Eighteen Things a Principal Needs to know

about TaxGST & 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; kielczynski.irena.e@edumail

9637 3281– Greg Hart; hart.greg.j@edumail ; 9637 3702– Contractors

DEECD Tax websitehttps://edugate.eduweb.vic.gov.au/Services/Finance/Pages/Tax.aspx

Nine Things about GST

#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 BM’s or Principal’s.• Principal delegation to BM

#2 Tax Invoices

• Only need if > $75, but gold standard says always• Rules Correct Name and Matching ABN

DateGST 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

Furniture Ltd

11 ABC Road Phone: 999 9999Melbourne VIC 3000 Fax: 989 9999

TAXINVOICE

ABN Number 98-765-432

To: DEECD Date: 1 July 2000 1 Spring Street Melbourne. VIC 3000Quantity Description of Goods and Services Unit Price Total

10 Tables $100.00 $1,000.00

Plus Goods and Services TaxTotal Amount Due

$ 100.00$1,100.00

Name & Address of SupplierName & Address of Supplier

Date of issueDate of issue

Name & Address of RecipientName & Address of Recipient

Description ofGoods & Services

Supplied

Description of Goods & Services

SuppliedQuantitySuppliedQuantity Supplied

Amount excluding GST

GST Charged

Supplier Australian Business Number

#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:– 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 staff @ morning

tea encouraging staff to obtain tax invoices

#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

#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

#6 Contractor 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

#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

#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

#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

#9 Grants/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

#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

#2 FBT Tracker

• FBT Tracker– Nil Returns– Other benefits– Car benefits

• Principal delegation to Business Manager

• FBT year: 1 April to 31 March

#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

#4 How 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%

#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

#6 Minor 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

#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?

#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 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