Compliance; it’s not optional! However, we want to make it as easy possible, so we can dedicate our finite resources to addressing behaviours that undermine our tax and super systems.
Last month I called out emerging behaviours that are inconsistent with our expectations of good compliance. We’ve been pleased with the community response, and I’m happy to report we’ve have had numerous tip offs. Additionally, I've received feedback from clients indicating our signals to market have positively influenced taxpayer behaviour in accordance with the law.
This month, I had the opportunity to join my colleagues in Austrade who run the Export Management Development Grant program. Grant applicants must comply with all relevant tax and super obligations including on time lodgment and payment of debts. These obligations apply to all taxpayers, including not-for-profits (NFPs).
Taxpayers are required to lodge on time, pay the right amount of tax by the due date and provide true and correct information according to law. Participation is measured through the 4 OECD pillars of compliance: Registration, Lodgment, Correct Reporting and On-time Payments.
Achieving great compliance
Achieving great compliance is easier than you think. While most NFPs self-assess as income tax exempt, many have other payment obligations such as GST, FBT and PAYGW.
Our online services provides access to a range of tax and super services in one place and you can access it from multiple devices. Our best tips to help you achieve great compliance are:
- keep good records for all sales, fees, expenses, wages, logbooks and tax invoices (5 years)
- keep up to date with risks communicated to market so you know what attracts our attention
- check the treatment of significant transactions with tax or super impacts; for example, apply government grants according to purpose
- record decisions for accounting or tax results; for example, explain how uncertain tax positions are accounted for.
Get ready for the new reporting requirements
From 1 July, non-charitable not-for-profit entities with an active ABN will be required to lodge an annual self-review return to access an income tax exemption. The first return will need to be lodged from 1 July 2024 for the 2023–24 income year.
We’ll provide more information throughout the year on the new reporting obligations; but for now, just make sure your details are up to date on the Australian Business Register and make it a point to review the purpose of your NFP organisation. Specifically, check that it falls within one of the 8 types of entities outlined in Division 50 of the Income Tax Assessment Act 1997. These are:
- Community service
- Sporting
- Cultural
- Educational
- Health
- Employment
- Scientific
- Resource development
DGRs required to be a registered charity
Most non-government deductible gift recipients (DGRs) needed to register as a charity by 14 December 2022 to remain eligible for DGR endorsement see: DGRs required to be a registered charity.
DGRs that don't meet the new eligibility requirements or didn't apply for a 3-year extension by the required date are no longer entitled to DGR endorsement and will now have their status revoked.
We’ve reviewed all DGRs required to be registered as a charity or be operated by one and will now begin the revocation of DGRs no longer eligible for endorsement. We will issue a notice of revocation to these DGRs, explaining our reasons.
A DGR that has their status revoked, can re-apply for endorsement if they later satisfy DGR requirements.
Tickets to fundraising events
If you’ve been following me on LinkedIn, you’ll have seen my recent post where I called out my wonderful staff who provide advice and guidance. They often receive calls about the tax deductibility of tickets to fundraising events such as dinners, galas or similar.
With such events now in full swing, it's timely to note that in some circumstances, part of the ticket cost may be tax deductible if certain conditions are met. Check our fundraising web pages to find out if you can claim a deduction.
Don’t be scammed
Finally, be vigilant of scams, phishing and fraud. You can report known or suspected tax crime activities to our Tax Integrity Centre on 1800 060 062. We take all reports of tax crime seriously and reports can be made anonymously using our tipoff forms.
Take care, stay safe and enjoy this beautiful time of the year.
Jennifer
Assistant Commissioner Jennifer Moltisanti discusses compliance; the new reporting regime, DGR status and fundraising.