Eighteen Things a Principal Needs to know about Tax

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Eighteen Things a Principal Needs to know about
Tax

• GST FBT TAX TRAINING
• Presented by
• Greg Hart and Wayne McKenna

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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

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Tax Compliance Unit

• Unit within Financial Services Division
• Functions
• Ensure DEECDs tax compliance is correct
• Support Service to Schools
• Who are we?
• Irena Kielczynski kielczynski.irena.e_at_edumail
  9637 3281
• Greg Hart hart.greg.j_at_edumail 9637 3702
• Contractors

DEECD Tax website https//edugate.eduweb.vic.gov.a
u/Services/Finance/Pages/Tax.aspx
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Nine Things about GST
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1 BAS 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 BMs
  or Principals.
• Principal delegation to BM

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2 Tax Invoices

• Only need if gt 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 gt 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

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Name Address of Supplier
Name Address of Supplier
Supplier Australian Business Number
Amount excluding GST
GST Charged
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3 Staff Reimbursements

• Schools can claim GST on staff reimbursements
• School must hold tax invoice staff member must
  provide tax invoice. If no tax invoice
• Shouldnt 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 staff _at_
morning tea encouraging staff to obtain tax
invoices
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4 Correct 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

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5 Statement 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

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6 Contractor v Employee

• School nurse, handyman, Caretaker/ Gardener, IT
  technician, Instrumental Music etc etc
• Even if in contract cant 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

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7 Fundraising

• 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

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7a Canteens

• 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

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8 Deductible 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

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9 Grants/Appropriations

• School should satisfy themselves about GST
  treatment of grants they receive. Dont 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

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Nine Things about FBT
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1 When 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

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2 FBT Tracker

• FBT Tracker
• Nil Returns
• Other benefits
• Car benefits
• Principal delegation to Business Manager
• FBT year 1 April to 31 March

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3 How 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

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4 How much will it cost ? ROUGH CALCS

• A simple but rough calculation is to multiply
  the value, say 100 expense100 X 96 96 FBT
  PLUS the original 100
• Therefore TOTAL COST 196 or whatever portion
  school has contributed X 96

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5 Some 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

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6 Minor Benefit Rule

• Infrequent, irregular
• lt 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
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7 When 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?

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8 Entertainment by Way of Food or Drink TR
97/17

• Where
• On site vs Off site
• When
• Business hours vs After hours
• December vs other months

• 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

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9 Fringe Benefits
No FBT FBT (Record on FBT Tracker) Working
Bee Any event with alcohol Parent Teacher
(onsite) Dinner vouchers Happy Hour (gold
coin) Happy hour (no gold coin) Wine to
presenters Corporate 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 vouchers Golf days