Brendan Lucas

For many community organisations and not-for-profits, valuing in-kind contributions can be a confusing and time-consuming process. But these contributions can be the difference between a good grant application and a great one!

The NDA team has developed a brand-new In-Kind Contribution Cheat Sheet, a practical and easy-to-follow resource designed to help you confidently assign value to non-cash support.

Whether you’re applying for government funding, philanthropic support, or local sponsorship, accurately reflecting the real value of community contributions is essential. 

With extensive expertise in grant budget development and acquittal, the NDA team created this tool to make your grant process smoother, more strategic, and ultimately, more successful.

Download the free In-Kind Contribution Cheat Sheet here.

A guide for not-for-profits on reimbursements, allowances, and honorariums.

Volunteers are the lifeblood of many Australian not-for-profits (NFPs). They give their time, skills and energy without expecting a pay cheque, but that doesn’t mean they can’t be reimbursed or recognised in other ways.

Whether it’s a board member travelling for meetings, a speaker at a charity event, or a long-term volunteer who has spent money on printing and supplies, there are times when paying volunteers makes sense. But the remuneration of volunteers must be done transparently, fairly, and in compliance with the Australian Taxation Office (ATO) and Australian Charities and Not-for-profits Commission (ACNC) regulations.

This guide explains the three main categories of volunteer payments – reimbursements, allowances, and honorariums/gifts – and offers tips on governance, reporting, and avoiding reputational risk.

Reimbursements: repaying volunteers for out-of-pocket costs

Reimbursements are the most common method of volunteer payments. When it is agreed that a volunteer purchases something for your organisation, such as stationery, parking for a board meeting, or petrol to attend a relevant event, repaying that cost is usually appropriate and non-taxable.

Genuine reimbursements, which don’t exceed the amount spent, are not taxable income for the volunteer and don’t need to be reported.

Best Practice:

• Ask volunteers to submit invoices/receipts as part of your reimbursement approval process.
• Consider using solutions such as ApprovalMax, Weel or DEXT to manage digital receipt uploads and payment tracking.
• Have an agreed policy regarding acceptable volunteer reimbursements.
• Be consistent in offering the same reimbursements to volunteers in similar roles.

Allowances: Pre-agreed flat rate payments

Unlike reimbursements, allowances are fixed payments made to volunteers to cover anticipated costs. They don’t require receipts, and the volunteer can keep any unspent amount.

The ATO defines allowances as:

“A definite, predetermined amount to cover an estimated expense… The recipient is not required to repay any excess if they do not spend it all.”

Allowances are generally considered assessable income for the recipient. If your volunteers receive allowances regularly, or they rely on them, they may need to declare this on their tax return

Examples of allowances include:

• A weekend volunteer receives a $50 flat rate for food and transport.
• A board member is paid a sitting fee for attending scheduled meetings.

These are sometimes referred to by charities as ex gratia payments, especially when provided in goodwill rather than as compensation.

ATO clarification on income treatment from a volunteer’s perspective includes:
“Generally, receipts that are earned, expected, relied upon and have an element of periodicity, recurrence or regularity are treated as assessable income of a volunteer.”

While allowances may be easier administratively, they can expose volunteers to unexpected income tax implications.

Governance Tips:

• Develop a formal Volunteer Payments Policy outlining when allowances apply and how they are approved.
• Consider whether the public or donors might misunderstand the purpose of the payment and be ready to explain it.

Honorariums and Gifts: Saying Thank You the Right Way

Honorariums are discretionary payments made without obligation, often to recognise exceptional voluntary service or thank someone for a professional service offered without charge.

While these kinds of volunteer payments are a generous gesture, honorariums and gifts must be handled with care.

According to the ACNC:

“It generally expects that any gifts or honorariums a charity may offer are of a token nature… Excessive gifts or honorariums could indicate that the charity’s financial affairs are being irresponsibly managed.”

Examples:

• A $200 one-off payment to a speaker who presented at a conference.
• A commemorative watch for a retiring volunteer.
• A bottle of wine for a community member who donated their time to run a workshop.

If the services provided are professional (e.g. legal, accounting, training), the ATO may classify the honorarium as assessable income, particularly if the work resembles paid employment.

Additionally, in some circumstances, non-cash gifts may give rise to fringe benefits tax (FBT) implications for the NFP.

Volunteer Management Tips:

• Be aware of situations where the volunteer’s work resembles paid employment.
• Volunteers who receive an honorarium for professional services may also be eligible to claim deductions for related expenses, provided the income is declared.

Governance and Legal Considerations

When offering financial recognition to volunteers, NFPs must consider more than just tax treatment. Be aware of the following governance and legal issues when making decisions about volunteer payments.

• Conflict of Interest and Related Party Issues:
  Payments to board members (or their relatives) may create a conflict of interest and fall under Governance Standard 5, which requires charities to act in the best interests of the organisation and manage conflicts transparently.
• Fundraising Laws and Trust Restrictions:
  In some states, fundraising laws restrict what board members (known as “Responsible People”) can be paid. If your charity is a trust, payments to trustees are only allowed if the trust deed specifically permits it.
• Financial Reporting Obligations:
  Under AASB 124, charities must disclose significant related party transactions, such as honorariums to board members, unless the payments are both immaterial and on arm’s length terms. Even small charities preparing special purpose reports are now required to disclose the nature and amount of related party transactions in their financial statements and Annual Information Statement. This shift aims to improve transparency and accountability across all tiers of the sector.

ACNC reporting: charity size and exemptions

The ACNC sets different reporting standards for medium and large organisations, depending on their size and any exemptions that apply; for example:

• Medium: Financial reporting required; payments should be included in reports.
• Large: Full financial reporting and remuneration disclosures required.
• Religious charities: May be exempt, but check your specific status on the ACNC website.

Where payments are made to board members or their close associates, the ACNC now requires all registered charities to disclose related party transactions in their Annual Information Statement (AIS). It also recommends having a clear policy in place to manage these relationships and ensure decisions are made in the best interests of the charity.

A best practice approach to volunteer remuneration:

• Develop a Volunteer Payments Policy that covers your approval process, relevant thresholds, and the handling of receipts.
• Maintain transparency with stakeholders and donors
• Manage expectations about the nature of the payment
• Seek professional advice for complex arrangements.

FAQs

Can a volunteer be reimbursed without paying tax?
Yes. If the reimbursement matches actual costs and isn’t more than the amount spent, it is not assessable income.

Is an allowance the same as a reimbursement?
No. A reimbursement repays actual expenses. An allowance is a pre-agreed flat payment and is generally taxable.

Are honorariums considered income?
They can be. If the honorarium is tied to a service with professional value or regularity, it may be assessable income for the volunteer.

Do all charities need to report volunteer payments?
Reporting depends on your charity size. Medium and large charities must report payments; small ones may not be required to report.

Our team works with a wide variety of NFPs, and we can provide professional advice about volunteer remuneration. Book a meeting today to learn more.

Aged care providers now have an additional four months to prepare for the rollout of the Australian Government’s Support at Home reforms, which will now commence on 1 November 2025.

While the extension offers some welcome breathing room, it is essential that providers use this time wisely. Now is the ideal moment to assess readiness, strengthen internal systems, and ensure your organisation is well-positioned to implement these significant sector-wide reforms.

To support providers in understanding the transition, the government has released a comprehensive manual titled “Support at Home Program Manual – A Guide for Registered Providers”. This manual has been revised to reflect ongoing developments. The latest Version, 3.0, was released in June 2025, offering the most up-to-date and practical information to support implementation.

The manual provides clear guidance on how registered providers can meet the rules, procedures, and obligations under the Support at Home program.

For NFP organisations preparing their accounting and compliance frameworks ahead of the new arrangements, the key areas of interest include:

• Review of the service list to ensure alignment with eligible services under Support at Home
• Service pricing and caps, including how providers can set prices within government defined limits
• Revised payment cycles and their implications for cash flow and reporting
• Grandfathering provisions for existing HCP clients and participant contributions
• Allocation and responsibilities of Care management under the new model.

Reviewing your Support at Home service list offering

The Support at Home program will replace the existing Home Care Packages (HCP) and Short-Term Restorative Care (STRC) programs. The new program has a defined service list outlining the funded services available to eligible participants.

Recommendation:

The government has issued a document outlining the services that participants can access under the Support at Home program. It’s recommended that your organisation review their service list offering in comparison to the Support at Home Service List to gain a full understanding of in-scope and out-of-scope activities.

Setting prices for your aged care services

Fair and transparent pricing is a core principle of the new Support at Home program. The initiative is designed to introduce capped pricing, ensuring greater consistency across service providers and preventing any inflated costs. At this stage, capped pricing will not be introduced until 1 July 2026.

Leading up to commencement, providers are required to communicate to existing participants and publish their prices for the services they deliver on the My Aged Care Service and Support Portal.

When setting prices, providers must ensure that the price reflects the full amount of revenue they will receive for delivering the service.

Unlike the current Home Care Packages (HCP) or Short-Term Restorative Care (STRC) programs, where separate charges for administration, travel, or care management could be applied, the Support at Home (SaH) program requires that all such costs be included within the unit price of the service itself.

This means providers will need to carefully calculate and consolidate:

• Service delivery costs
• Administration and operational overheads
• Travel and logistics expenses
• Any relevant care coordination components.

A clear, well-structured pricing model will be essential to ensure compliance, financial sustainability, and transparency under the new framework.

Recommendation:

Although the government has not yet finalised the pricing caps for Support at Home services, providers should not wait to begin planning. It is strongly recommended that your organisation fully cost its regular services now to understand the minimum viable pricing required for sustainable service delivery.

By identifying your true costs, including direct care, overheads, administration, and compliance-related expenses, you’ll be in a stronger position to:

• Align future pricing with government-set caps
• Avoid under-pricing services that may become financially unviable
• Justify your pricing strategy internally and externally
• Respond quickly when the official pricing framework is released.

Taking a proactive approach now ensures your organisation is financially prepared and operationally responsive when the final price limits are announced.

Payment Cycles and Provider Cash Flow

Under the new system, there are new rules for claiming. Providers must only claim for services on their service list that have been approved in the participant’s Notice of Decision and support plan at the agreed price. Payments are made on an arrears basis, and providers can determine the frequency of their claims, whether that is daily, weekly, fortnightly, monthly or quarterly. Claims can also be submitted individually or in bulk. Once the provider’s claim has been validated for payment, Services Australia will:

• Deduct the government funded amount and participant contribution amount from the participant’s budget
• Pay the provider the government funded amount.

Note: It is the provider’s responsibility to collect the participant’s contribution.

Successfully validated claims submitted online to Services Australia have a 7-day processing time between approval and payment being made. For ongoing services, providers have 60 days after the last day of the quarter to submit their claims. For short-term services, providers have 60 days after the completion of the episode to submit their claim for each participant.

Recommendation:

Providers should review several areas to ensure that their financial operations are aligned with the changes.

It is important to review and align your financial system or CRM to ensure it can:

• Track service delivery against approved participant plans
• Separate government funding and participant contributions
• Handle multiple claiming frequencies and formats
• Issue participant statements in the approved format, including all required information.*

You will also need to develop a cashflow management strategy which includes:

• Recognising any pressures on cash reserves or liquidity to account for arrears-based payments
• Adjusting your billing cycle, if required, to match the 7-day turnaround time for Service Australia payments.

Streamline your claiming processes to ensure that:

• Staff are trained on what a provider must submit for a successful claim. More guidance is found in the document titled ‘Support at Home User Guide – submitting claims to the Aged Care Provider Portal’. This can be found on the department’s website.
• Internal deadlines for submitting claims are set well within the 60-day window.
• You establish checks for your data before submitting to avoid any claim rejections.

Track your claim submissions and reconciliation by building a dashboard or report that will monitor:

• Claims submitted vs claim status
• Funds received vs what was expected
• Participant contributions outstanding.

*More information on participant statements can be found in the Support at Home Manual, and a Support at Home monthly statement template can be found on the department’s website.

The ‘Grandfathered’ provision on participant contributions & Unspent HCP Funds

A ‘no worse off’ principle applies to grandfathered Home Care Package care recipients. This applies to recipients who, on or before 12 September 2024, were either receiving a Home Care Package on the National Priority System or assessed as eligible for a package. The ‘no worse off’ principle applies to participant financial contributions.

The premise is that participants will make the same contributions or lower contributions than they would under the Home Care Package system, despite any reassessment into a higher Support at Home classification.

In practical terms for HCP recipients, this means that:

• Recipients who did not have to pay an income-tested fee – will continue not to have to contribute to Support at Home
• Recipients who paid an income tested fee – will pay the same amount or less under Support at Home as they did under Home Care Packages.

Transitioned HCP care recipients who have unspent funds at the commencement of Support at Home retain these funds for use under Support at Home. The prioritisation of claiming varies depending on the type of service being delivered.

When claiming regular or short-term services (e.g. Care services, restorative or end-of-life support), the following order will apply:

• The participant’s active Support at Home Budget
• Provider-held HCP Commonwealth unspent funds – funds that are transitioned with the participant and held by the provider
• HCP Commonwealth unspent funds in the Home Care Account – funds that are transitioned with the participant, administered, and held by Services Australia.

For Assistive Technology and Home Modifications (AT-HM), the claiming order is:

• Provider-held HCP Commonwealth unspent funds
• HCP Commonwealth unspent funds in the Home Care Account
• AT-HM funding tiers – these will be the pre-allocated funding levels depending on participant needs and eligibility.

Recommendation:

For any grandfathered HCP care participants, Services Australia will notify them and their provider of the contribution amount payable. As the provider, you will need to invoice the participant for their contribution through your CRM or accounting system.

Providers need to monitor the amount of HCP unspent funds transitioned to the participant to avoid overspending in the participant’s budget. Also, when Provider-held funds are used for service delivery, it is essential to ensure that the funds have already been paid to the provider.

Care Management Allocation to Providers

Another key difference between the Support at Home program and the programs it replaces is the approach to Care Management – both in terms of its scope and how it is funded.

Care Management refers to the ongoing coordination, planning, and monitoring of aged care services tailored to the needs, preferences, and goals of the participant. It ensures services are delivered safely, effectively, and in line with the participant’s support plan.

Under the Support at Home program, care management will be delivered by a designated staff member known as a care partner. These care management activities will be funded through the provider’s Care Management Account.

For participants receiving ongoing services, 10% of their quarterly support budget will be automatically allocated to care management. These contributions will be pooled with care management funds from other participants to form the provider’s collective Care Management Account, from which eligible care management activities can be drawn.

Activities that can be claimed by providers from their care management account are:

• Care planning – involves working with participants, their families, and support networks to identify individual needs, goals, and preferences and to develop tailored care plans, service agreements, and budgets.
• Service planning and management – involves the ongoing coordination and management of funded aged care services to ensure they are comprehensive, culturally appropriate and responsive to the participant’s needs.

Monitoring, review, and evaluation involve the ongoing assessment of the participant’s needs, goals, and care outcomes through regular communication, case conferencing, and evaluation.

Support and education involve empowering participants to make informed decisions, promoting wellness and reablement, and helping them navigate the aged care and health systems.

Recommendation:

Providers must ensure that their care partners understand the scope of care management. We recommend that you clearly distinguish between service delivery activities that form part of routine service delivery and those that are claimable under care management activities from the Care Management Account.

The transition to the Support at Home program brings significant changes that require careful planning and preparation by providers. If your organisation needs support in assessing the financial implications of the new program, Next Dimension Accounting is here to help. Our team has played a key role in guiding clients through the reform process and preparing them for what lies ahead.

For further information about Support at Home, get in touch with us today.

Karen Wong, Operations Manager at Allergy & Anaphylaxis Australia (A&AA), has overseen significant growth in the organisation’s operations. With expert guidance from Next Dimension Accounting, A&AA transitioned to more structured, cost-effective financial systems that have enabled stability and scalability during a critical phase of development.

A&AA is a registered charity founded in 1993. It is a national patient support organisation dedicated to helping individuals and carers alike in managing allergic diseases. Historically focused on food allergies, it now covers the full spectrum of allergic disease such as insect allergy, allergic rhinitis (hay fever), atopic dermatitis, allergic asthma and other potentially life-threatening conditions. It created Food Allergy Week, held in May each year, to raise awareness in Australia.

Headquartered in Castle Hill, Sydney, the A&AA team has tripled in size in recent years, with revenue increasing to $1.8 million per annum. As many of A&AA’s roles require clinical expertise, its volunteer base remains intentionally small, focused on governance and administrative support.

Partnering for Stability and Scalability

The partnership with Brendan Lucas, Founder & Managing Director at Next Dimension Accounting (NDA), began when he was recommended to review A&AA’s payroll systems. With their in-house bookkeeper nearing retirement, the organisation explored outsourcing options that could support growth while maintaining financial oversight.

Next Dimension stepped in with a customised solution, combining Brendan’s strategic leadership with the capabilities of a broader NDA accounting team. The result was a smooth, well-managed transition from internal systems.

“It is actually costing less than our spend on an on-staff person doing payroll and bookkeeping ,” Karen explains. “The Next Dimension team are very good at producing management reports that meet compliance standards, and all functions are done well.”

Today, Next Dimension manages all payroll and accounts processing and delivers monthly reporting.  A&AA and NDA hold regular review meetings. As a grants based organisation, A&AA deals with complex acquittals at times, and Next Dimension assists when acquittals require extra accounting knowledge. “They are a key part in helping us be a financially sound organisation,” says Karen.

In addition to operational support, Karen consults directly with senior NDA team members Tina and Vivian for higher-level accounting matters. “We get a lot more out of the outsourced team with their higher-level analysis and commentary,” she says.

Efficient Systems and Proactive Problem-Solving

One of the most valuable aspects of the relationship has been Next Dimension’s ability to streamline A&AA’s accounting processes and embed consistent routines. “It’s now very stable and consistent, a nice routine where they are really functioning like an internal accounts team, just on the end of a video call,” says Karen.

She especially appreciates the team’s problem-solving approach and efficient use of technology. “The Next Dimension team can think through problems for us and implement something once, rather than us wasting time with multiple attempts to work it out ourselves.”

For example, the team introduced stronger processes around financial security and system access. “They helped us implement security measures in Xero and moved us to digital debit cards, which has improved security and minimised disruptions,” says Karen, “and the team is always up to date on things happening in the accounting space.”

From Firefighting to Forward Planning

Karen reflects that in the past, the organisation was often stuck in reactive mode. “One of the challenges while we were very small was that we were always firefighting rather than improving the business,” she recalls. “Now, we can take advantage of the expertise provided by NDA and this adds focus to our strategic thinking and actions.”

That Next Dimension expertise has helped A&AA elevate its reporting, budgeting and forecasting practices. 

With input from the NDA team, what was once a basic budget is now a multi-year financial planning model. “We’ve refined our budgets each year. We now have a three-year forecast, which allows us to see how we can fund new developments and keeps us focused on our financial sustainability,” notes Karen.

Digital Strategy and New Projects

Operations strengthened by good accounting practices have supported A&AA’s recent strategic expansion.  In response to growing public demand, A&AA adopted a digital-first strategy, with a major investment in a new website and upgraded IT infrastructure. The strategy also included more sophisticated analysis of how users interact with digital resources to better shape service delivery.

“It was a very big undertaking and investment,” says Karen, “but we are now starting to see good results, including 30% growth in website traffic since launching our new website in October 2024. The new site gives the public quick access to information and enables one-on-one support when needed.”

The organisation is also advancing a number of targeted digital projects:

• Eating Out with Allergies: A national awareness campaign about staying safe when dining out, and understanding rights and responsibilities related to food allergies.
• Eczema Connect: A clinical trial conducted in partnership with Perth Children’s Hospital. The trial will assess the impact of expert advice prior to a specialist appointment.
• The Shared Care for Allergy Project: Delivered in collaboration with the National Allergy Council to improve access to specialist care and shared care models. Funding is provided by the Australian Government, Department of Health.

“With allergies, you are living with them every day. It’s about getting optimal care,” says Karen. “We provide information in bite-size pieces. We’ve found that when people understand more, they get much more out of a specialist appointment. Navigating the health system is challenging and understanding who may be involved with your care, and why, helps people to find health care professionals that can support their diagnosis and treatment.”

A Foundation for Future Growth

Karen emphasises that the partnership with Next Dimension has been instrumental in helping A&AA balance operational stability with ambitious long-term goals. “They’ve really become the financial engine behind our operations,” she says. “Their team brings qualified expertise, timely reporting, and deep financial insight that we wouldn’t otherwise have access to.”

The organisation is committed to raising public and professional awareness about allergic disease, which impact an estimated 6 million Australians “Our vision is to improve quality of life for all Australians with allergic disease.  We do this through advocacy, support, education and guidance. Central to this is a commitment to  empower people to help them with their everyday life and to connect with credible and evidence-based information and health professionals,” says Karen. As A&AA continues to expand its impact and reach, financial strategy remains central to its success.

“We have very audacious goals,” Karen acknowledges. “But with the knowledge, reporting, and financial nous of the Next Dimension team, we can build a strong foundation to achieve them.”

In the lead-up to the next federal election, the 2025 Federal Budget positions itself as a cautious but considered offering for Australian businesses and not-for-profits (NFPs). Delivered in an environment of inflationary pressure and global uncertainty, the Budget favours targeted relief over sweeping structural reform

A Budget of Targeted Relief, Not Systemic Reform

For businesses and NFPs operating in consumer-facing sectors, the continuation of income tax cuts and energy rebates may translate into marginal improvements in discretionary spending and donor activity. The starting rate of income tax will reduce from 16% to 14% by 2027–28, a move designed to ease cost pressures on households. However, given the relatively small size of the annual tax saving for most income brackets, the flow-on benefits for community contributions and service demand are likely to be modest.

Small businesses and NFPs will also benefit from extended energy rebates, with around one million eligible enterprises receiving up to $150 directly off their power bills through to the end of 2025. In addition, the Energy Efficiency Grants for Small and Medium Enterprises program will provide $56.7 million in grants (up to $25,000 per business) to support upgrades such as replacing inefficient appliances and improving heating systems.

Workforce Reform

A notable reform in this year’s Budget is the proposed ban on non-compete clauses for employees earning under $175,000, part of a broader effort to enhance wage growth and labour market flexibility. While this shift may benefit workers seeking new opportunities, it may pose real challenges for employers — particularly small businesses and not-for-profits that already struggle to compete on salary alone.

NFPs already have limited capacity to compete on salary, as we’ve highlighted previously, so the removal of non-compete protections for small to medium businesses and not-for-profits may intensify talent churn.

No Instant Asset Write-Off

One omission for small-to-medium enterprises and community organisations is the failure to extend or legislate the $20,000 instant asset write-off. As it stands, the threshold is set to revert to $1,000 from 1 July 2025, significantly limiting the ability of smaller operators to invest in capital improvements such as IT systems, machinery, or office upgrades.

Health, Aged Care and Frontline Service Delivery

The Budget includes several headline investments in healthcare and aged care including:

• $2.5 billion to support wage increases for aged care workers,
• $8.4 billion to expand bulk billing, aiming to deliver 18 million extra GP visits annually by 2030, and
• $1.8 billion in top-up funding for state-based public hospitals.

However, without proportional increases in operational or infrastructure funding, the risk is that providers may be unable to scale service delivery in line with policy ambition.

ATO Compliance

The government is making a substantial investment in tax compliance and enforcement. With $999 million allocated over four years, the Australian Taxation Office (ATO) will expand its compliance footprint through a suite of programs aimed at improving integrity and increasing revenue without raising taxes. Funding will be allocated across the Tax Avoidance Taskforce, Shadow Economy Program, Personal Income Tax Compliance Program and the Tax Integrity Program.

Regulation, Fair Trading, and Sector Integrity

Beyond tax compliance, the Budget includes several measures aimed at strengthening the regulatory environment including $12 million to improve oversight of the Franchising Code of Conduct, enhance detection of phoenixing activity (especially in construction), and extend protections against unfair trading practices and $3 million for ASIC to target illegal phoenixing practices.

Final Reflection

The 2025 Federal Budget delivers measured, election-conscious support for businesses and not-for-profits, with selective relief measures and a focus on health and workforce reform.  

What’s clear is that both businesses and NFPs will need to navigate the coming year with increased scrutiny, tighter margins, and growing demand.

2025 is shaping up to be a pivotal year for businesses and not-for-profits (NFPs) in Australia, particularly as it coincides with a federal election. Key legislative changes and proposed policies from both the Government and the Opposition will impact a wide range of sectors.

Staying informed and proactive is critical to navigating these shifts successfully. Below are ten significant issues we have identified for the months ahead.

1. Expanded Mental Health Support for Small Businesses

The Government has allocated $10.8 million over 18 months to programs like NewAccess for Small Business Owners and the Small Business Debt Helpline. These free and confidential services will provide tailored support for financial and mental health challenges faced by business owners.

Action/Impact:
Take full advantage of these programs while funding is available.

2. Governance and Ethical Use of AI

AI technologies will continue revolutionising our work over the coming year and present significant ethical and governance risks. The Australian Government is considering mandatory regulations for high-risk AI applications. Resources like the AICD Director’s Guide to AI Governance offer practical strategies to manage these challenges.

Action/Impact:
Boards should prioritise implementing governance frameworks to ensure the responsible use of AI. Consider forming committees to assess risks and opportunities associated with AI adoption.

3. Cybersecurity and Supply Chain Resilience

As supply chain attacks rise, all organisations are advised to focus on compliance and security.

Action/Impact:
Strengthen third-party relationships and invest in technologies that bolster supply chain security. Regularly review vendor risk management strategies. Engage the services of an IT cybersecurity professional to get the best advice and understand where you may be vulnerable and how to mitigate your risks.

4. Changes to Fringe Benefits Tax (FBT) for PHEVs

Starting April 2025, plug-in hybrid electric vehicles (PHEVs) will no longer qualify for FBT exemptions as low-emission vehicles. Businesses and NFPs using PHEVs must act quickly to secure binding agreements before this deadline to maintain exemptions.

Action/Impact:
Review vehicle contracts immediately to lock in exemptions. Evaluate alternative sustainable fleet options.

5. New Aged Care Act Commencing 1 July 2025

The new Aged Care Act introduces a rights-based framework emphasising simpler access, greater choice, and stronger protections for aged care recipients.

Action/Impact:
If your organisation operates in the aged care sector, review policies and procedures to ensure compliance with the Act’s requirements. Consider additional training for staff to align with the new framework. The Federal Government has also recently announced The Support at Home and new Aged Care Act Transition Support 2024-25 Grant Opportunity (GO7421) designed to provide $10,000 for upgrading IT systems.

6. Policy Shifts in Green Jobs and Energy Transition

The Government will continue to expand support for green jobs across the energy sector, offering funding to employers engaged in tasks like solar panel installation. This aligns with Australia’s sustainability goals, including plans to build 1.2 million homes over five years.

Action/Impact:
Explore funding opportunities for green projects and assess workforce needs to align with energy transition goals.

7. Apprenticeship Incentives to Address Workforce Gaps

Prime Minister recently announced an election policy of a $10,000 cash bonus available for apprentices in residential construction and clean energy sectors starting 1 July 2025. This initiative aims to address critical workforce shortages while promoting sustainability.

Action/Impact:
This policy will depend on whether the Government is returned post-election.

8. Instant Asset Write-Off Threshold

The Coalition has proposed increasing the Instant Asset Write-Off Threshold from $20,000 to $30,000, though it is unclear whether the Government will match this policy. This change could provide small businesses additional opportunities to invest in capital assets.

Action/Impact:
Small business owners should monitor developments closely. Consider deferring major purchases until there is more clarity regarding the potential threshold increase post Federal election.

9. Wage Theft Penalties

From January 2025, the criminalisation of wage theft introduces penalties of up to 10 years in prison and fines exceeding $7.8 million for companies. Small businesses with fewer than 15 employees will not face prosecution if they adhere to a yet-to-be-finalized wage compliance code.

Action/Impact:
Ensure payroll systems are accurate and compliant. Monitor developments on the wage compliance code and align practices accordingly.  Software such as Deputy and Employment Hero can help systemise your payroll particularly around award interpretation. Our team work closely with clients to support their compliance in this area.

10. Tax Deductions for Dining and Entertainment

The Coalition has proposed a tax deduction of up to $20,000 for dining and entertainment expenses for small businesses with turnover under $10 million. Alcohol expenses are excluded.

Action/Impact:
If implemented, this policy could boost spending in hospitality and enhance staff/client engagement opportunities.

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Preparing for What’s Ahead

To thrive in 2025, businesses and NFPs must take a proactive approach. Preparation is key, from leveraging potential tax breaks to addressing digital transformation and workforce gaps. Begin assessing how these changes might impact your organisation and develop strategic plans to stay ahead of the curve.

Engaging with industry experts like Next Dimension Accounting and communicating with stakeholders will ensure you remain agile in a dynamic operating environment.

The past twelve months have tested and rewarded NFPs and businesses in equal measure. As we head towards 2025, it’s worth taking a moment to assess where we stand and consider how we can maximise the opportunities ahead.

Interest rates

The cash rate held steady at 4.35% throughout 2024, and while everyone loves to guess when rate cuts might finally arrive, experts say we may have to wait until mid-2025 to see any changes, though some recent reports suggest it could be February 2025.

Award wage rate increase impacts

Midway through the year, many workers saw a boost, with the award wage rate climbing to 3.75%, adding another layer of complexity for businesses and NFPs already navigating tight margins.

Throughout 2024, high interest rates and wage increases have caused many clients to look at refinance options, tightening their expenditures and reviewing their business plans. 

Boards focusing on managing risk

At the board level, many companies and NFP organisations concentrated on managing risks, revising budgets, and exploring new strategies to navigate challenges. In some cases, survival tactics became necessary, with several businesses and NFPs opting for amalgamations as a means to stay afloat.

Instant asset write-off and the Federal Election

Legislation to extend the $20,000 instant asset write-off for another year was left on the cutting room floor as Parliament rushed to finalise bills before Parliament rose for 2024. This leaves the future of this important tax incentive uncertain. With the federal election on the horizon, both parties may focus on this issue when campaigning.

Superannuation reforms stalled

The revised super rules targeting balances over $3 million are still to be released, adding to uncertainty for taxpayers. It means there could be tweaks before passing in parliament, making it harder to assess their future impact.  Again, this issue may be impacted by the upcoming federal election.

Staff challenges

With Australia’s unemployment rate holding steady at around 4%, the challenge of attracting and retaining high-quality staff is expected to persist, continuing a trend seen over the past few years.

Support at Home Reforms

The Government’s Support at Home program will be rolled out in some form from 2025 onwards, although it is still unclear how those critical providers, including transport, will be funded. The program will bring together current in-home aged care providers and is intended to improve access to services, equipment and home modifications. It will be interesting to watch how this impacts NFPs and businesses that cater to the sector – we are working closely with a number of clients on this.

Expect greater ATO and ACNC scrutiny

From the ATO’s point of view, increased audit activity will be seen in the new year. The ATO’s revenue collections have been under immense pressure in the past few years, given the impact of the pandemic on budgets. 

Greater scrutiny and focus on data matching between SuperStream and single-touch payroll reporting will be used to identify employers delaying superannuation payments. Employers who fail to meet Super Guarantee Contribution deadlines could face interest charges and potential penalties.

The ACNC will continue to take a more active role in the NFP sector, with the public demanding more oversight of charitable donations. However, stricter regulations and compliance requirements should improve the outcomes of organisations that qualify for charity status. 

Strategies for stability and growth

As well as tightening budgets, forward-looking organisations have responded to financial challenges with plans to improve revenue streams.

Boards have been ensuring the financial security of their organisations by returning to their investment strategies. Those businesses – and some NFPs – sitting on excess funds have seen their money work productively for them. Higher interest is boosting deposits, cash rates are up and most global stockmarkets are performing well. 

As business plans are reviewed, we’re seeing most clients look at new ways to stand out. Although it is a very competitive environment, with everyone looking for ways to make their dollar go further, there are strategies to get ahead.

Your game plan

If you haven’t already, plan for your year ahead based on more of the same conditions for at least the first half of 2025, and sharpen your familiar game tactics:

• When dealing with suppliers or making major purchases, make sure you negotiate to get the best deal.
• Continue to find ways to operate more effectively and economically, especially by utilising technology to automate tasks.
• Review each segment of your business and analyse how its returns could be improved in the best way.
• Re-engage with your key customers and staff – they will be critical to your success.

For your game plan to maximise positive developments and achieve sustainable growth, don’t forget these two essentials: 

• Bring out the best in your people, whether they are paid staff or volunteers
• Enhance the benefits for your customers or clients.

Wishing all our clients and broader network a Merry Christmas and a Happy New Year. As we look ahead to 2025, we encourage you to connect with us to explore strategies to help you seize opportunities and tackle challenges confidently in the year to come. Reach out to our team today to start that conversation.

A quick Google search about Australia in 1986 reveals that the average capital city median house price was just over $80,000, people were still renting VHS tapes for movie nights, and salary-sacrificing options for Not-For-Profits were introduced as a fantastic tool for attracting top talent.

But here we are, nearly 40 years later. The cost of living has skyrocketed, wages have increased, and house prices have reached unprecedented levels. Despite these seismic shifts, the salary-sacrificing caps for the not-for-profit (NFP) sector have stayed more or less the same.

What once gave NFPs a competitive edge is outdated and ineffective, eroded by inflation and wage growth.

In other words, salary-sacrificing advantages have been whittled down to become relics of a bygone era. Without government action, they will continue to hinder the sector’s true potential.

The Evolution (and Inertia) of NFP benefits

The introduction of the Fringe Benefits Tax (FBT) system in 1986 was a game-changer for the not-for-profit (NFP) sector. By offering concessional treatment and the ability to ‘salary package’, the government gave NFPs a powerful recruitment tool, allowing them to attract and retain skilled talent through tax-exempt salary packages. This move helped level the playing field between charities and the commercial sector, making it easier for NFPs to compete for top talent.

In 1994 new tweaks to the FBT calculation method threatened to disrupt the sector’s newfound advantage. However, the introduction of rebates for income-tax-exempt employers ensured they wouldn’t bear the brunt of these changes, allowing NFPs to continue benefiting from the system.

Caps were introduced from 1 April 2001 to limit the concessional tax treatment provided. The caps were set at $30,000 per employee for Public Benevolent Institutions (PBIs) and health promotion charities and $17,000 per employee for hospitals and ambulance services. It’s important to note that these caps are ‘grossed-up’ values, meaning that the actual ‘cash’ value that someone can salary package is actually $15,900 for PBIs and $9,010 for hospitals.

The system was further tightened on 1 July 2005, and charities needed to be endorsed to access the FBT concessions.

In 2016, a Meals cap of $5,000 grossed-up ($2,650 cash) was a major change, as previously, it was uncapped. A cap on Meals, entertainment, Holiday Accommodation and Venue Hire benefits remains in place.

While the government has occasionally flirted with reforming NFP sector arrangements, meaningful action has yet to be taken. In 2012, Treasury released a discussion paper from the NFP Sector Tax Concession Working Group, exploring various reform options – but that went nowhere.

Despite discussions, little changed in the decades that followed. As living costs soared, the benefits intended to support the NFP sector began to erode, leaving charities at a distinct disadvantage when competing with businesses for skilled workers.

Diminishing benefits

Statistics from the ABS and Fair Work Commission reveal that over the years, there has been no indexation, and the percentage of wages covered by the FBT concessions has diminished.

YEAR	MINIMUM WAGE EARNER (NFP)	COVERAGE – MINIMUM WAGE	AVERAGE WAGE EARNER	COVERAGE – AVERAGE WAGE	MAX SALARY (FBT EXEMPT NFP)	ENTERTAINMENT CAP (FBT EXEMPT NFP)
2001	21,496	34,745	74%	34,745	46%	uncapped
2013	32,354	77,932	49%	77,932	20%	uncapped
2023	45,905	98,202	40%	98,202	15%	2,650

Observers of the NFP sector have noted that rising costs of living have, in effect, diminished the benefits of concessions. Tony Vitacca, from Go Salary, an external Salary Sacrifice provider, says:

“Although salary packaging remains an integral part of an NFP’s remuneration and benefits offering, it has remained somewhat of an afterthought when it comes to indexation. The rapidly rising costs of living have meant that the tax savings derived from salary packaging are not what they used to be.”

Where once salary sacrificing arrangements could potentially equalise the two sectors when competing to recruit the same talent, that is no longer the case. It’s just not enough and charities are struggling to retain and attract talent.

The government needs to acknowledge that charities play a critical role in society by protecting our most vulnerable members.

What will need to change?

NFP salary sacrificing benefits should be brought up to pre-2024 levels. Ideally this would include the adjustment of salary sacrifice benefits for indexation of the last 20 years. However, since budget challenges are a given, the very least the government could provide is a commitment for the cap to be indexed moving forward, among many other tax regimes.

There have also been calls to change the workings of the charity sector, with an emphasis on making charitable organisations more like companies so they can operate effectively and have greater impact on society.

The popular book Uncharitable by Dan Palotta, based on his 2013 TED Talk and recently made into a documentary film, argued for a change in how charities are perceived. This would involve a shift from the public asking how much of their donation goes into overheads, rather than the cause, to the public understanding that the overhead costs of a charitable organisation provide essential investment in impact.

Tony Vitacca comments, “We see first-hand the important and varied roles that NFPs play in the community. In a competitive employment environment, it’s crucial for employers in the social sector to have access to a fairer playing field when it comes to remuneration.”

If the government truly recognises the critical role NFPs play in protecting Australia’s most vulnerable, then it’s time for salary sacrificing to get a much-needed update. Bringing the system into the modern age, with indexed caps and refreshed benefits, could once again make NFPs competitive with the commercial sector.

NFPs shouldn’t be left relying on outdated tools from a bygone era. It’s time to swap the retro for relevant, ensuring that these organisations can thrive and continue their vital work in today’s challenging economic landscape.

About Brendan Lucas Brendan founded Next Dimension Accounting (NDA), an outsourced accounting company, in 2021, building on his experience with a top-tier accounting firm. Focused on supporting NFPs and charities, NDA has successfully grown to become one of Australia’s leading outsourced accounting companies focused on the NFP sector.

In recent years, not-for-profit (NFP) organisations have begun adopting strategies previously favoured by small-to medium-sized businesses, including outsourced accounting services. This shift reflects a broader trend toward efficiency and flexibility, allowing NFPs to focus more on their core missions while benefiting from specialised financial expertise.

However, the decision to transition to outsourced accounting is multifaceted, requiring careful consideration of strategic, operational and stakeholder impacts. This white paper explores the advantages and potential challenges associated with this shift, focusing particularly on the implications for Australian-based NFPs.

As the philanthropic landscape evolves, Not-for-Profit (NFP) organisations are facing heightened scrutiny and rising expectations. The Productivity Commission’s report Future Foundations for Giving highlights that NFPs are subject to “new scrutiny because of changing community expectations and standards.”

In response to these pressures, many NFPs are rethinking how they operate, particularly when it comes to financial sustainability. The idea that NFPs should remain entirely distinct from business practices is outdated and increasingly unviable in today’s complex and competitive environment.

NFPs, like businesses, must think strategically to ensure their long-term success and resilience. This shift in mindset doesn’t undermine an organisation’s core values or mission; instead, it enhances its ability to serve communities and meet growing needs.

NFPs Can and Should Think Like Businesses

A persistent misconception is that NFPs must operate with a charitable mindset that is removed from the financial and operational strategies used by businesses. 

The Australian Charities and Not-for-profits Commission (ACNC) has recently directly addressed these misconceptions, encouraging NFPs to think strategically about their financial practices. The ACNC clarifies that:

• A charity can spend money on administration.
• A charity can make a surplus (profit).
• A charity can keep money in reserve.
• A charity can invest its funds.
• A charity can undertake commercial activities.

These facts underscore that, like businesses, NFPs need the flexibility to manage their funds, plan for future growth, and invest in their own infrastructure. By adopting practices such as building reserves, making smart investments, and creating diversified income streams through commercial activities, NFPs strengthen their financial resilience. This business-like approach is not only permissible but crucial for long-term sustainability.

The Influence of Uncharitable

This evolving perspective is reflected in the documentary Uncharitable, inspired by Dan Pallotta’s groundbreaking TED Talk, which challenges conventional ideas about nonprofit work. Pallotta argues that to enable NFPs to drive change truly, we must remove the outdated constraints placed on them. 

The Role of Business Practices in NFP Resilience

Incorporating business principles into the operation of NFPs does not detract from their core mission; instead, it bolsters their ability to deliver on that mission. By adopting a more business-like approach, NFPs can:

• Plan for Sustainability: Surplus funds should not be seen as a sign of greed but as an opportunity for growth. Building reserves allows NFPs to weather economic downturns, invest in new initiatives, and scale their services in response to rising demand.
• Invest in Infrastructure: Much like businesses, NFPs need to invest in infrastructure, technology, staff development, or operational improvements. These investments can lead to greater efficiency and long-term cost savings, ensuring more funds are directed toward the mission.
• Diversify Income Streams: NFPs can use business-like strategies to diversify revenue, reducing reliance on volatile donations and grants, whether through social enterprises or other entrepreneurial efforts.
• Drive Innovation: By adopting the risk-taking mindset often found in business, NFPs can innovate how they deliver services, engage with communities, and tackle complex social issues. This flexibility allows them to adapt to changing environments and seize new opportunities.

The Role of Accountants and Financial Expertise

Just as businesses rely on financial professionals to ensure their growth and stability, NFPs can benefit from the expertise of accountants and CFOs. Financial professionals provide critical insights that empower NFPs to adopt business-like strategies while maintaining compliance with regulations and ethical standards. 

As NFPs face increasing scrutiny and rising expectations, adopting business principles is no longer an option—it’s a necessity for future resilience. 

Our team works with clients to ensure NFP and charities are fit for purpose, now and in the future. Contact us to find out more.

Australia’s Productivity Commission has released its Future Foundation for Giving Inquiry Report and made recommendations on how to increase philanthropic giving.

The Commission commenced its review in 2023 and published a draft report later that year. It then conducted public hearings and incorporated public sector submissions and consultations on the draft, releasing the final Inquiry Report on 18 July 2024. 

In the final report, there were nine significant findings and 19 recommendations for reforms for the government to adopt. The recommendations cover a wide range of issues across the philanthropic sector, with four key areas of focus:

• An improved deductible gift recipient (DGR) system
• Better access to philanthropic networks for Aboriginal and Torres Strait Islander people
• An enhanced regulatory framework for charities and ancillary funds
• Improved public information on charities and donations.

As we noted in our January article on the draft report, any reform of philanthropic giving and DRG rules might necessitate changes in accounting processes, so Australian NFP organisations should seek professional advice regarding potential impacts, particularly with reforms related to DGR status and corporate giving.

Public contributions to the report

Many charitable organisations took up the invitation to respond to the draft report. Feedback from Inquiry participants took the form of 1611 public submissions, 1593 brief comments, more than 120 consultations, 10 roundtables plus 6 days of public hearings held in February 2024. 

The final report captures the views of those who made submissions and comments, including more than 50 interest groups. Some comments of interest included:

• On defining whether or a not certain charities are PBIs, Justice Connect (sub. 269, p. 4) commented: “PBI requirements ‘can only be fully understood by reference to 90 years’ worth of case law and a lengthy ACNC Commissioner’s Interpretation Statement’.”

• On the DGR, the Community Council for Australia commented: “We would say very strongly, as we have said for over a decade, the DGR system is an absolute mess, it’s dysfunctional, it’s counterproductive, it favours the wealthy over the poor, the politically connected and powerful over the disadvantaged, and it’s not understood, it’s not well administered, and it doesn’t, I think, provide the kind of benefit that it could was it more effectively established and eligibility was clearer, and the processes around DGR were more transparent and equitable. And I think the measures that you’ve put forward are certainly a big step in that direction. So we applaud the report, we applaud what we see is the key recommendation.” (trans., p. 286) 

Report highlights

Some central findings and recommendations highlighted in the 468 page final report were:

• The deductible gift recipient (DGR) system is not fit for purpose and should be reformed – Reform is needed to simplify the DGR system and direct support to where there is likely to be the greatest net benefits to the community from subsidised philanthropy. If adopted, more charities overall would be able to access tax-deductible donations. 

• Explicitly consider the effects on volunteers when designing policies and programs – To support volunteering, Australian, state, territory and local governments should consider how changes to policies and programs would affect volunteers.

• Reforms are needed to enhance the regulatory framework for charities and to support high levels of public trust and confidence in charities now and into the future – Establishing a National Charity Regulators Forum comprised of Australian, state and territory charity regulators “would formalise the regulatory architecture to embed coordination and cooperation”.

• The framework must keep pace with societal trends and developments – These include changes in transaction technologies and new ways of giving. 

• The Australian Government should create more value for the public from the data collected about charities and giving, including by publishing aggregate information on corporate giving and by requiring listed companies to be more transparent to stakeholders about their giving. 

DGR status

Changes needed to Deductible Gift Recipient (DGR) status, including proposed reforms to simplify access to the DGR, are a significant development. Predictably DGR issues attracted many comments in the report. It is estimated that with DGR simplification reforms, the number of charities gaining DGR status would increase from about 25,000 to 30,00–40,000 charities, and some participants raised concerns about the increased competition. For example, “the Sydney Children’s Hospitals Foundation (sub. DR457, p. 4) was concerned that a proliferation of small charities with overlapping objectives would increase inefficiency and lessen the ‘impact of charitable donations’.” 

The report confirms that DGR status continues to be a key point of reform, so, as we noted in our recent article, charities should prepare themselves for ongoing DGR requirements. 

Volunteering

Finding 3.2 highlights that while volunteering remains prevalent in Australia, the formal volunteering rate has declined. In 2022, around 6 million Australians volunteered for organisations, but nearly double that number engaged in informal volunteering—helping individuals outside their families and beyond the structure of formal organisations or groups.

The report observes that broader social, economic, and demographic shifts have influenced volunteering participation. Increases in real wages and workforce participation over recent decades have raised the opportunity cost of volunteering. People are staying in the workforce longer, and there has been a rise in female labour force participation.

The report suggests policy options to enhance volunteering, such as simplifying the process through behavioural economic strategies. This might involve technology that more efficiently connects potential volunteers with opportunities.

Regarding government tax incentives for volunteering, the Commission believes that targeted government grants addressing specific needs would likely offer greater net benefits to the community than tax incentives, provided they are well-targeted and evaluated.

Recommendation 7.7 advises considering the impact on volunteers when designing policies and programs, including addressing any negative effects on volunteer participation and exploring volunteer opportunities within policy or program development.

Recommendation 9.4 calls for the Australian Bureau of Statistics (ABS) to enhance the relevance and utility of public information sources related to volunteering.

National regulation of charities

Recommendation 7.5 proposes the creation of a National Charity Regulators Forum, which would include regulators from Australian states and territories. This Forum would represent a move towards a “joint stewardship” model for charity regulation. Its terms of reference would be defined in an intergovernmental agreement.

The Forum’s objectives would be to clarify roles and responsibilities, enhance collaboration and information sharing, advance reforms in charity law and regulation, manage regulatory risks, and coordinate responses to significant misconduct.

The report also suggests reforms to strengthen the Australian Charities and Not-for-Profits Commission (ACNC). It emphasises that these reforms are more likely to succeed if the ACNC is equipped and resourced to take a more assertive regulatory stance while continuing to support charities through education and guidance.

Keeping pace with changes in giving

The Commission recognises that the “philanthropic and volunteering landscape” is continually evolving. Donors now have a wider range of choices and are influenced by new transaction technologies in their giving habits. Innovations like QR codes and peer-to-peer giving platforms are emerging as popular methods.

The report raises concerns about whether the current system is adequately prepared to address the challenges posed by these new online giving trends. It highlights that the rise of online giving platforms could introduce new regulatory risks, which must be proactively monitored to sustain trust and confidence.

Reporting and publishing evaluations

The Commission addressed the issue of reporting and publishing evaluations, noting that while there are benefits to governments publishing effectiveness evaluations, these do not outweigh the associated costs and risks. Significant risks include the potential for biasing donors towards certain types of interventions that are easier to measure and towards charities that can afford evaluations. Additionally, there is a risk that such information could lead charities to alter their activities to appear more successful based on specific metrics rather than focusing on the needs of their beneficiaries (Finding 9.1).

The Commission also highlighted voluntary initiatives to support not-for-profit (NFP) organisations in measuring and reporting outcomes and impact, such as Chartered Accountants Australia and New Zealand’s ‘Measuring Social Impact for Better Reporting’ guidance (CA ANZ 2023). These initiatives offer valuable resources to enhance performance reporting without imposing the costs of mandatory reporting requirements on all organisations.

The Inquiry Report and the Overview can be accessed here. 

If you would like to discuss any of the issues raised in this article, get in touch with our team today.

Kathryn Akre, Chief Executive Officer at Bathurst Community Transport Group, which covers a vast area in regional NSW, has appreciated how the Next Dimension difference has enhanced the NFP’s operations.

The team from Next Dimension provides an on-Demand CFO service. It is responsible for financial reporting to the CEO and Board, liaising with the auditors, and, when required, providing short-term bookkeeping services.

INTRODUCTION

Bathurst Community Transport Group (BCTG) is an NFP that provides community transport around Bathurst and to the regional centres of Orange, Lithgow, Dubbo, Katoomba and Sydney in NSW.

BCTG has been operating since 1978 and actually operated the first ever Community Transport buses – Australia now has Community Transport services in every Local Government Area. 

Currently, BCTG has 7 staff members, as well as a keen force of regular volunteers. From its South Bathurst premises, the NFP deploys a fleet of 13 vehicles.

SERVING THE COMMUNITY

“We transport the elderly and vulnerable people. It could be to Orange 55km away or to Sydney, more than 200km away,” says the organisation’s CEO, Kathryn Akre.

This much-loved Community Transport organisation is powered by volunteer drivers. Its subsidised services for elderly and vulnerable residents include medical, shopping and social trips, with local residents transported from door to door.

About 10 years ago BCTG began the special ‘Radiation Bus’ service. Each weekday it commutes from Daffodil Cottage in Bathurst to the Department of Radiation Oncology at Orange Base Hospital. This special service helps support clients together as they go to and from their regular appointments for radiation treatment. The BCTG Radiation Bus service relies solely on donations as it receives no Government funding.

THE CHALLENGES FACING COMMUNITY TRANSPORT SERVICES

For 46 years BCTG has risen to meet the challenges it has faced. “We’re a small organisation; however, we punch above our weight,” says Kathryn with pride.

Covid-19 represented a huge challenge to community transport organisations, and more recently the cost of living has made its impact. “Funding for community transport services has not kept pace with rising prices, including increases in fuel, insurance and rent,” Kathryn points out. However, responding to increasing operating expenses with a hike in the prices charged for services is difficult. “We know that our customers are struggling”, says Kathryn.

The organisation needed to take strategic measures to become more resilient. “I’m not an accountant but I knew we needed analysis and top level advice, from someone who is an expert in the industry.” That’s where Next Dimension Accounting came in.   

NEXT DIMENSION’S EXPERTISE

BCTG looked for outsourced accounting services that could help strengthen their operations. “We needed to know where we were at, and what levers we would need to pull in order to grow and thrive – but I had neither the time nor the skillset to do this,” says Kathryn. 

“We interviewed four people and clicked with Brendan Lucas from Next Dimension Accounting.” Next Dimension’s established track record of working with Australian Community Transport organisations ensured a positive start.

“Next Dimension are experts in Community Transport. They know Community Transport thoroughly, including reporting requirements and the rules,” says Kathryn. 

Brendan, supported by the Next Dimension team, acts as the organisation’s CFO. “He provides the ability to look at an issue and offer good advice quickly. It would take me much longer,” she adds.

NEXT DIMENSION BOOSTS EFFICIENCIES

Since Next Dimension Accounting was appointed as an outsourced accountant for BCTG in November 2023, the NFP has seen numerous benefits arise from the arrangement. “Brendan’s team has been able to make such a difference since they came on board,” says Kathryn.

The external accounts services have been beneficial for analysing costs, budgeting and planning for the organisation’s future development. “It helps to have someone who is outside the organisation but knows the Community Transport issues challenging us, and can support us in our decision making, ” says Kathryn.

Access to a whole outsourced accounts team can provide a timely advantage. “Recently our office bookkeeper left and while we started looking for a replacement, Next Dimension was able to ‘flick a switch’ to provide temporary bookkeeping within about 12 hours,” recalls Kathryn. “It was such a relief.”

Reporting and presenting to The Board is also part of the services provided. “The Board really values the input of Next Dimension Accounting,” says Kathryn. “Brendan presents at Board meetings and provides a clear, thorough analysis of the figures. He is able to highlight the risks and identify where we need to spend money, and where we could make money. A Board member with many years of experience told me at one point that it was the best explanation of finances he had ever received.” 

Kathryn says, “For me the value is having an advisor who understands the quirks of Community Transport.”

TECHNICAL SUPPORT

Next Dimension has also provided assistance with technology that makes the BCTG office operate more efficiently. For example, they set up Xero to be more automated than it was.  Staff can phone the Next Dimension team to get tips on how to do something with the bookkeeping or accounting software. 

“I don’t know what I don’t know – or have the time to sort out how to change the set-up,” says Kathryn. “It’s just nice to have a team who knows Community Transport supporting you.”

FUTURE GROWTH FOR BCTG

In the future, BCTG hopes to provide more community transport services by expanding the tour company it runs. “We have been running the company Bathurst Tours for two years now, which helps to cover some of the community transport service costs,” explains Kathryn. Operating the tour company helps to offset the considerable expenses of providing community transport services across such a large area. “We are growing Bathurst Tours so we can welcome more tourists to discover the beautiful Bathurst region,” says Kathryn. 

For the BCTG office itself, they just want to make everything more efficient, while supplying the highest quality service possible. For a Community Transport organisation where the farthest boundary is in excess of 100 kilometres from the office, it is no small ambition, but Next Dimension is helping them all the way. 

Kathryn notes, “The city-based Community Transport organisations have their own issues, but they do have economies of scale that we just don’t have in the regions.” 

“In the city the Community Transport services don’t have to deal with the distances or weather conditions, such as snow or bushfire,” she adds. “But I like the fact that although Brendan is from Next Dimension, which is city based, he gets it.”

The ACNC has recently released its Australian Charities Report 10th edition, highlighting the impact of rising costs on the charity sector.

In her foreword, ACNC Commissioner Sue Woodward details critical findings, including sector revenue and expenses, dramatic increases in employee expenses, and changes in donations and philanthropy. 

She also points out that while the cost of operating and delivering services has increased, charities also require help finding sufficient revenue or donations to keep pace with these rising costs.

The Next Dimension Accounting team continues to support our clients, who are established organisations, by working with them to identify and manage inflationary pressures.  Our clients have found that outsourced financial support is a positive way to combat rising costs, stay across all financial information, and address strategic planning challenges and key person dependency.

Key takeaways from the report ACNC Charities Report

Some of the key takeaways from the report include:

Expenses vs revenue – increases in expenses and liabilities outpaced increases in revenue in 2022 (in percentage terms). Total revenue increased by $11 billion to a record high of just over $200 billion, but expenses increased by $22 billion in the same period.

Employees—Charity spending on employees in 2022 increased nearly 10% compared to 2021—the highest annual percentage increase recorded. Charities remain a major employer, accounting for 10.5% of the Australian workforce.

Donations and bequests –In 2022, donations and bequests totalled $13.9 billion, an increase of more than $584 million over 2021 figures. Donations grew by 4.4%. However, this was lower than the 5.3% increase in donations reported in 2021.

Philanthropic spending—Charities reported spending $11.7 billion on grants and donations to others, an increase of 21% from the previous reporting period.

Revocations—From 1 July 2022 to 30 June 2023, the ACNC processed 1,543 voluntary revocations. The ACNC also revoked seven charity registrations due to compliance issues. 

Managing the impact of rising costs

The report findings show that preparing your charity or NFP for the ongoing impact of rising costs is imperative. 

With advice from our trusted team, you can stay on top of financial data to ensure your NFP or charity remains resilient in the current climate. Some ways we can help you include:

• Use technology to measure, monitor and model financial information. Providing oversight and insight.
• Working hand-in-hand to develop strategies and actions capitalising on opportunities and reducing risk. 
• Measuring performance KPIs to proactively manage issues before they negatively impact the organisation.
• Expert bookkeeping and payroll services.

Our Capability Statement details our approach, services, and results in greater detail. You can download a copy here.

The complete Australian Charities Report can be found here. This 10th edition draws on ten years of existing data to highlight fundamental changes across the charity sector in ten graphs.
The ACNC’s interactive Charity Data Explorer provides filters to run custom searches. This year, the explorer has been updated to allow filtering by postcode.

Brendan Lucas will participate in this important series to support and empower not for profit organisations.

If funding and revenue for FY25 are weighing on your mind and you’re feeling stuck, Benefolk’s two-week online webinar series will help you feel inspired, energised and organised.

From 23 July – 1 August, hear from 14 of the NFP and charity sector’s leading advisors across major gifts, bequests, corporate partnerships, social enterprise and government relations and funding.

Plus, tap into the expertise of our sustainability and marketing strategists, feasibility,business planning and data analytics specialists to pull together a comprehensive and integrated plan for success. Learn what has worked well in other organisations and how to apply those insights to your context.

You can join individual sessions of interest, or buy a six-part Series Pass with all recordings, so you have all the tips, case studies and inspiration on hand throughout FY25. There’s also the chance to book a 60 minute online consultation with our featured specialists on the soon-to-be-launched Benefolk Expert Bar.

If you want to take “Diversify Income” from a bullet point in the Board Papers to an actionable roadmap, take the time to engage with these sessions and have meaningful conversations with your team.

Learn more and register here: [Click here to register]

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.