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In 2023 smart NFPs are embracing technology and automation to empower their finance teams.  As a trusted advisor to a wide range of NFPs, we stay on top of the latest technology and work alongside our clients to apply the right tools for their success.

Key benefits include:

Improved Efficiency

With many organisations experiencing decreasing productivity, technology and automation offer the chance to improve the efficiency of financial processes significantly. Digital financial management systems and software can automate tasks such as data entry, report generation and reconciliations. For the finance team, this saves much time, allowing them to focus on value-added activities. 

Protects Against Human Error

Manual processes can be prone to errors, leading to large, costly mistakes. Automation can assist finance teams by reducing errors. Automated systems perform precise calculations and data analysis, minimising the chance of flawed calculations and ensuring accurate financial reporting.  

Real-time Reporting

Technology enables finance teams to access real-time financial data and generate reports instantly. This helps NFPs with quick decision-making by providing up-to-date information on cash flow, revenue, expenses and budgets.  We are proud of Xero Gold Partners, but other options, such as MYOB or Sage, may be worth considering.

Data Analysis and Forecasting

Advanced financial software equipped with data analysis capabilities allows finance teams to analyse large volumes of financial data and identify patterns or trends. This helps forecast financial performance and supports strategic planning at a management and board level. Some of our favourite tools include Power BI, Calxa and Fathom.

Improved Financial Visibility for Reporting and Accounts Payable

Technology-driven financial reporting functions provide management teams with a broader and more detailed view of their financial activities and performance, including tracking budgets accurately, zeroing in on overspending or identifying potential areas for cost savings.

Streamlining Accounts Payable functions with technology supports greater internal efficiencies and oversight and improves vendor relationships. Technology can be used to process documents, facilitate reimbursement, issue virtual debit cards and implement financial controls over approvals. We love ApprovalMax, DEXT and Weel.

Better Cash Flow Management

Efficient financial systems and automation tools help finance teams manage cash flow more effectively. This benefits other parts of the organisation by ensuring funds are available when needed. Improved cash flow management enhances stability and flexibility for the entire organisation.

Artificial Intelligence

We can’t write an article about technology and automation without mentioning AI. Many platforms mentioned in this article are also beginning to integrate AI and machine learning into their product offering. The evolution of technology will be increasingly focused on these concepts, which will benefit organisations in ways we can’t even predict today.

Our use and knowledge of technology and automation sets us apart from other accounting firms. 

Next Dimension’s NFP clients are often amazed when we work with them to implement the latest technology in their organisation. Our forward-looking approach to accounting backed by technology strengthens our clients’ success and allows them to grow and expand into new areas that have yet to be identified.

Book a meeting today for an obligation-free discussion about tools to empower your finance team.

New inflationary pressures could spell trouble for NFPs as well as businesses, so developing an action plan to tackle them head-on is critical. Now is the time to address key target areas that will strengthen your organisation for a new financial year that could be challenging.

NFP CEOs, CFOs and Boards will understand the importance of carefully managing the organisation’s budget. In many ways, NFPs are impacted by internal and external pressures as the community reigns in spending and donating as cost-of-living pressures continue to bite. At the same time, for many NFPs and charities, the demand for their services continues to increase alongside operational costs.

There are positive steps you can take today to tackle inflation:

Action plan

Track – Ensuring you regularly review your projected year-end result v budget is key to measuring any inflationary impacts. All good accounting systems will have a standard budget variance report, or you can easily customise it.

Review – Go back to your original business plan. Is what you were trying to achieve still relevant now? The broad goals may be the same, but you will probably need to adjust the plan due to higher inflation levels.

Reforecast – You know that inflation is increasing costs, so if your income will be less than the plan/budget allows, don’t stall; you need to re-forecast now.

Identify loss makers –  Review programs/business units. Identify anything losing money that could be cut off. Beware of looking at profit after fixed costs for programs. Remember, if you cut the program, another program has to bear that cost now.

Trim excesses – Undertake a more detailed analysis of costs, starting with the staffing/organisation chart. Is there anything you could do without?

Explore cost savers – Look for grants, and NFP discounts offered.

Stay connected – Use your network to keep up with what’s happening in the NFP sector and get some moral support. Stay connected with the business community to help you identify upcoming threats and opportunities. Utilise your management team and board network. Board members probably have experience with the longer cycles of the Australian economy, including the 1970s when average annualised inflation was 10.5%, and can help broaden your financial perspective.

What have you learnt?

You should have acquired greater knowledge of and confidence in the organisation’s resilience by working out the action plan. It will put you in a better position to identify milestones/triggers and the best actions to take if the cycle of rising inflation continues.

Do you need more forecasting/monitoring of regular cash flow? Outsource to an accounts service if you don’t have time or are afraid, you’ll miss something, good or bad. The right accountants will have more experience and knowledge of the NFP sector.

The good news

It’s easier to respond to an event that you are prepared for it.  Book a free 30-minute consultation with one of Next Dimension Accounting’s experienced team today to discuss how we can help you navigate the bumpy financial waters ahead.

You’ve fine tuned the figures, set down the goals and delivered your annual budget.  But what’s next?

An approved budget is just phase one; ongoing skilled budget management makes all the difference.

Whether you’ve spent days crafting the budget details or have just walked into a new role and been handed an unfamiliar budget to work with, how you manage that budget is critical. 

For NFPs, understanding the key traps and tips will improve your progress. Learn how to navigate any potential obstacles to achieving your budget goals.

Budget management traps for the inexperienced

The fundamental error made with budgeting is taking a ‘set and forget’ approach. Be prepared from the outset to monitor your budget, feed in up to date figures every month and keep on reviewing your forecasts. 

To avoid common pitfalls:

• Don’t leave budget tracking to the end of the financial year, do it monthly at a minimum
• Be aware of cash flow issues in particular, such as the cash flow implications of  major purchases like IT equipment or vehicles plus insurance payments 
• Be flexible enough to accommodate small changes and prepared for reforecasting
• Where negative figures are substantial and necessitate financial intervention or major pivots, be prepared for an overhaul of the budget
• Don’t overlook the possibility that your organisation might do unexpectedly well, and the budget may need to accommodate very positive unforeseen developments.

How to start budget monitoring

Your organisation’s budget needs to be monitored, with ongoing measurement of actual expenditure and income against the budget.

The recent Covid-19 pandemic introduced many unknowns that were disrupting for budget makers. In situations which create considerable uncertainty, like the pandemic, you must track financials in greater detail, more frequently, and reforecast regularly.

The first step in effective budget monitoring is to upload your budget to a suitable accounting system. 

Look for software to monitor the budget which will offer:

• compatibility with the existing system
• customisation to match your organisation’s requirements
• real-time monitoring
• clear reports for staff or board members who don’t have accounting expertise.

The monitoring process

Note that at critical times you may need to monitor daily rather than monthly. 

After your first month results are in, monitoring involves these steps:

1. Do a budget comparison. 
2. Considering actual figures, re-forecast how you think the rest of the year will go
3. Repeat this process each month at a minimum
4. Keep the projected end of year result in sight
5. Reforecast and adjust assumptions where the internal or external operating environment has changed substantially
6. Communicate results with the relevant parties – such as CFO, CEO or Board members.
7. Consult with them to ensure they understand forecasts they have committed to. Answer queries, encourage buy-in, flag key issues, and update the next budget accordingly.

The process is important to ensure that your organisation continues to meet its budget. Larger ACNC member charities will need it for reporting public information. It can also inform grant acquittals. 

Seek outside expertise

If you encounter difficulties with managing the budget and don’t have the resources inside your organisation to help, an external accounting team can provide expertise and solutions. 

If you get the right people on board, you can profit from their knowledge of the NFP sector.

The ways an accounts service can help you manage the budget include:

• Analysis and financial modelling
• Stress-tests of your budget
• Grant acquittals.

Set up your organisation for success

The aims of a smoothly managed budget include accurate tracking, sound comparisons of financial data, useful forecasting and financial early warning alarms.  These will enable your organisation to look ahead with clarity.

A solid foundation for constructing the next budget is a desired outcome of good management.

For NFPs especially, reducing organisational stress by being prepared for change and having action plans already in place is another important outcome.

Most budget managers encounter problems; the successful ones have the will to explore solutions and to learn from any errors they make. To maximise your capacity to manage, external accounting expertise may help.

Let us help you put your budget to work. Book a free 15 minute consultation today! https://calendly.com/brendan-nextda/free-15-min

Some measures will be introduced to smooth the path of doing business in the latest Federal Budget, which has as its main focus the assistance of Australians in need.

The Federal Budget for 2023–24 is the second handed down by Australia’s Treasurer, Dr Jim Chalmers. The budget announcement includes a surprise small surplus of 4.2 billion for the 2022–23 financial year, the first since 2007–08. The symbolic surplus is based on better-than-expected conditions, including higher prices for key exports and a strong labour market with wage growth and low unemployment.

For small to medium businesses, welcome budget features include power bill relief that will help an estimated 1 million small businesses, an extension of the instant asset write-off and support for cash flow.

Reducing the cost of doing business

The Government has announced some measures aimed at boosting efficiencies and reducing expenses involved in operating a business. Key offerings for those running small and medium enterprises include the following:

$20,000 Instant Asset Write-off: Small businesses with an aggregated annual turnover of less than $10 million can immediately deduct their eligible depreciating assets costing less than $20,000. This measure is estimated to decrease receipts.

Ease of doing business: Initiatives worth $2 billion are designed to simplify the interface between businesses and government services. The ‘Buy Australia Plan’ will help businesses compete for tenders, update the AusTender system, and improve SME awareness of federal government contracts.

Industry growth program for SMEs: The Government will improve support for SMEs and startups, with $431.9 million over four years from 2023­–2024 (and $79.2 million per year ongoing). Eligible businesses that focus on priority areas listed in the National Reconstruction Fund can get help commercialising their concepts and expanding their operations.

$20,000 Small business energy incentive: Most small and medium businesses could be eligible for up to $20,000 in tax relief under the Energy Incentive scheme if they invest in energy-efficient equipment or electrification of cooling and heating systems. Eligible assets or upgrades must be used or installed between 1 July 2023 and 30 June 2024. 

Energy Bill Relief Fund: Small businesses will get power bill rebates through the jointly funded Energy Bill Relief Fund from 1 July 2023.

Small business cyber wardens: A $23.4 million program to train in-house cyber security wardens will help small businesses combat cyber threats. The Council will deliver training for Small Business Organisations of Australia.

Migration Program Skill Stream Increase: The Permanent Migration program will return to higher levels, with a greater percentage (70%) allocated to the Skill Stream.

Pacific Australia Labour Mobility: The PALM scheme, which provides working visas for people from Pacific countries, will be expanded with an extra $370.8 million in funding over four years.

Workforce assistance

For Australia’s small to medium business workforce, the budget provided key changes and benefits, including the following.

Fee-free TAFE places:  300,000 new fee-free TAFE places will be available to train Australians in critical and emerging sectors.

Superannuation harmony: Superannuation and salary payment will be more synchronised from 1 July 2026 to reduce the risk of unpaid superannuation and boost retirement savings. Employers will be required to pay superannuation on the same day as wages. The other fundamental budget change to superannuation is reduced tax concessions for balances above 3 million from 1 July 2025 (about 0.5 % of super holders).

Pensioner work extension: There will be an extension of measures enabling aged and veteran pensioners to work extra hours. Pensioners can earn up to $11,800 before their pension is reduced, supporting pensioners who want to do some work without losing their pension.

International student work hour increase: Until 31 December 2023, students in the aged care sector will be exempt from the 48-hour per fortnight cap.

Tougher conditions ahead

The Budget changes will compel some small businesses to become more rigorous. The ATO will get extra funding to improve GST compliance among businesses ($588.8 million over four years).

Looking ahead, Budget forecasting indicates there could be significant challenges for Australians in 2023–2024, with predictions that unemployment will rise and GDP growth will halve to just 1.5%. However, if inflation is tamed, it is expected that there could be real wage growth.

Consult your accountant and work together to prepare your business or NFP for upcoming changes in the financial landscape.

Get in touch with our team at Next Dimension Accounting if you would like more information or to discuss any of the elements outlined in last night’s Budget announcement.

Australian NFPs are experiencing significant shortfalls in philanthropic funding. But stronger government relationships could provide a solution that offers financial stability to NFPs, plus options for growth.

A recent Perpetual article on philanthropy in Australia flags the concerns held by many NFP organisations over current funding shortfalls. 

Perpetual Trustee Company’s ‘Philanthropy Snapshot: How to give well in 2023’, is a precursor to the October Philanthropy Insights report. It draws on data collected from Perpetual’s IMPACT Philanthropy Application Program, which had more than 1400 applications for funding, and from the community sector. Some of the big challenges Australian NFPs experience include:

• Inflation, with the cost of delivering community services increasing sharply just as the community requires more assistance 
• Talent shortages, with NFPs vulnerable to high staff turnover and competing with the private sector when recruiting, plus confronting critical shortfall in volunteers since the pandemic
• Cyber risks, with NFPs struggling to find the funds and the people needed to protect their organisation and their clients from cyber risks.

However, the snapshot also notes that: “Government relationships can underpin predictable funding. They can help drive crucial policy changes that help the communities that not-for-profits serve.”  

Focusing on these government relationships could put your NFP in a stronger position to access government funding.

Government funding sources for NFPs 

Key sources of government funding for NFPs are:

• Federal, state or local government grants 
• Federal, state or local government tenders.

At Next Dimension Accounting we can assist your organisation to boost its prospects for securing government funding.

Changing relationships

The Perpetual report commented on a key problem with government relationships, “Today many not-for-profits say they are struggling to get the ear of government because they lack staff with necessary lobbying and policy skills.” A constructive approach would be to engage people who can help your NFP connect with government opportunities.

New opportunities have opened up following recent changes in federal and state governments. Where funding previously favoured ‘bricks and mortar’ and sports, there will now be more government funding for soft skills and the arts, such as the new Creative Australia agency established under the Australia Council.

Having organisational policies that chime with government objectives will strengthen your NFP’s position, so where needed use an agency to create appropriate content, messaging and strategies.

Being aware of upcoming opportunities is important, so your organisation is prepared even before government grants or tenders are advertised. As was demonstrated during the pandemic, NFPs fare better if they can offer suitable services quickly when governments introduce new measures in response to changing conditions.

Government grants

At Next Dimension we have considerable experience with preparing submissions for grant-making bodies. 

You can enlist an accounting service at the pre-submission stage to help with costings and budgets for government grant funding applications. If the grant is awarded, the accounts team can monitor the spending of grant funds, and track projects through to the acquittal stage. NFP outsourced accountants like Next Dimension are experienced in tracking funding that is project based, and will manage accounts receivable, cash collection apps, invoicing, transfers, financial reports, review of expenditure compliance and program closeout.

There has been a sharp increase in public scrutiny of government grants, with conditions tightening after recent examples of extreme ‘pork-barrelling’ that pushed grant practices into the media spotlight. Your accounts team can help your NFP ensure plans for spending any government grant money are justified and grounded in realistic budgets.

Government tenders

Securing a government tender is a practical way to ensure your NFP has a reliable income stream. The federal state or local government might procure services from NFPs such as counselling, construction, transportation and more. 

Devise your organisation’s game plan for winning an Australian government tender. Become familiar with tender requirements and processes. The Federal Government, for example, operates under a Commonwealth Procurement Framework. Work to ensure your organisation is tender-ready and agile. Keep the organisation’s figures up to date with Xero. 

When compiling your tender bid, your accountants can help project figures and cost a bid that is realistic for your organisation in terms of financial investment and human resources. A wide range of contacts, with expertise in different areas, can add value to the submission. 

The ‘predictable funding’ provided by government grants or tenders can boost NFPs of different sizes attempting to manage shortfalls across many areas and represent a stable platform on which future capability can be built. Contact Next Dimension Accounting for assistance in addressing philanthropic shortfalls and maximising opportunities to win government grants and tenders. To find out more, please contact our team.

Note: Perpetual’s comprehensive 2023 Philanthropy Insights report will be published in October 2023.

New regulations on Related Party Transactions that have been designed to prevent private benefit and conflict of interest are now in place. Understand the specific actions your charity needs to take and use this opportunity to review your organisation’s policies.

Reporting on Related Party Transactions (RPTs) will now apply to all Australian charities in their 2023 and later Annual Information Statements.  A related party is a person or organisation that is connected to the charity and has significant influence over the charity.

Charities preparing Special Purpose Financial Statements (SPFS) have a new mandatory accounting standard.

It is wise to ensure that your charity has updated its reporting processes for 2023:

• An end of financial year AIS must report RPTs from 1 July 2022
• An end of calendar year AIS must report RPTs from 1 January 2023.

In preparing the report, it is a good idea to review some of the wider implications of Related Party Transactions and how your organisation should manage RPTs going forward.

Australian RPT regulations for different organisations

Disclosure obligations vary for different organisations. Related party disclosures for charities of different sizes are detailed in the Australian Accounting Standards (AASB 124 Related Party Disclosures).

NFPs and charities:

Disclosure is now required regardless of whether you prepare general purpose or special financial statements. The charity’s auditors have to state within their report if material-related party transactions are not disclosed. Basic Religious Charities are an exception, but those Basic Religious Charities that choose the option of submitting a 2023 Annual Information Statement would disclose RPTs.

NFPs established as a company:

Directors of NFPs established as a company should exercise particular caution as the rules are complex when it comes to transactions of with a person of influence.

Public companies:

For public companies, Related Party Transactions require shareholder/member approval but exceptions can include arm’s length transactions; small amounts eg under $5000; and reasonable remuneration of officers and expenses of related parties.

Underlying principles

Initially, complying with regulations for Related Party Transactions may seem difficult. For the director of a long-established NFP that has served the community well by managing its connections in good faith so very modest resources stretch a long way, the change of approach could appear daunting – or, if you come from a family business background or operate in a regional or isolated area where nearly everyone and every business is connected. However, the underlying principle of the regulations is to ensure actions are in the best interest of the organisation.

RPTs represent a risk, so it is good business and good governance to minimise this risk through careful management.

Charities especially must avoid RPTs that use publicly donated funds to provide a benefit to a private individual, as this would erode their philanthropic mission.

Key steps in reducing RPT risks

In daily life and business, related party interactions may be unavoidable, but any transactions can be managed through the following key steps.

1: Disclosure

Disclose related parties in the accounts. Note that some information may be personal or sensitive so will need to be managed properly when disclosed.

To aid disclosure, good record-keeping is important. Internal records should include a register of all related parties. There should also be a system to identify and record all transactions with related parties.

CPA Australia provides a factsheet on Related Party Disclosures that includes a disclosure checklist.

2. Safeguard the organisation’s interests

An organisation can introduce numerous checks and balances to prevent future RPT issues from escalating or even potential fraudulent activity. A few examples include:

• Obtain additional quotes before major purchases to establish that a payment to a related party would not be excessive.

• Undertake a tender process for major provision of services or contracts.

• Establish rules for awarding grants or gifts to avoid transactions involving undisclosed related parties or conflicts of interest.

• Clarify when related parties cannot take part in discussions (such as at a board meeting) to avoid a conflict of interest.

• Review recruitment and hiring procedures. For example, ensure roles are adequately advertised and an independent panel assesses candidates. Any candidate should have experience and qualifications suited to the role, not just connections.

Consult the ACNC website for more guidance on managing conflicts of interest.

3. Communicate expectations

The ACNC points out on its website that “Related Party Transactions are common and not necessarily a problem”. Clear communications can resolve many potential issues.

Ensure your directors, staff, contractors, volunteers and other stakeholders understand the organisation’s expectations regarding Related Party Transactions by:

• Developing a policy and procedures document covering Related Party Transactions for your organisation.
• Educating staff and encouraging them to flag issues relating to potential RPTs.

Public trust and confidence are vital for NFPs. Taking a transparent and proactive approach to Related Party Transactions can minimise the financial and reputational risks to your organisation.

The team at Next Dimension Accounting can work with you to put in place systems and processes to ensure compliance and also assist with the new reporting requirements. Contact us today to find out more.

Since the COVID-19 pandemic began, many employees have started to work from home as they adapt their schedules and lifestyles.

The Australian Taxation Office (ATO) has changed the work-from-home deductions available to employees in the following way:

• The COVID 80 cents per hour shortcut method has been scrapped.
• The fixed-rate method rate has increased to 67 cents per hour. 

The changes announced by the ATO relate to the fixed rate method and apply from 1 July 2022 for 2022/23 income tax returns.

The new fixed-rate method.

The revised fixed rate method can be used from the 2022–23 income year onwards. 

Employees using this method cannot separately claim deductions that include:

• Energy – Electricity or Gas
• Stationery
• Computer consumables, such as printer ink
• Internet or phone
• The decline in value of assets used while working from home, such as computers and office furniture.
• The repairs and maintenance of these assets.
• Costs associated with cleaning a dedicated home office.

You can still claim a separate deduction for:

• The decline in value of assets used while working from home, such as computers and office furniture.
• The repairs and maintenance of these assets.
• Costs associated with cleaning a dedicated home office.

Stricter record-keeping rules

In addition to the new rate, stricter rules apply for keeping records of hours worked and from 1 March 2023 onwards, taxpayers will be required to keep a record of the total number of hours they work from home.

Another significant change is that employees will no longer need a dedicated home office to use this method.

If more than one person is working from home at the same time, each person can use the fixed rate method. 

No changes have been made to the “actual cost” method.

Many who work from home will predominantly be better off if they spend the time maintaining the required records.

To discuss new fixed-rate changes and what they may mean to your employees, please get in touch with our team today.

The ATO has ramped up efforts to uncover sham NFPs that are set up for tax evasion purposes. Tighter controls will mean more ATO attention is paid to legitimate NFP activities, so take steps to keep your organisation in line.

Assistant Commissioner Jennifer Moltisanti from the ATO’s NFP centre wrote in a February 2023 blog, “We’ve received intelligence about the promotion of ‘private’ not-for-profit foundations created to avoid or evade tax.”

The Assistant Commissioner added that because NFPs provide an important service, “It is critically important that we remain vigilant to those who seek to undermine or take advantage of the available supports.” 

The figure provided of around 144,000 NFPs in Australia self-assessing income tax exemption suggests that tax evasion issues could have a widespread impact. Here’s what the ATO are doing about scam practices, and steps for NFPs to ensure their house is in order as regulation of the sector tightens.

ATO investigations

The ATO announced that it is investigating potential scams that involve tax dodgers streaming their incomes through a sham foundation that pays no tax. 

Also under ATO scrutiny are cases of registered Public Benevolent Institutions (PBIs), where the employees undertake charitable or commercial activities of other entities that are not benevolent in nature.

The Assistant Commissioner said, “These arrangements involve the provision of employment services by the PBI to another entity within the group and typically include a charge-back or labour-hire agreement.

“The arrangement is purportedly claimed with the purpose of providing funding to the PBI to achieve its benevolent purpose.”  

The ATO can prosecute a range of summary offences or refer to serious cases of tax fraud. Actions taken against NFPs that fail to keep in line might include removing their income tax exemption or their Deductible Gift Recipient (DGR) status.

A broad view of the NFP sector

While bad practitioners are a grim prospect for the NFP sector, the racketeers and fakes do not represent the majority. CPA Australia’s spokesperson commented on the NFP investigations issue that “only a very small minority intentionally broke the rules” [source Pro Bono News]. 

Those NFPs and charities experiencing taxation difficulties reported that their problems sometimes arose from “a lack of expertise, complex and excessive regulatory requirements, and a shortage of resources,” added the CPA Australia spokesperson.

At Next Dimension Accounting our work with genuine NFPs overcoming any difficulties regarding taxation and superannuation obligations shows that a mix of outside expertise and internal rigour can enable your organisation to stay on the right side of the ATO.

Actions your NFP can take

To avoid areas of potential concern, a genuine NFP can take several steps:

1. Acquire expertise – If your organisation lacks expertise in taxation and your staff numbers are limited, hire the expertise you need. An outsourced accountant who knows Australia’s NFP sector can be hired to work with you on a regular basis and ensure you are prepared properly for annual reporting or returns. A trusted outsourced accountant can also step in to help when you run special programs that are complex financially.

2. Review practices – An external accountant can commence with a review of your bookkeeping and reporting. This will enable the accountant to analyse the effectiveness of the company’s current procedures and advise on better pathways and technology to help meet ATO requirements.
   

3. Self-assess – The ATO has plans for all registered Australian NFPs to lodge an online Annual Self-Review Form for the 2023–2024 income year. In the following years, NFPs will confirm or amend their details using a pre-filled self-review ‘return’. No doubt the ATO will use this information to target their compliance resources accordingly.  An accountant can help you work through your requirements to meet the ATO test.
   
4. Raise awareness levels – All staff members should be aware of key ATO requirements that apply to their work. An experienced accountant can conduct in-house information sessions if there are major ATO reforms. And if you do come across misconduct anywhere in the sector, the ATO provides an avenue to report it. 

To learn how we can support your NFP to meet taxation and superannuation obligations, contact the Next Dimension team.

Workplace giving programs are in the spotlight as a tool for reaching Australia’s national target for philanthropic giving. This donation method does present real opportunities – for the socially responsible employees and businesses, and for the NFPs that receive their generosity.

Prior to the election it was pledged that an Albanese Labor government would “work to double philanthropic giving by 2030 by engaging collaboratively with the charitable sector.” As Andrew Leigh, Assistant Minister for Competition, Charities and Treasury, noted in a pre-election press release, this target would simply “bring charitable donations as a share of GDP into line with countries like New Zealand”. Late last year he recommended more action to support workplace giving programs, saying, “The sooner we can remove barriers to workplace giving, the better our whole community will be.”

Official workplace giving programs, also known as “payroll giving”, have been around in Australia for many years, and this new focus may result in greater engagement.

How workplace giving works

An Australian employee donates a portion of pre-tax salary under a giving program. The employer then matches that contribution. The employee donation is reported through the employee’s tax return, using the “workplace giving” category.

The ATO records for 2020–2021 suggest that around 4.3 million Australians have a workplace giving program at their place of work. Around 4.7 per cent of these workers participate in a program. On average they give $258 per annum. Interestingly, employees of micro-businesses were most generous, contributing $714 per person on average, compared to government employees at $169 each.

Potential growth to benefit NFPs

In the USA more than 49% of nonprofit respondents identified workplace giving as a growth strategy for their organisation.

At a recent roundtable with the Business Council of Australia,  Assistant Minister Leigh said that “Workplace giving in Australia isn’t living up to its potential, but applied correctly, it could help get Australia to its charitable giving target by 2030.”

Does it work well in other countries?

In New Zealand, where it is known as ‘payroll giving’ employees inform their employer of the charity they want to donate to, as long as it is on the list of inland revenue approved organisations. NZ Inland Revenue figures show that over the past decade payroll giving donations climbed to $71 million per annum in 2022 (from $2.3 million in 2011).

In the UK it is estimated that more than a million people donate to charities through “payroll giving”. More than 8500 organisations facilitate the programs for their employees to donate. An estimated 2 billion pounds has been raised for charitable causes through payroll giving.

February 2023 will be Payroll Giving Month, celebrating 35 years of payroll giving in the UK.

In India, where corporate social responsibility laws require companies to give 2 per cent of their profits to charity, it is estimated that payroll giving will grow at 30% and 50% annually. Microsoft India’s Corporate Giving Campaign is one of the largest corporate giving programs in the world. It is based on three aspects – the employee contributions via payroll, the Microsoft Match program and an Employee Volunteering Policy.

In the USA, a survey of employers found the majority of companies (66%) have an ‘open’ matching gift program, which means that employees can donate to most non-profit organisations and the company will match that contribution. (Source: America’s Charities Corporate Benchmarking Analysis). The surveys suggest average employee participation in employer matching gift programs is 10% in the USA. This compares to about 4.7 % in Australia. A survey of approximately 1,200 workers across the U.S. by Fidelity Investment, found that: 42% of respondents said it was important for employers to match employees’ charitable contributions through a workplace giving program. Among millennials, it was 75%.

The US trends suggest that in Australia will also see an increase in workplace giving in the future. With the younger demographic notably more motivated by corporate social responsibility, as they start to replace older members of the workforce the take up of workplace giving should increase.

Next Dimension Accounting will stay across Workplace Giving updates and work with our clients to ensure they are able to take advantage of donations received through this method. We can also assist with setting up Workplace Giving programs and if you would like to find out more please get in touch.

New industrial relations reforms in the Secure Jobs, Better Pay bill will impact NFP sectors and businesses.

The government’s new Secure Jobs, Better Pay bill, tabled on 27 October 2022, addresses several key issues affecting Australia’s workforce, including pay secrecy clauses and rolling fixed-term contracts.

Some of the proposed measures would have a significant effect on those organisations accustomed to having multiple staff working for them on a continuous contract basis.

Pay secrecy clauses banned

The bill includes a ban on ‘pay secrecy clauses’ in employment contracts.

Formerly, such clauses actively prevented employees from discussing how much they were paid with colleagues. A flow-on effect of preventing employees from comparing wages and salaries has been that it helped obscured the practice of employers who paid women less for the same job.

While imposing compulsory secrecy clauses in contracts or other written agreements will be prohibited, employees would still have the discretion to choose whether they share their salary information with colleagues.

Any contracts that were agreed to before the ban will be enforceable but only up to the point at which any variation to that contract was agreed upon.

It is hoped that the easier disclosure of salary information might help to reduce the gender pay gap.

Reduction of rolling fixed-term contracts

The new rule is that fixed term contracts cannot be used for more than two years, or more than two consecutive contracts – whichever is shorter.

The proposed amendments would target rolling contracts where the job or position was substantially the same.

Formerly, many organisations would renew fixed term contracts (such as 6 months or 1 year contracts) repeatedly, rather than engaging staff on a permanent basis. The effect of this on the employee would be like being placed on perpetual probation, with hardly any job security.

The amendments would result in changes to an employer’s ability to offer fixed term employment for periods of more than two years. However, it does not apply to casuals and there will be many exceptions that organisations can claim.

The large number of exceptions includes:

• Cases where the contract pays over the high income threshold (currently $162,000), or a pro rata amount for part-time or partial year employees
• Where the work is funded by a government funding scheme of a kind prescribed by regulations and the funding is payable for more than two years, but there is no reasonable prospect that the funding will be renewed beyond that period
• Where the work relates to a governance position that is time-limited by the governing rules of a corporation
• Where the employee is covering for another employee
• Where the contract engages the employee to perform only a distinct and identifiable task involving specialised skills.
• Where a modern award permits the arrangement expressly (such as the awards covering schools and higher education).

SMEs and NFPs that regularly engage staff members on rolling fixed term contracts will be affected, so a review of staffing and hiring practices is recommended. Consult an accountant about the most viable strategy for your organisation. For example, it may be cost effective to make use of indefinite contracts with provision for termination on notice.

Other industrial relations reforms

Some of the other reforms in the industrial relations overhaul include:

• Protection from sexual harassment extended – so that all workers, regardless of occupation, will have access to the same minimum protections
• Flexible working hours negotiations encouraged – so that employees balancing responsibilities outside work can negotiate agreed working hours with employers. Employees can involve the Fair Work Commission if a reasonable request is refused.
• Multiple employer collective bargaining encouraged – so that workers in sectors like childcare, who have a common enterprise but different employers, can negotiate a common pay deal
• Employment advertisements with illegal pay rates banned – to reduce job ads that mislead prospective employees.

There will financial implications for SMEs NFPs and other businesses if any or all the reforms are passed.

Employers and managers should get a handle on the key issues now, including a review of your organisation’s:

• Employment contracts
• Confidentiality agreements
• Pay rates
• Recruitment advertising.

The Industry Relations reforms are continuing through parliament, and we will provide more information about the laws that have been passed.

Talk to our team about your review, and how to steer the most effective financial course for your organisation. Contact Next Dimension Accounting today.

The Australian Government delivered the Federal Budget on 25 October 2022, the second federal budget for the year. In his budget speech the new government’s Treasurer, the Hon Dr Jim Chalmers MP, highlighted that the budget “does three things:

• It provides cost of living relief which is responsible, not reckless – to make life easier for Australians, without adding to inflation.
• It targets investments in a stronger, more resilient, more modern economy.
• And it begins the hard yards of Budget repair.”

Some budget changes that could impact SMEs or NFPs include the following.

For employers of skilled migrants

Skilled migration to address workforce shortages was a focus area of the budget. The government announced an increase in the permanent migration program  intake to 195,000 places in 2022–2023. More than 90 per cent of places will be for skilled migrants and more than 25 per cent of places will be targeted towards regional areas.

Work restrictions on holders of student and secondary training visas will be relaxed until 2023, allowing them to work additional hours in any sector. An extra 500 places will be added to the aged care training pathway for the Pacific Australia Labour Mobility scheme.

For new parents

Australia’s Paid Parental Leave (PPL) Scheme will be extended by two additional weeks per year until the scheme reaches a full 26 weeks by 1 July 2026. The leave entitlement can be shared by two parents (a proportion will be on a “use it or lose it” basis).

Reforms will allow either parent to claim the payment, and both birth parents and non-birth parents to receive it if they meet the eligibility criteria.

Eligibility for Childcare Subsidies (CCS) will be extended to families earning more than $356,756 (but less than $530,000) in household income.

For employers and fleet managers

Taxes on electric vehicles and import tariffs will be reduced from 1 July 2022. For employers, the exempt electric car fringe benefits must be included in an employee’s reportable fringe benefits amount.

Exemptions from FBT import tariffs can apply to battery, hydrogen fuel cell, and plug-in hybrid electric cars. However, the car must first have a retail price below the luxury car tax threshold ($84,916 for fuel efficient vehicles for the 2022–2023 income year and not have been held or used before 1 July 2022.

For NFPs

For NFPs some areas of focus for increased funding include:

• NDIS initiatives such as: fraud detection; an alternative dispute resolution pilot; NDIA staffing; and the NDIS review.

• Funding for fighting domestic violence has been allocated at 1.7 billion over six years.

• First Nations initiatives to receive funding include The Voice referendum, child health and education, and health clinics

• Funding was allocated to expand Headspace and support the mental health of communities in flood-affected NSW.

• Climate initiatives will receive significant funding of $25 billion in the years to 2030.

Key taxation items outside this budget

Other key items related to personal income/business income taxation that are not mentioned in this budget are already scheduled to take place:

• Introduction of Stage 3 tax cuts – from 1 July 2024
  (Incomes between $45,000 and $200,000 would be taxed at a flat rate of 30%)
• Expiration of temporary full expensing rules –  finishing 30
  June 2023
• Expiration of loss carry-back rules – finishing 30 June 2023
• Expiration of low-and-middle-income tax offset (LMITO) – finished on 30 June 2022.

In his speech the Treasurer noted that the budget “recognises that our best defence against uncertainty around the world is responsible economic management here at home.”

If you need to discuss economic management of your business or NFP, an accounting service can provide valuable advice. Contact Next Dimension Accounting.

Internal fraud poses a risk to NFPs and businesses of all sizes. Better accounting practices can help ensure that fraud is detected and your funds are protected.

‘Million Dollar Employee Fraud in Australia’, the seventh major fraud research study since 2008 from Warfield and Associates, looks at cases where employees were convicted of major fraud. The study compiled by the accounting and corporate investigations firm exposes the methods fraudsters used and the damage they caused. It recommends that “Being proactive with regards to fraud control is important for all sized organisations.”

The study findings act as a horrible but very useful warning, and may prompt NFPs and businesses to improve their systems to prevent internal fraud practices – or at least expose them early on.

There is a place for trusted outsourced accountants who can implement the best processes and technology to monitor and deter fraudulent practices within an organisation.

The serious impact of internal fraud

The ramifications of internal fraud can be devastating for NFPs and SMEs, even when the fraudulent practice has been detected and stopped. Quite often, the perpetrator is unable to repay the funds stolen. The Warfield study notes that, “The likelihood of repayment by the perpetrator/s was also diminished by the existence of a severe gambling problem, as most of the fraudulently obtained funds were used to gamble.”

Fraud-based losses can force organisations to downsize, sell assets or even liquidate. Associated impacts include employees retrenched and branches or stores closed. Longer term there can be issues with meeting payments, including extra mortgage costs or servicing the ATO debt for the diverted funds. There may also be difficulty obtaining insurance or an increase in insurance premiums. Uncovering the fraud itself involves additional costs, such as the extra staff time spent documenting the problem, forensic accounting fees and legal fees.

The study indicates that, “Small businesses or not-for-profit organisations may not be able to survive if the amount is large enough to deplete their financial resources.”

Other adverse impacts could be stress on owners and other staff members, plus reduced trust and dysfunctional relationships within the organisation.

The damage that fraud cases inflict on an organisation’s image can also be costly. For large organisations that might otherwise “absorb their frauds with little apparent impact on their operations”, negative publicity is actually a key concern. The study points out that, “The vast majority of the frauds included in this research were publicised by the media.” If it is a small business, that tarnished image may potentially lead to a loss of vital commercial opportunities. For NFPs, “Stakeholders, who provide grants or make donations, may also question their wisdom in choosing that organisation to contribute scarce resources.”

Given the heavy costs associated with internal fraud, outsourced accounting services that detect fraud or protect the organisation can be regarded as a valuable investment.

Protection against internal fraud

Businesses and NFPs can learn from the 102 cases of million-dollar fraud in the Warfield study and implement better ways to operate. Some key lessons that can be taken from the case studies of fraud-affected Australian organisations include:

• Don’t allow one person to count the cash takings, prepare the deposit slip and undertake the physical banking of cash.
• Scrutinise creditors to ensure payments are not being paid to fake creditors.
• Ensure there is segregation of duties in changing credit or bank account details.
• Introduce a reporting trigger to notify customers or management within the financial institution of reversing receipts for payments which puts accounts temporarily into a negative balance.
• Conduct background checking / pre-employment screening processes to identify staff with criminal history.
• Review controls over EFT with an expert who can spot where the systems can be manipulated.
• Train staff to be focused rather than blasé when conducting regular checks and balances.

An outsourced accounting service can help by increasing staff vigilance and teaching them how to spot the signs of fraud.

Making your organisation safer

As we noted in our recent article on payment redirection scams, to combat financial risks – whether they are external scams or inside jobs – your organisation can introduce accounting strategies that segregate duties and add controls.

Talk to us about how our outsourced accounts service can reduce the risk of fraud. From providing accurate and detailed budgets that highlight unusual expenditure to freeing up the CEO to monitor the business, our team can help make your organisation safer.

For more information, contact the Next Dimension team.

The first batch of 2021 Census data has been released, with important findings highlighting a long-term decline in volunteer numbers.

The eighteenth Census of Population and Housing in Australia was taken on 10 August 2021, when we were in the second year of the COVID-19 pandemic.

The first release of Census data encompasses topics such as age structure, household types, education levels, incomes, cultural diversity, disability and health, housing tenure and unpaid work.

Reversals to previous upwards trends are a notable feature of this Census. They include a decline in Australia’s unpaid workforce.

Changes to Australia’s unpaid workforce

Some key statistics on unpaid work between the 2016 and 2021 Census counts include:

• Volunteering rates have decreased from 19.0% in 2016 to 14.1% in 2021, a decline of 26%.
• Those volunteer rates have declined across all age brackets, with the decline most pronounced in the 35–54 age bracket.
• The number of people over 55 looking after children not their own (e.g. grandchildren) has declined. Around one in eight (12.6%) of Baby Boomers are looking after children not their own (e.g. grandchildren)

Lindsay Dawson, Philanthropy Research & Insights Manager at Perpetual Limited, has analysed the Census data on volunteers as part of the Perpetual Limited report, ‘Census 2021: Numbers that matter’[i].

Dawson notes “First we need to remember – and celebrate – how crucial volunteers are in everything from sport to the arts to life-saving and life-altering social services.”  

Covid restrictions have certainly impacted volunteering, and Dawson questions whether the disruption is more than temporary.

Dawson also points out that financial pressures also hurt volunteer engagement. “Financial stress is a factor. According to the Census, the number of mortgages with payments exceeding $5,000 a month increased 60% since 2016. Pressures on the home balance sheet mean more people are working full-time; however, research tells us that women working part-time do a vast amount of volunteering.”

Charities and their volunteer base

For those charities and NFPs that rely on volunteers, the decline of the unpaid workforce will have an ongoing impact.

Reports from Volunteering Australia and ANU Centre for Social Research and Methods show similar patterns to the Census data, finding that “the total number of hours of volunteering is estimated to have fallen by around 293 million hours over a 12-month period since COVID” and suggesting that “voluntary work has been impacted harder by the COVID-19 recession than paid work”.

Data from the Australian Charities and Not-for-profits Commission (ACNC) also corresponds with the Census information. The ACNC Australian Charities Report identified a consistent volunteer decline over several reporting periods. “3.4 million volunteers helped deliver services in the 2020 reporting period. While the total number remains high, it is a decrease of approximately 220,000 on the previous reporting period. This follows a similar decrease in the reporting period before last.”

The many smaller charities that make up the sector are vulnerable, especially as the majority rely solely on volunteers. “More charities operated without paid staff (51%) than with paid staff (49%),” according to the ACNC.

Reviving our unpaid workforce

A year on from the August 2021 Census, cost of living pressures (mortgages, inflation, fuel prices) have only intensified. At the same time, employment opportunities have increased throughout Australia. With these conditions prevailing, many families prioritise paid work over volunteer work.

At this critical point, any organisation that depends on volunteers to function would benefit from a financial review and advice. Strategies to increase organisational resilience in the future include financial restructures to bolster staffing and upgrade technology, adapting initiatives to smaller pools of volunteers and prioritising volunteer drives.

Contact Next Dimension for more information.

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[i] The 2022 report ‘Census 2021: Numbers that matter: A strategic compendium for Australia’s for-purpose leaders, boards and philanthropists ’, produced by Perpetual Limited, data powered by Seer Data & Analytics.

A Next Dimension Accounting survey of Australian businesses and not for profit organisations has confirmed trends towards a major shift in the local employment market.

The survey looked at Australian businesses representing a range of industries and sectors, including private companies and NFP organisations. The majority of respondents were employing entities.

Survey findings are reflective of the wider Australian business environment and highlight issues with understaffing, hiring plans, recruitment problems and projected pay increases.

Understaffing and jobs vacant

Half of the respondents to the Next Dimension survey indicated their business was currently understaffed and a further 20 per cent were unsure regarding staffing levels.

Understaffing is currently a key issue for Australian companies and NFPs, with persistently high Covid case numbers pushing absenteeism to levels that disrupt supply chains and essential services. The survey reflects Australian Bureau of Statistics (ABS) data that shows job vacancies climbed again to 480,000 in May 2022 – more than double the number of vacancies in February 2020, according to the Australian Bureau of Statistics. The spread of the vacancies is also noticeable, with a quarter of businesses reporting having at least one vacancy in May 2022 – more than double the pre-pandemic level (ABS).

Hiring intentions

Most respondents of the Next Dimension survey (60 per cent) indicated they are in the process of hiring more staff, confirming this encouraging trend.  

In a broader sense, in July 2022 labour market insights from the National Skills Commission revealed that “25% of employers expected to increase staffing levels over the next three months.” A report on the recruitment intentions of business leaders from talent solutions provider Robert Half indicates that “More than four in five businesses (82%) are planning to hire permanent employees in 2022, with 44% of Australian employers planning to maintain headcounts and 38% of business leaders planning to expand their workforces by actively adding new positions.” (January 2022)

Hiring difficulties

An overwhelming majority of the Next Dimension survey respondents (80 per cent) agreed that they are currently finding it difficult to recruit more staff. Hiring difficulties that are widely acknowledged in the business and NFP community are also relevant to the surveyed group of employers. With more Australians now in employment and the national unemployment rate dropping to 3.5% (ABS, June 2022 period) the pool of available local workers has shrunk. It has been reduced by shortages of skilled workers from overseas due to border closures during the global pandemic. Australia’s National Skills Commission found that in July 2022, “the recruitment difficulty rate increased by 8 percentage points to reach a record high of 75% of recruiting employers”. 

Imminent pay rises

Survey respondents were asked to look at the next three months and the results were striking. Within 3 months, most of the businesses surveyed (70 per cent) plan to give their staff pay rises.

Real wage increases across different industries have followed the national minimum wage increasing by $40 per week, set by the Fair Work Commission [in effect from 1 July 2022; or from 1 October 2022 for workers in aviation, tourism and hospitality]. Pay rises for workers above the minimum wage are also happening now and the RBA is forecasting “a lift in wages growth from the low rates of recent years as firms compete for staff in the tight labour market.” (RBA Media Release August 2022)

How outsourced accounting services can solve the problem

As a team of experienced outsourced accountants, understanding these pressures and actively shaping our services to address client challenges is a key focus.

The benefits of engaging the Next Dimension team include:

• Rather than relying on one person our clients are supported by a team of professionals
• We implement technology so that businesses and NFPs can make decisions by accessing and monitoring their financial position in real time
• Our costs are fixed for the term of our client’s contract

Get in touch with us to find out more.

There are several changes related to superannuation that apply from 1 July 2022.

One change relates to the super guarantee (SG) rate, which will increase from 10% of an employee’s ordinary time earnings to 10.5% on 1 July 2022.

The ATO advises that the new rate of 10.5% must be used to calculate employee super on or after 1 July, even if some of the work was undertaken before that date.

The removal of the threshold for paying the SG can also impact payroll and accounting systems, as more employees may become eligible for superannuation. From 1 July employees can be eligible for super regardless of how much they earn. The former $450 per month eligibility threshold no longer applies. However, workers under 18 only need to be paid super if they work more than 30 hours in a week.

More detail about changes to superannuation for employees is available from the ATO website. Further changes will be introduced by 2025, when the SG rate is legislated to increase to 12%.

If you have any questions, please get in touch.

Next Dimension Accounting is client and technology focused. We work hand in hand with many charities and not for profit organisations and we are always on the lookout for new methods and tools that support their growth and success.

Online giving has become an entrenched part of donating and NFPs using digital donation tools have seen substantial gains. These are some of the current benefits, trends and implications of digital fundraising options.

The charity sector embraces many forms of giving, from gold coins dropped in a bucket to sophisticated crowdfunding campaigns that raise thousands in minutes.

It is worth exploring the newer electronic forms of donation. Digital donations can reduce your organisation’s admin, plus streamline payments, accounting and tax processes for the donor too. They may also connect your cause with new realms of potential donors. However, also consider the implications for your organisation when you use digital donation tools.

Benefits

Digital donation tools offer a range of benefits, especially to charities operating on a shoestring.

Digital tools automate the donation process. Donors enters their details and the digital tool processes payments and then issues receipts and thank-you letters. This method increases the accuracy of donor information and expedites their receipts efficiently – which is a key concern for many donors. Your office also wins, with less paperwork and the funds transferred and received efficiently. Because automation makes donating easier, it encourages giving on an ongoing, regular basis.

Digital tools accomplish donation admin tasks in a timely way. Because processes are automated you don’t need to wait for someone to be in the office to take phone calls, open the post, or issue and then mail receipts. This is a big advantage towards the end of the financial year when donors want quick receipting for tax purposes.

Digital tools utilise common devices, such as mobile phones, that donors prefer to use for their daily transactions like shopping and paying bills. This makes it simpler for the public donor to act on an impulse to give.

For your accounting purposes, reporting is easier and quicker as the digital tools work from accurate data supplied by the donor and can generate informative reports automatically in your required format. Presenting information to the board becomes easier with the reports that are generated.

The integrations that come with fundraising tools are also worth reviewing. Useful integrations such as PayPal, Facebook or Mailchimp can help with admin and marketing. Integrations like Google Analytics, for example, can make it easier for you to analyse data and interpret giving patterns.

Once your organisation is active online – through tools or third-party platforms – you extend your NFP’s potential reach to the global online audience and can communicate your cause far more widely.

Remember though to consider the financial costs in terms of fees and pricing.

Digital tools and third-party platforms now trending

While many digital tools and third-party platforms are available, we have briefly examined a few that are popular with NFPs:

Shout

• Australian owned	•  QR codes
•  Plugin website integration	•  Online auction capabilities

Shout is an Australian business that offers: tools to fundraise for the web or app; hand-held terminals to accept cards and payments; easy plug-ins for website integration; SMS keyword options for donors, which are useful for large events; QR codes directing donors to your fundraising page with a scan from their mobile phone; and an online auction platform for charities to host silent or open auctions.

Donorbox

•  Overseas platform	•  Code for website embeds
•  Website pop-ups	•  Multiple currencies and languages

Donorbox is a platform that provides a smart donation form for NFPs that embeds directly into your website or as a pop-up. The fast checkout process makes online payments smooth and stress free. The platform offers great functionality with only 1 click to set up a recurring donation. By supporting more than 20 popular currencies  and 11 different languages this platform helps your NFP acquire a global reach. Marketing your campaign is also easier with pop-up donation forms, a donor wall and a goal meter to register fundraising progress – the meter can be within your form design or embedded separately. Crowdfunding campaign pages are also quick to set up and easy to personalise to encourage donors.

My Cause

•  Australian platform	•  No platform fee on donation forms, fundraising and campaigns
•  Provides fundraising tools, including event websites	•  Peer-to-peer fundraising options

My Cause is an Australian business that operates an online crowdfunding and fundraising platform. For Australian charities it provides free fundraising. Donation forms can be tailor-made with your organisation’s branding and colours. Options include SMS giving. Donor contributions are all receipted and the funds are sent directly to the charity. The campaign reach can be extended to family and friends. Event websites offer integrations with registrations, fundraising and merchandise, as well as phone, email and ticketing support to fundraisers and donors.

GoFundMe

•  Overseas platform	•  Expert advice
•  Mobile app to improve donor and organiser experience	•  Fraud protection with donor protection guarantee

GoFundMe is a well-known overseas based business, enabling millions of users to choose a charity and launch a fundraiser for them. It has provided fast and safe fundraising options for eight years. As an experienced market leader in the fundraising space, GoFundMe is able to offer expert customer service and advice around the clock. Its services are trusted by institutions around the world and backed by a donor protection guarantee. Its tools enable funds to be raised quickly, which allows communities to be supported as soon as possible when disasters strike.

RallyUp

•  Overseas platform	•  Caters for all-virtual event or ‘hybrid’ event – virtual and in-person attendance
•  Flexible tools for virtual fundraising events	•  Fundraising activities include silent auctions, raffles and trivia contests

RallyUp is an overseas business embracing new technology to provide interactive online fundraisers. It provides a platform for fundraising activities such as silent auctions, raffles, trivia contests and paddle raises. The tools enable you to manage the whole process of virtual fundraising, including the key event and donor contributions, as well as recurring giving.

Incorporating digital donations in your processes

To incorporate digital fundraising tools in your accounts procedures, keep up to date with advice from the Australian Charities and Not-for-profits Commission (ACNC), such as their crowdfunding guide, and act on these tips:

• Calculate the real costs, such as platform fees or percentage-based plans before you sign up
• If you are a deductible gift recipient (DGR), meet your ATO requirements, for example with the issuing of receipts
• Ensure your collection, storage and use of donor data complies with relevant privacy laws.
• Ensure your Australian charity complies with the different state and territory fundraising legislation.
• Feature your online fundraising facility prominently on the homepage of your website.
• Remember that donations are voluntary and however high-tech your tools are, you still need to communicate your story and explain the worth of your cause.

Recent changes to Australian charity and NFP remuneration reporting requirements will apply to the 2022 Annual Information Statement reporting period.

ACNC Commissioner Dr Gary Johns highlighted the new disclosure rules regarding the remuneration of ‘key management personnel’ in a recent column.

These rules apply to medium and large registered charities and NFPs in Australia that submit a General Purpose Financial Statement. More details of the key management personnel remuneration parameters are here, along with useful case studies.

From 1 July 2023 the ‘related party transactions’ of charities will be more prominently disclosed in the Annual Information Statement itself. 

Which staff does it apply to?

The remuneration disclosure will apply to the NFP’s key management personnel, such as senior staff, management and other responsible people like board members, trustees or committee members, where applicable.

If the NFP engages key management personnel from a separate management entity, such as an accounting service provider, they would report the cost of that key management personnel – calculated by the hour or as a percentage of the single fee, as relevant.

An NFP’s ‘related party’ may include a board member, or a close member of a board member’s family. According to Treasury “The ACNC will provide guidance to assist charities in identifying related parties.”

Why is there a need to disclose remuneration of key management personnel?

Dr Johns points out that although it is right for a charity to pay personnel such as senior staff, and NFP staff members can be highly skilled, experienced and bear responsibility for complex operations, their renumeration should be transparent. “Being transparent about this is crucial in reassuring donors, supporters and the public that a charity is well run and uses its funds responsibly,” says Dr Johns.

Dr Johns adds that improved accountability can actually benefit the NFPs, as it “helps uphold public trust and confidence in the sector and its people”.

What does ‘remuneration’ cover?

The remuneration disclosure will encompass the wages, salaries, annual leave and bonuses of an NFP’s senior staff. It would include their paid long-service leave or a post-employment pension or termination payment.

It also encompasses non-financial items, such as:

• Free or subsidised goods
• Free or subsidised services
• Packaged fringe benefits such as the use of a car
• Medical care fringe benefit
• Housing fringe benefit.

Planning for the new rules

For more background on the issue, the ACNC provides targeted information on its website, such as guides to the renumeration of charity board members. According to the ACNC guides, “Charities should have a clear policy that outlines the manner in which remuneration is determined and the process for its approval.”

If the renumeration issue has raised some questions about your NFP organisation’s financial arrangements for paying responsible persons, discuss them with the Next Dimension team.

There are several things that set accountants apart. While their experience, communication skills, areas of expertise and focus play a role, professional qualifications and ongoing professional development are also key.

Several of our team members are Chartered Accountants. But what does that mean?

Encouraged by a new advertising campaign by Chartered Accountants Australia & New Zealand (CA ANZ) this article focuses on the value of working with a chartered accountant.

What is a CA?

A Chartered Accountant or CA is a recognised accounts professional who has completed a university degree plus the CA program of training and mentoring in chartered accounting.

In Australia CAs must produce references to be eligible for full membership of the professional institute, Chartered Accountants Australia and New Zealand (CA ANZ).

As well as being armed with all the skills of professional accountants, CAs have additional training in auditing and taxation skills.

CA credentials have long been recognised internationally. The professional accounting body dates back to 1854 with the establishment of the Institute of Chartered Accountants of Scotland. Australia’s Institute of Chartered Accountants (ICAAA) was formed in 1928 by Royal Charter and later amalgamated with the institute of New Zealand (NZICA) to become CA ANZ.

In Australia, members comply with the rigorous code of conduct for professional accountants set out by CA ANZ.

Ongoing education

CA ANZ runs the Chartered Accounting Program in Australia and is the only professional accounting body in Australia registered as a higher education provider. CA ANZ is a member of the Global Accounting Alliance (GAA).

Successful completion leads to a Graduate Diploma of Chartered Accounting (GradDipCA): an AQF accredited postgraduate qualification that is internationally recognised.

A practising CA must maintain his or her qualifications by completing 120 hours of Continuing Professional Development (CPD) every three years.

Choose a CA for surety and ease

The benefits of the choosing a CA are no secret to Australian businesses and NFPs. By engaging a Chartered Accountant you can place your organisation in good hands.  

In the search phase of finding either an employee or contractor, choosing a Chartered Accountant has distinct advantages. A simple search of the CA ANZA database can confirm if the candidate is a registered Chartered Accountant. Only Chartered Accountants holding a Certificate of Public Practice and/or who are an approved CA Specialist are on the database. 

With the valued ‘CA’ credential, the minimum standard of a candidate is readily apparent. They will have a recognised accounting or finance degree, CA training and knowledge that is internationally recognised, plus participate in ongoing professional development.

Organisations without the capacity to employ a CA can find a neat solution by engaging outsourced accounting services. Look for an accounting services company that has CAs on staff. The CA can act in different capacities, as a virtual CFO for instance, or providing advice on audit and taxation matters.

Work with a CA to transform your organisation

A CA will bring a big picture approach to solving business issues, based on their education in many aspects of accounting.

It’s one of the reasons the Next Dimension team fields four CAs, in addition to our Founder and Director who is also a CA. Our CA ‘heavyweight line-up’ means that we can provide clients with the full complement of advice and that our clients’ organisations benefit from the depth and range of a CA’s knowledge.

To find out more, get in touch today.

The Australian Government’s Budget 2022–2023 was handed down on 29 March 2022. Following two years of the pandemic, the budget is planning towards a stronger future for Australia.

In the budget the Government highlights that it will deliver its plan for a stronger future through: “Supporting small businesses to adopt digital technology and train and upskill employees with new tax incentives.”

As well as impacting small to medium businesses, parts of the budget address general cost of living pressures and taxpayer obligations. Some measures will assist the charity and NFP sector and rebuilding communities.

Next Dimension will be working with clients on the detail of changes as more information becomes available. Following are some of the key features of the budget for SMEs and NFPs.

Small Business

Government procurement to facilitate SME contractor opportunities

Proposed changes would require Government departments to split up major projects so that smaller contractors have a better chance at competing for contracts. In addition, the Department of Defence will be undertaking limited tenders with SMEs for procurements up to $500,000 from 1 July 2022

Tax breaks for small businesses that train their staff

Those SMEs with an aggregated annual turnover of less than $50 million that continue to train their workers in new skills will get a break. They will be able to deduct an extra 20 per cent of expenditure on external training courses. The effect will be a $120 tax break for every $100 spent on training. Conditions include that the training must be delivered by training entities registered in Australia.

Technology boost for small business investing in digital tools

The SMEs with an aggregated annual turnover of less than $50 million can get a 20 per cent additional tax deduction on business expenses and depreciating assets that support their adoption of digital workplace items such as portable payment devices, cyber security systems, or cloud subscriptions. The deductions will be capped at $100,000 of expenditure per year.

GDP uplift rate set at two per cent

The GDP uplift factor for PAYG and GST instalments will be set at two per cent for the 2022–23 tax year, subject to the legislation passing. This will result in lower instalments for 2.3 million small to medium businesses and sole traders. It compares favourably to the 10 per cent that would have applied under statutory formula.

Support for wellbeing of small business owners

The Beyond Blue program to provide free, accessible and tailored mental health support to small business owners will continue, with funding for the New Access for Small Business Owners of $4.6 million over two years. The Financial Counselling Australia program to provide financial counselling to small businesses facing financial issues will also continue with funding for  the Small Business Debt Helpline funded by $2.1 million over two years.

Fair Work funding

There will be funding of $5.6 million over four years for the Fair Work Commission to establish a dedicated unit to support small businesses, including unfair dismissals and general protections disputes.

Small business financial capability

There will be funding of $8.0 million for the Australian Small Business and Family Enterprise Ombudsman to work with service providers to enhance small business financial capability.

Other measures impacting taxpayers

Taxpayer compliance streamlined with automated reporting

The Government will leverage new technology and update systems to automate tax reporting requirements. This will allow companies to calculate their Pay-As-You-Go (PAYG) instalments based on current financial performance, extracted from business accounting software, with some tax adjustments. This means companies may be able to receive an automatic refund of PAYG instalments where financial performance declines.

There is also a proposal for:  

• Single Touch Payroll (STP) data to be shared with State and Territory Governments on an ongoing basis to enable the pre-filling of payroll tax returns.
• Businesses required to lodge with the Australian Taxation Office (ATO) a taxable payments annual report (TPAR) to be able to opt into automatic reporting supported by new software.

NFPs

The government announced a $2.1 billion Budget package of targeted measures “to further support Australian women and girls as part of our plan for a stronger future”. $1.3 billion is allocated to improve outcomes for women’s safety which includes  investing in community-led prevention programs.

The government also announced $26.9 million investment into allergy prevention and management, which will lead to the creation of two organisations, the National Allergy Council and National Allergy Centre of Excellence (NACE). These organisations will work together to deliver world-leading initiatives and research to improve consumer safety and prevent anaphylaxis deaths.

Flood-affected NFPs, along with primary producers, small businesses and councils, will be covered in an estimated $2.0 billion in support measures for the February/March 2022 floods in New South Wales and Queensland.

With the substantial additional investment provided in last year’s Budget to meet the increasing costs of the National Disability Insurance Scheme (NDIS), there are limited measures within this Budget specific to Australians with a disability. Additional funding is likely to follow completion of the Disability Royal Commission in 2023.

Integration across the aged, disability and veterans’ care sectors

There is a strong focus on integrating the aged care, disability and veterans’ care sectors, with a total of $17.7 million allocated to streamline workforce regulation and promote efficiencies across the three sectors, including:

• $10.8 million to develop a Cross-Agency Taskforce on Regulatory Alignment to implement the next stage of regulatory reforms across the aged, disability and veterans’ care sectors.
• $6.9 million to support the development of co-operatives and other collaborative business models across the aged, disability and veterans’ care sectors.

Conclusion

The Government describes the budget as a plan that “Delivers more jobs as we push the unemployment rate below 4 per cent, supports small business, expands and modernises Australia’s sovereign manufacturing capability, secures our supply chains and invests more in infrastructure, skills and the digital economy.”

Cybercrime is a real threat to Australian organisations.

Founded in 2015, Eftsure is an app that is designed to help companies and NFPs avoid payment error, fraud, cybercrime and financial loss.

Banks don’t match payee names to account numbers, and this can lead to errors, fraud or payments going to the incorrect accounts.

Eftsure takes away risk by allowing suppliers to:

• Log on to a secure portal to input their details
• Eftsure will then verify all required supplier details by matching the payee names to account numbers
• Each time a vendor submits or re-submits their bank details Eftsure automatically verifies that information against its network of suppliers to detect fraud.

Here is what the Eftsure dashboard looks like:

Our favourite thing about Eftsure

Eftsure reduces risks with new suppliers and enables organisations to monitor the supplier’s compliance in real time.

To find out how Next Dimension Accounting can assist your business with any accounting needs, contact us today.