Eighteen Things a Principal Needs to know about Tax GST & FBT TAX TRAINING Presented by: Greg Hart and Wayne McKenna

Objective of this Session To help you consider the impact of GST/FBT when making decisions Be proactive with tax, not reactive Reach the gold standard of tax compliance Confirm correct tax treatment with your business manager Ratify your processes and reduce risk in the event of an ATO audit

Tax Compliance Unit Unit within Financial Services Division Functions –Ensure DEECD’s tax compliance is correct –Support Service to Schools Who are we? –Irena Kielczynski; 9637 –Greg Hart; ; 9637 –Contractors DEECD Tax DEECD Tax website

Nine Things about GST

#1BAS Lodgement ATO Portal /ECI /Running Balance Account Should lodge electronically? Fact sheet available from TCU BM should check Running Balance Account twice each year AUSKey certificates in Prin and BMs name Passwords - Should not be using the previous BM’s or Principal’s. Principal delegation to BM

#2Tax Invoices Only need if > $75, but gold standard says always Rules Correct Name and Matching ABN Date GST Amount or “Total includes GST” Name and address of School (if > $1000) Discuss where trading name does not match invoice but may nominate the payment to someone else (a third party) School Purchasing Card – gold standard is to have Statement and Tax invoice

Name & Address of Supplier Date of issue Name & Address of Recipient Description of Goods & Services Supplied Quantity Supplied Amount excluding GST GST Charged Supplier Australian Business Number

#3Staff Reimbursements Schools can claim GST on staff reimbursements School must hold tax invoice – staff member must provide tax invoice. If no tax invoice: –Shouldn’t claim GST back, therefore each time it is costing the school 10% extra; or –Claim the GST back puts the School at risk if ATO audit, as no tax invoice held Principals should support Business Managers by facilitating a small presentation to morning tea encouraging staff to obtain tax invoices

#4Correct Coding in C21 G11 is the standard code for claiming GST back (must have a valid tax invoice!) G10 for capital acquisitions G13 is for input taxed only (canteen, fundraising) G01 for taxable revenue (camp food etc) G03 for GST-free revenue (most revenue) DEECD funding NS6

#5Statement by Supplier Govt Policy is - preference to deal with suppliers who have an ABN Otherwise they must sign a SBS Teachers employed at your school, cannot sign an SBS at your school (eg Active After School) When can you use them – Discuss scenarios? Not always a “get out of jail free” card Use should be limited

#6Contractor v Employee School nurse, handyman, Caretaker/ Gardener, IT technician, Instrumental Music etc etc Even if in contract – “can’t contract away your legal entitlements” Schools must work through “Contractors” fact sheet and then if still unsure, contact TCU. Risk of having to pay SGL, Workcover, Leave entitlements

#7Fundraising Its complicated and schools should use the GST tax concessions to obtain maximum benefit Various options/choices to make Prepare a budget and minute passed through school council Impacts on Uniform shops, bookshops, Functions, Trivia Nights, Dinner Dances, Fetes, etc Fundraising Wheel on tax website to help

#7aCanteens Do a budget for your canteen If profitable, generally run as input taxed Healthy Canteens, falling enrolments, socio economics could be causing the canteen to run at a loss TCU recommends that if canteen running at a loss-run as fully taxable, but consider extra admin TCU fact sheet to schools

#8Deductible Gift Recipients (DGRs) Building Funds, Library Funds Special Schools Scholarship Funds Must be endorsed by the ATO (see ABN website), separate bank account, separate receipts, limits on use of funds, True donation

#9Grants/Appropriations School should satisfy themselves about GST treatment of grants they receive. Don’t just accept what the other party says (even DEECD): –Is it a general funding payment – no conditions on use (eg SGB, most DEECD funding) – no GST –Is it a payment for a specific purpose, ie must be used for that purpose (eg C/W grants) - taxable School can be guided by the box on the DEECD remittance advice – If blank NO GST applies General discussion-Investing in Schools Grant, BER, NPP

Nine Things about FBT

#1When does FBT apply? In simple terms, FBT will be payable when the “School has PAID” for an Employee or their associate or 3rd party to receive a fringe benefit. Types of Fringe Benefits: –Car Fringe Benefit (e.g. a school car) –Housing Fringe Benefit (Principal/teacher relocation) –Tax Exempt Body Meal Entertainment: School Council Dinners Business Managers cluster Christmas meeting (party) School Christmas party for staff

#2 FBT Tracker FBT Tracker –Nil Returns –Other benefits –Car benefits Principal delegation to Business Manager FBT year: 1 April to 31 March

#3How do schools pay FBT? School report events on FBT Tracker At the end of each FBT year school data is collected and paid by DEECD on behalf of the schools to the ATO in May- June DEECD sends a tax invoice to the school for the amount of FBT

#4How much will it cost ? ROUGH CALCS A simple but ‘rough’ calculation is to multiply the value, say $100 expense; $100 X 96% = $96 FBT PLUS the original $100 Therefore TOTAL COST = $196 or whatever portion school has contributed X 96%

#5Some fringe benefits are exempt from tax These include work related items (ie “otherwise deductible”): Mobile phones (where used primarily for use in employment). Protective clothing required for employment. Briefcase, calculators, tools of trade, elect. diary Laptop computers (limit 1 per FBT year & business use) Newspapers, Subscriptions to trade or professional journals Travel costs associated with relocating an employee Taxi trips beginning or ending at work or taxi trips between work, home or hospital where the employee is sick or injured. Contributions by an employer to an eligible childcare centre

#6Minor Benefit Rule Infrequent, irregular < $300 each inclusive of GST Difficult to record Not subject to FBT NB: Schools generally cannot use minor benefit exemption on entertainment – only in limited circumstances

#7When is a car subject to FBT? What is “Private Use”? Taking school cars home –overnight and –private car use Home to work travel is private, with some exceptions Home garaging is therefore (generally) private If garaged at School will be less likely to be deemed private use All travel is deemed private unless a log book is maintained Does you school have a “private use” policy?

#8 Entertainment by Way of Food or Drink – TR 97/17 Why –Social vs Business What –Finger food vs 3 course meal Consumption of alcohol will taint the whole event as subject to FBT File notes are very important DEECD Tax unit undertakes desk audits to verify that Schools’ entertainment expenditure is correctly treated as FBT or otherwise Where –On site vs Off site When –Business hours vs After hours –December vs other months

#9 Fringe Benefits No FBTFBT (Record on FBT Tracker) Working BeeAny event with alcohol Parent Teacher (onsite) Dinner vouchers Happy Hour (gold coin) Happy hour (no gold coin) Wine to presentersCorporate boxes School Council Dinner (on site)Council dinner (off site) XMAS party (staff pay) Theatre tickets Morning tea (onsite/light refresh)Teacher games expense Shopping complex vouchersGolf days