NOTFORPROFITTAXATION&

AVOIDINGFRAUD

2- 3February2017

HillRogers| February2017

AssociationsForum– CEO&ChairSymposium,Brisbane

AndrewLamTaxSpecialist– NotForProfitSector

2

Notforprofittaxation

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

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

RecapoftaxconcessionforNFPs

3

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

4

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

5

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

6

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

7

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

8

VishalModiAuditSpecialist– NotForProfitSector

9

AvoidingFraud

Thissessionwillcover:

• Howyoucanprotectyourorganisation

• Whyeffectiveinternalcontrolsareimportant

10

“Atanygivenmoment, thereisacertainpercentageofthe

population that’suptonogood”

J.EdgarHooverDirectoroftheFederalBureauof

Investigation(FBI),USA

Fraud

11

MisappropriationofAssets

CorruptionFraudulentStatements

FraudTriangle

12

FraudTriangle

Incentives/Pressures

Opportunities Attitudes/Rationalisation

Howyoucanprotectyourorganisation

Itisimportant thatyouconsider theseaspectsofyourorganisation:

• Ethicalculture

• Communication flow

• Formalpoliciesandprocedures

13

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

14

Preventfraudwithproperinternalcontrols

• Developsoundwrittenpoliciesandprocedures – important theyareclearaboutrolesandresponsibilities, andwhatstepsmustbetaken,including:

ü detailedandrobust financialprocedures, information technology &security

ü fraudpreventionpolicy

ü humanresourcesprocedures

• Promptly report anysuspectedfraudorothercriminalactivitythattakesplace,andtakestepstominimiseanylossandprevent itfromreoccurring

15

Whyeffectiveinternalcontrolsareimportant

• Implementing effectiveinternalcontrols iscriticaltoreducing your organisation’s exposure tofraud risk

• Reviewingtheeffectivenessofinternal controlisanessentialpartoftheBoard’sresponsibilities; whilstmanagementisaccountabletotheBoardfordeveloping,operatingandmonitoring thesystemofinternalcontrolandforproviding assurancetotheBoardthatithasdoneso

• TheBoardcannotrelysolelyonaprocessofinternalcontrolembeddedwithintheorganisation’s operations, butshould regularlyreceiveand reviewreportsoninternalcontrol frommanagement

16

Whyeffectiveinternalcontrolsareimportant

• Aswellasaregular review,doundertakeanannualassessment

• Riskmanagementandcontrolsarenottobeseenasaburdenonbusiness, ratherthemeansbywhichbusinessopportunitiesaremaximisedandpotential lossesassociatedwithunwantedeventsreduced

• Develop asuccessfulsystemofinternalcontrol thatisresponsivetochange

17

Aboutme– VishalModi

• Expertiseinproviding commercialentitiesandmembership basedorganisationswithexpertadviceandguidancewiththeirassurancerequirements

• Focusedonbuilding strongpartnershipswithclients• Passionateabout advisingandimplementing efficientriskmanagementcontrolsand

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

18

t+61292325111f+61292337950www.hillrogers.com.au| info@hillrogers.com.au

Level5,1ChifleySquare,SydneyNSW2000 AustraliaGPOBox7066,SydneyNSW2001

H.R.P.HPtyLimitedpractisingasHillRogers|ABN12003718 518MemberofKSInternational,anassociationofglobal independentaccountingfirms.Liability limitedbyaschemeapprovedunderProfessional StandardsLegislation.

Disclaimer:HillRogers AdvisoryPtyLtdNone of the material contained in this publ ication is, or should be regardedas personal or f inancial product advice. Accordingly, no person should relyon any of the content s of th is publ ication without fi rst obtaining specificadvice from Hill Roger s. Every effort ha s been made to ensu re that thecontent is accurate,however it is not intended tobe a complete descript ionof the matters de scribed. Hil l Roger s, its Principa ls and agents accept norespons ibi lity to any person who acts or re lies in any way on any of thematerial without first obtaining such specific advice.

H.R.P.H Pty Limitedpractising asHill Rogers|ABN 12 003 718 518Member of Mor ison KSi, an association of global independent accountingfirms. Liability l imited by a scheme approved under Pr ofess ional Standard sLegislation.