Twilight Seminar Presentation: 040417 Andrew Lam - Tax Specialist NFP Sector, Hill Rogers: NFP Tax Concessions

1. Andrew Lam
Tax Specialist: Not-For-Profit Sector
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2. Tax Concessions
• Tax is a cost that erodes profits
• A NOT-for-profits needs to make a profit
• We need to make a profit so that we can pursue our objectives
• We need to make a profit so we can hire the best people
• We need to make a profit so we can create a inspiring working environment
• We need to make a profit because …………… ………….
Why do we care?
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3. Not-for-profit Taxation
• Income tax exemptions
• GST concessions
• FBT concessions (rebate or exempt)
• DGR (not strictly a tax concession)
• Principle of mutuality (not strictly a tax concession)
• Payroll tax concessions
• Stamp duty concessions
• Land tax
• Local government concessions (e.g. rates)
Recap of tax concession for NFPs
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4. Not-for-profit Taxation
• Access to concessions are not automatic
• Some exemptions require self-assessment and others require endorsement by the
ACNC and/or ATO
• Regularly review access to tax concessions
• Undertake a tax health check. (There are many concessions being forgone)
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Key points:

5. Is Your Organisation Charitable?
• Advancing health
• Advancing education
• Advancing social or public welfare
• Advancing religion
• Advancing culture
• Promoting reconciliation, mutual
respect and tolerance between
groups of individuals that are in
Australia
• Promoting or protecting human
rights
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The Charities Act 2013 (Cth) lists twelve charitable purposes:
• Advancing the security or safety of Australia
or the Australian public
• Preventing or relieving the suffering of
animals
• Advancing the natural environment
• Promoting or opposing a change to any
matter established by law, policy or practice
in the Commonwealth, a state, a territory or
another country, (where that change
furthers or opposes one or more of the
purposes above)
• Other similar purposes ‘beneficial to the
general public’ (a general category)

6. Responsibilities, Risks and Opportunities?
• Income tax status should be annually
reviewed or when structure or
activities change (non-charities and
charities)
• Don’t forget refund of franking credits
• ACNC reporting e.g. Annual
Information Statements
• What to do if your organisation is
picked for an ATO review?
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7. What’s New?
• FBT exempt Caps ($31,177 or $17,667) 31
March 2017
• FBT exempt Caps ($30,000 or $17,000) 31
March 2018 (consider adjusting salary
packages)
• FBT rebate of 49% capped at $31,177 31 March
2017
• FBT rebate of 47% capped at $30,000 31 March
2018
• Salary packaged meal entertainment and
entertainment facility
leasing expense benefits capped at $5,000
Fringe Benefit Tax
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8. Not-for-profit Stewardship Group
• Last available minutes – 13 July 2016.
• Last meeting – 8 March 2017.
• Major topics covered:
• Compliance cost of FBT reporting (Q23)
• Impact of Common Reporting Standards
• ATO’s compliance approach for breaches of the Ancillary Fund Guidelines
• Updating the Ancillary Fund model trust deed
• ATO Project – building confidence in the tax and super system for NFPs (more on
next slide)
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9. Building Confidence in the Tax and Super System for NFPs
• How the ATO detects and deals with organisations that don’t do the right thing
• What attracts attention?
• Private ancillary funds - Late lodgement of annual returns, Related party transactions
• Charities and DGRs – Not applying income and assets solely for purpose, incorrect
claims for franking credit refunds, incorrectly advertising that deductible donations can
be received.
• Self-assessing income tax exempt not-for-profits – incorrect self assessing, not meeting
the requirements
• FBT – incorrectly claiming rebates and exemptions
• Mutuality – incorrectly classifying member and non-member income and expenses
Compliance approach for NFPs
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10. What Resources are there?
Income tax
• Income tax guide for non-profit organisations:
http://law.ato.gov.au/atolaw/view.htm?DocID=SAV/ITGNPO/00001
• Income tax status of self-assessors should be regularly reviewed (non-charities):
https://www.ato.gov.au/assets/0/104/1909/2003/bba2a60f-db06-4d61-9fef-
ec6ea0f0cea2.pdf
• Income tax status of charities should be regularly reviewed (charities:
https://www.ato.gov.au/assets/0/104/1909/2003/51a4ab21-5668-4211-bde1-
e1212bc7f65a.pdf
GST
• https://www.ato.gov.au/Non-profit/Your-organisation/GST/GST-concessions/
FBT guide for employers
• https://www.ato.gov.au/general/fringe-benefits-tax-%28fbt%29/in-
detail/employers-guide/fbt---a-guide-for-employers/?page=1#Introduction
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11. About me – Andrew Lam
• Is a chartered tax adviser and a solicitor
• Has worked within leading taxation advisory teams in chartered
accounting firms (both big 4 and mid-tier) and a top-tier law firm
• Has deep experience in taxation advisory matters with a particular focus and interest
in NFPs with their taxation affairs
• Also provides tax advice in connection with business purchase and sales transactions,
undertaking tax due diligence assignments, structuring inbound and outbound
investments and general tax planning.
• Bachelor of Commerce/Bachelor of Laws, Master of Laws (Taxation)
• A Chartered Tax Advisor
• Andrew.lam@hillrogers.com.au │m: 0419 293 385
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firms. Liability limited by a scheme approved under Professional Standards
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