A reminder to check your School Building Funds’ compliance with the ATO requirements.coinjar

School and College Building Funds may attract the attention of the ATO’s compliance program this year.  The ATO develops and implements its compliance program annually, which identifies key areas for its compliance activities for the financial year.  The compliance program targets areas of risk of non-compliance with taxation laws, which will be subject to greater ATO scrutiny for the year, to encourage greater compliance with taxation laws within the community.  School and College Building Funds have been identified as a potential area of focus for the 2016-2017 ATO compliance program.

In 2013, the ATO, on behalf of the Commissioner of Taxation, released Taxation Ruling 2013/2 which made significant changes to the ATO’s assessment of School Building Funds.  Managers of School Building Funds are encouraged to review their School Building Funds in light of the taxation ruling, and the possible ATO compliance focus this year, to ensure that their funds are complying with the ATO requirements.

Please do not hesitate to contact Bill d’Apice if you would like a review of your School Building Fund and its compliance with TR2013/2.

Click here to read our previous article on the Taxation Ruling and School Building Funds.

Bill d’Apice, Partner | +61 2 9233 9013 | wdapice@makdap.com.au

As advised in Issue 1: Governance, during the course of advising charities and not-for-profit (NFP) organisations over many years, we have noticed some common issues that are important to our clients. Over the next few months, we will continue to run a series of short summaries of those legal issues that every charity and not-for-profit organisation should consider.

This month we will deal with the topic of charitable tax concessions.

Charities and some NFP organisations may be entitled to receive a range of Federal and State tax concessions. It is important that you are familiar with these so you can take advantage of them. This may enable your organisation to free up capital to spend on your charitable or NFP objectives.

If your organisation is a charity it must be registered with the ACNC in order to be eligible to be endorsed by the ATO for Federal tax concessions.

In order to make sure your organisation is registered and endorsed for all the tax concessions that it is entitled to we recommend you consider the following:

Have you checked which Commonwealth tax concessions your organisation is currently endorsed to receive?
Click here for the ABN lookup.

Is your organisation registered as a charity with the ACNC? If so, it may be eligible to be endorsed for:
* Income tax exemption
* Goods and Services Tax (GST) concessions
* Fringe Benefits Tax (FBT) rebate
We recommend that all charities seek the above tax concessions.

Is your charity or NFP entitled to be endorsed for Deductible Gift Recipient (DGR) status?
DGR status is not available to all registered charities, only some limited categories of charities and NFP organisations are eligible to be endorsed to offer DGR receipts to donors. This is a very sought after tax status that is worth investigating. Click here to view ATO’s DGR table.

If your charity or NFP is endorsed with DGR status, is it entitled to receive and registered for FBT exemptions?
We note these are more lucrative than the FBT rebate.

Is your charity or NFP entitled to receive State, Territory or local government tax concessions? 
These are in addition to Federal tax concessions and may include stamp duty (a tax paid on some financial and property transactions), payroll tax (a tax on wages which exceed a certain threshold), land tax, and rates concessions (for local government council rates).

Your charity or NFP organisation may also be entitled to receive other tax concessions so please do not hesitate to contact us with any queries related to tax concessions that you might have.

Tax MoneySummary – Earnings derived from “new” activities that do not directly support the NFP organisations altruistic purposes are now subject to tax.

We thought it appropriate to provide an update on the proposals for taxation of unrelated business activities (commonly referred to as “UBIT”).

In the 2011-12 Federal Budget the government announced it will reform the tax concessions provided to not-for-profit (NFP) organisations to tax the earnings after 1 July 2011 generated by ‘unrelated commercial activities’ of NFP organisations.  Earnings derived from activities that do not directly support the NFP organisations altruistic purposes are now subject to tax.

Continue Reading Update: NFPs and UBIT (taxation of ‘unrelated business income’)

Woman confused while filling out tax formSummary – California couple donated real estate worth USD18 million to a charity but their failure to complete the Internal Revenue Service (IRS) form correctly lead to their loss of the entire associated tax deductions.

California couple, Joseph and Shirley Mohamed, donated real estate worth USD18 million to a charity in 2003 and 2004 but their failure to follow instructions on how to document their donations when completing the Internal Revenue Service (IRS) form lead to a loss of the entire associated tax deductions.

Joseph and Shirley Mohamed set up a charitable remainder trust and donated six (6) properties to it. Under the tax relief allowed to these types of trusts, the couple would have been entitled to USD4.2 million in immediate charitable contribution deductions and another USD15 million in future years.

Continue Reading California couple loses USD18 million over IRS form filling error