP’s ‘related party’ may include a board member, or a close member of a board member’s family. According to Treasury “The ACNC will provide guidance to assist charities in identifying related parties.”

Why is there a need to disclose remuneration of key management personnel?

Dr Johns points out that although it is right for a charity to pay personnel such as senior staff, and NFP staff members can be highly skilled, experienced and bear responsibility for complex operations, their renumeration should be transparent. “Being transparent about this is crucial in reassuring donors, supporters and the public that a charity is well run and uses its funds responsibly,” says Dr Johns.

Dr Johns adds that improved accountability can actually benefit the NFPs, as it “helps uphold public trust and confidence in the sector and its people”.

What does ‘remuneration’ cover?

The remuneration disclosure will encompass the wages, salaries, annual leave and bonuses of an NFP’s senior staff. It would include their paid long-service leave or a post-employment pension or termination payment.

It also encompasses non-financial items, such as:

• Free or subsidised goods
• Free or subsidised services
• Packaged fringe benefits such as the use of a car
• Medical care fringe benefit
• Housing fringe benefit.

Planning for the new rules

For more background on the issue, the ACNC provides targeted information on its website, such as guides to the renumeration of charity board members. According to the ACNC guides, “Charities should have a clear policy that outlines the manner in which remuneration is determined and the process for its approval.”

If the renumeration issue has raised some questions about your NFP organisation’s financial arrangements for paying responsible persons, discuss them with the Next Dimension team.

There are several things that set accountants apart. While their experience, communication skills, areas of expertise and focus play a role, professional qualifications and ongoing professional development are also key.

Several of our team members are Chartered Accountants. But what does that mean?

Encouraged by a new advertising campaign by Chartered Accountants Australia & New Zealand (CA ANZ) this article focuses on the value of working with a chartered accountant.

What is a CA?

A Chartered Accountant or CA is a recognised accounts professional who has completed a university degree plus the CA program of training and mentoring in chartered accounting.

In Australia CAs must produce references to be eligible for full membership of the professional institute, Chartered Accountants Australia and New Zealand (CA ANZ).

As well as being armed with all the skills of professional accountants, CAs have additional training in auditing and taxation skills.

CA credentials have long been recognised internationally. The professional accounting body dates back to 1854 with the establishment of the Institute of Chartered Accountants of Scotland. Australia’s Institute of Chartered Accountants (ICAAA) was formed in 1928 by Royal Charter and later amalgamated with the institute of New Zealand (NZICA) to become CA ANZ.

In Australia, members comply with the rigorous code of conduct for professional accountants set out by CA ANZ.

Ongoing education

CA ANZ runs the Chartered Accounting Program in Australia and is the only professional accounting body in Australia registered as a higher education provider. CA ANZ is a member of the Global Accounting Alliance (GAA).

Successful completion leads to a Graduate Diploma of Chartered Accounting (GradDipCA): an AQF accredited postgraduate qualification that is internationally recognised.

A practising CA must maintain his or her qualifications by completing 120 hours of Continuing Professional Development (CPD) every three years.

Choose a CA for surety and ease

The benefits of the choosing a CA are no secret to Australian businesses and NFPs. By engaging a Chartered Accountant you can place your organisation in good hands.  

In the search phase of finding either an employee or contractor, choosing a Chartered Accountant has distinct advantages. A simple search of the CA ANZA database can confirm if the candidate is a registered Chartered Accountant. Only Chartered Accountants holding a Certificate of Public Practice and/or who are an approved CA Specialist are on the database. 

With the valued ‘CA’ credential, the minimum standard of a candidate is readily apparent. They will have a recognised accounting or finance degree, CA training and knowledge that is internationally recognised, plus participate in ongoing professional development.

Organisations without the capacity to employ a CA can find a neat solution by engaging outsourced accounting services. Look for an accounting services company that has CAs on staff. The CA can act in different capacities, as a virtual CFO for instance, or providing advice on audit and taxation matters.

Work with a CA to transform your organisation

A CA will bring a big picture approach to solving business issues, based on their education in many aspects of accounting.

It’s one of the reasons the Next Dimension team fields four CAs, in addition to our Founder and Director who is also a CA. Our CA ‘heavyweight line-up’ means that we can provide clients with the full complement of advice and that our clients’ organisations benefit from the depth and range of a CA’s knowledge.

To find out more, get in touch today.

The Australian Government’s Budget 2022–2023 was handed down on 29 March 2022. Following two years of the pandemic, the budget is planning towards a stronger future for Australia.

In the budget the Government highlights that it will deliver its plan for a stronger future through: “Supporting small businesses to adopt digital technology and train and upskill employees with new tax incentives.”

As well as impacting small to medium businesses, parts of the budget address general cost of living pressures and taxpayer obligations. Some measures will assist the charity and NFP sector and rebuilding communities.

Next Dimension will be working with clients on the detail of changes as more information becomes available. Following are some of the key features of the budget for SMEs and NFPs.

Small Business

Government procurement to facilitate SME contractor opportunities

Proposed changes would require Government departments to split up major projects so that smaller contractors have a better chance at competing for contracts. In addition, the Department of Defence will be undertaking limited tenders with SMEs for procurements up to $500,000 from 1 July 2022

Tax breaks for small businesses that train their staff

Those SMEs with an aggregated annual turnover of less than $50 million that continue to train their workers in new skills will get a break. They will be able to deduct an extra 20 per cent of expenditure on external training courses. The effect will be a $120 tax break for every $100 spent on training. Conditions include that the training must be delivered by training entities registered in Australia.

Technology boost for small business investing in digital tools

The SMEs with an aggregated annual turnover of less than $50 million can get a 20 per cent additional tax deduction on business expenses and depreciating assets that support their adoption of digital workplace items such as portable payment devices, cyber security systems, or cloud subscriptions. The deductions will be capped at $100,000 of expenditure per year.

GDP uplift rate set at two per cent

The GDP uplift factor for PAYG and GST instalments will be set at two per cent for the 2022–23 tax year, subject to the legislation passing. This will result in lower instalments for 2.3 million small to medium businesses and sole traders. It compares favourably to the 10 per cent that would have applied under statutory formula.

Support for wellbeing of small business owners

The Beyond Blue program to provide free, accessible and tailored mental health support to small business owners will continue, with funding for the New Access for Small Business Owners of $4.6 million over two years. The Financial Counselling Australia program to provide financial counselling to small businesses facing financial issues will also continue with funding for  the Small Business Debt Helpline funded by $2.1 million over two years.

Fair Work funding

There will be funding of $5.6 million over four years for the Fair Work Commission to establish a dedicated unit to support small businesses, including unfair dismissals and general protections disputes.

Small business financial capability

There will be funding of $8.0 million for the Australian Small Business and Family Enterprise Ombudsman to work with service providers to enhance small business financial capability.

Other measures impacting taxpayers

Taxpayer compliance streamlined with automated reporting

The Government will leverage new technology and update systems to automate tax reporting requirements. This will allow companies to calculate their Pay-As-You-Go (PAYG) instalments based on current financial performance, extracted from business accounting software, with some tax adjustments. This means companies may be able to receive an automatic refund of PAYG instalments where financial performance declines.

There is also a proposal for:  

• Single Touch Payroll (STP) data to be shared with State and Territory Governments on an ongoing basis to enable the pre-filling of payroll tax returns.
• Businesses required to lodge with the Australian Taxation Office (ATO) a taxable payments annual report (TPAR) to be able to opt into automatic reporting supported by new software.

NFPs

The government announced a $2.1 billion Budget package of targeted measures “to further support Australian women and girls as part of our plan for a stronger future”. $1.3 billion is allocated to improve outcomes for women’s safety which includes  investing in community-led prevention programs.

The government also announced $26.9 million investment into allergy prevention and management, which will lead to the creation of two organisations, the National Allergy Council and National Allergy Centre of Excellence (NACE). These organisations will work together to deliver world-leading initiatives and research to improve consumer safety and prevent anaphylaxis deaths.

Flood-affected NFPs, along with primary producers, small businesses and councils, will be covered in an estimated $2.0 billion in support measures for the February/March 2022 floods in New South Wales and Queensland.

With the substantial additional investment provided in last year’s Budget to meet the increasing costs of the National Disability Insurance Scheme (NDIS), there are limited measures within this Budget specific to Australians with a disability. Additional funding is likely to follow completion of the Disability Royal Commission in 2023.

Integration across the aged, disability and veterans’ care sectors

There is a strong focus on integrating the aged care, disability and veterans’ care sectors, with a total of $17.7 million allocated to streamline workforce regulation and promote efficiencies across the three sectors, including:

• $10.8 million to develop a Cross-Agency Taskforce on Regulatory Alignment to implement the next stage of regulatory reforms across the aged, disability and veterans’ care sectors.
• $6.9 million to support the development of co-operatives and other collaborative business models across the aged, disability and veterans’ care sectors.

Conclusion

The Government describes the budget as a plan that “Delivers more jobs as we push the unemployment rate below 4 per cent, supports small business, expands and modernises Australia’s sovereign manufacturing capability, secures our supply chains and invests more in infrastructure, skills and the digital economy.”