Not for Profit: Avoiding Fraud and Tax Concessions

NOTFORPROFITTAXATION&

AVOIDINGFRAUD

2- 3February2017

HillRogers| February2017

AssociationsForum– CEO&ChairSymposium,Brisbane

AndrewLamTaxSpecialist– NotForProfitSector

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Notforprofittaxation

• Incometaxexemptions• GSTconcessions• FBTconcessions(rebateorexempt)• Payrolltaxconcessions• Stampdutyconcessions• Landtax• Localgovernmentconcessions(e.g.rates)• DGR(notstrictlyataxconcession)• Principle ofmutuality(notstrictlyataxconcession)

Keypoints:• Accesstoconcessions arenotautomatic.Somerequireself-assessmentorendorsement.• Regularlyreviewaccesstotaxconcessions

RecapoftaxconcessionforNFPs

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What’snew?

• FBTexemptCaps($31,177or$17,667)31March2017• FBTexemptCaps($30,000or$17,000)31March2018(consideradjustingsalary

packages)• FBTrebateof49%cappedat$31,17731March2017• FBTrebateof47%cappedat$30,00031March2018• Salarypackagedmealentertainmentandentertainment facility

leasingexpensebenefitscappedat$5,000

FBT

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Notforprofitstewardshipgroup

• Lastavailableminutes– 13July2016.• Lastmeeting– presumeNovember2016.• 45staffmembersintheATOworkingpredominantlyonNFPissues• ATOworkscloselywiththeACNC• NFPsarepartofthe“ReinventingtheATOprogram”.2016/17programmainlyrelatesto

makingtheirinformationeasiertounderstand.(https://www.ato.gov.au/uploadedFiles/Content/CR/downloads/Re-inventing/js37511%20EYC%202016-17_not-for-profit_w.pdf)

• ABNapplicationissueswithtimelinessresolved• BetterinformationexchangebetweenATOandACNCtoenableautomaticupdateofABN

lookup• Preparingaprofileofhigh-riskcases• Lookingattrainingorganisationsthathaveself-assessedasincometaxexempttoconsider

whethersomeshouldberegisteredascharitieswiththeACNC

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Responsibilities,RisksandOpportunities?

• Incometaxstatusshould beannuallyreviewedorwhenstructureoractivitieschange(non-charitiesandcharities)

• Don’tforgetrefundoffrankingcredits• ACNCreportinge.g.AnnualInformationStatements• WhattodoifyourorganisationispickedforanATOreview?• Isyourorganisationcharitable(notethatATOdefinitioncanbebroad)?

ü Professionalassociationsü Chambersofcommerceü Notforprofitagedcarehomesü Notforprofitchildcareü Scoutsassociationsü Universitiesandcollegesü Non-governmentschoolsü Guidedogsassociationü Disability serviceorganisations

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Whatresourcesarethere?Incometax• Incometaxguidefornon-profitorganisations• http://law.ato.gov.au/atolaw/view.htm?DocID=SAV/ITGNPO/00001• Incometaxstatusofself-assessorsshouldberegularlyreviewed(non-charities)• https://www.ato.gov.au/assets/0/104/1909/2003/bba2a60f-db06-4d61-9fef-

ec6ea0f0cea2.pdf• Incometaxstatusofcharitiesshouldberegularlyreviewed(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/

FBTguideforemployers• 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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Aboutme– AndrewLam

• Isacharteredtaxadviserandasolicitor• Hasworkedwithin leadingtaxationadvisory teamsinchartered

accounting firms(bothbig4andmid-tier)andatop-tierlawfirm• Hasdeepexperienceintaxationadvisorymatterswithaparticularfocusandinterest

inNFPswiththeirtaxationaffairs• Alsoprovides taxadviceinconnectionwithbusinesspurchaseandsalestransactions,

undertaking taxduediligenceassignments, structuring inbound andoutboundinvestmentsandgeneraltaxplanning.

• BachelorofCommerce/BachelorofLaws,MasterofLaws(Taxation)• ACharteredTaxAdvisor• Andrew.lam@hillrogers.com.au │m:0419293385

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VishalModiAuditSpecialist– NotForProfitSector

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AvoidingFraud

Thissessionwillcover:

• Howyoucanprotectyourorganisation

• Whyeffectiveinternalcontrolsareimportant

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“Atanygivenmoment, thereisacertainpercentageofthe

population that’suptonogood”

J.EdgarHooverDirectoroftheFederalBureauof

Investigation(FBI),USA

Fraud

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MisappropriationofAssets

CorruptionFraudulentStatements

FraudTriangle

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FraudTriangle

Incentives/Pressures

Opportunities Attitudes/Rationalisation

Howyoucanprotectyourorganisation

Itisimportant thatyouconsider theseaspectsofyourorganisation:

• Ethicalculture

• Communication flow

• Formalpoliciesandprocedures

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Stepsforfraudprevention

• Beclearabouttheethicalvalues,e.g.honestyandaccountability– setthe“toneatthetop”onfraudulent behaviour

• Beopenaboutthepossibility (risk)offraud,evenifitisonlyasmall risk– ifyoudon’tacknowledgethatfraudhappens,youarenotgoingtofindit

• Identifythetypesoffraudyoumaybeatriskfrom– conductariskassessment

• Understand theredflags thatactasawarningofpossible issues– e.g.behaviouralorlifestylesymptoms, accounting&analyticalanomalies

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Preventfraudwithproperinternalcontrols

• Developsoundwrittenpoliciesandprocedures – important theyareclearaboutrolesandresponsibilities, andwhatstepsmustbetaken,including:

ü detailedandrobust financialprocedures, information technology &security

ü fraudpreventionpolicy

ü humanresourcesprocedures

• Promptly report anysuspectedfraudorothercriminalactivitythattakesplace,andtakestepstominimiseanylossandprevent itfromreoccurring

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Whyeffectiveinternalcontrolsareimportant

• Implementing effectiveinternalcontrols iscriticaltoreducing your organisation’s exposure tofraud risk

• Reviewingtheeffectivenessofinternal controlisanessentialpartoftheBoard’sresponsibilities; whilstmanagementisaccountabletotheBoardfordeveloping,operatingandmonitoring thesystemofinternalcontrolandforproviding assurancetotheBoardthatithasdoneso

• TheBoardcannotrelysolelyonaprocessofinternalcontrolembeddedwithintheorganisation’s operations, butshould regularlyreceiveand reviewreportsoninternalcontrol frommanagement

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Whyeffectiveinternalcontrolsareimportant

• Aswellasaregular review,doundertakeanannualassessment

• Riskmanagementandcontrolsarenottobeseenasaburdenonbusiness, ratherthemeansbywhichbusinessopportunitiesaremaximisedandpotential lossesassociatedwithunwantedeventsreduced

• Develop asuccessfulsystemofinternalcontrol thatisresponsivetochange

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Aboutme– VishalModi

• Expertiseinproviding commercialentitiesandmembership basedorganisationswithexpertadviceandguidancewiththeirassurancerequirements

• Focusedonbuilding strongpartnershipswithclients• Passionateabout advisingandimplementing efficientriskmanagementcontrolsand

affecting longtermsustainableimprovements inbusinessoutcomes• JoinedHillRogersin2005andappointedDirectorin2012• BachelorofCommerce• MemberofCharteredAccountantsAustraliaandNewZealand• RegisteredCompanyAuditor• Vishal.Modi@hillrogers.com.au │m:0434129005

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