By Alisa Sainoski

Donating to our Country’s Bush Fires

It is heartening to see the outpouring of support in the wake of our countries bushfire crisis.

In 2020 there are so many ways to give, as social media unites people in remarkably charitable ways.  However, before you donate you should be aware of where your money is going, how it might be used, and where it leaves you at tax time.  So let us help you, help them.

As you are all aware you can claim a tax deduction as long as you are giving $2 or more to a registered organisation endorsed as a Deductible Gift Recipient (‘DGR’), get a receipt and are not receiving any benefit from the donation.  However, in the age of internet there are plenty of other ways money finds its way to a cause.

Take Live Streaming for example.  Users have been supporting their favourite gamers and social media influencers chipping in hundreds of thousands of dollars for donations to the wild fires.  However, while the money is obviously well-intentioned, it’s a complicated way to give.

Basically you are giving Money to another individual who isn’t registered as a charity or with the government.  It’s unlikely you’ll receive a receipt and it doesn’t sound like it is tax deductible.  While that might not be a concern for those who throw in a few dollars, it might leave a bitter taste in the mouths for those who chipped in upwards of a $1,000.  However, it also potentially leaves the gamers and social media influencers in a pickle because if the gamer wants to claim the deduction they would need to claim it as income so it all becomes a really complicated way to do something quite simple.

The most common social media fundraisers are on Facebook and crowdsourcing platforms like GoFundMe and Givit.  Thankfully they’re also a little more straightforward.  On sites like Facebook, it is typically a lot more direct.  You will very often be clicking on a link which will then take you to an appeal website.  If not, Facebook donations are direct to charities themselves, meaning as long as it is registered with the Australian government you will be eligible for a deduction.  The same goes for GoFundMe and Givit.  You can check whether the donations can be deductible through the ABN Look up.

Ultimately though, you are probable better off just donating directly.

Bushfire donations from a Super account

The damage from Australia’s bushfire disaster has come up with large-scale donations to bushfire relief.  Self-managed Superannuation Fund (‘SMSF’) Members, as trustees, are more vulnerable to breach early access provisions as they directly control access to their member accounts.  SMSF members need to be aware that SMSF’s are prohibited from making donations as it is a clear breach of the sole purpose test.

However there are ways around this, as any member may draw on monies which they hold the withdrawal personally, as if they were using it for themselves.  If this is what you are planning on doing, it would be wise to contact your financial planner and discuss these options.

For Members drawing from their SMSF to make a donation they must meet a condition of release, which could involve either fully retiring or finishing a job after the age of 60.  Apart from actual retirement after perseveration age, a useful trigger of release between the ages of 60 and 65 is the cessation of a situation of employment as retirement is not required.  Members under the age of 60 would not be able to access their super for donation purposes, but may be able to do so under financial hardship provisions if they had been personally affected by the fires.  The Australian Taxation Office (‘ATO’) decides, and not the trustee of the SMSF, on whether a trigger of release due to compassionate grounds is allowable.  To receive the qualification is quite difficult.  As the compassionate grounds of release of monies is generally for medical expenses, but can also include being able to make a payment on a loan. Generally this latter relief is only available to prevent the loss of the member’s principle place of residence if the member is legally responsible for making mortgage payments.  If the member qualified for release on compassionate grounds, they could only access a maximum amount up to three months’ worth of loan repayments plus 12 months’ interest on the outstanding loan balance.

The expansion of the Taxable Payment Reporting Systems (‘TPRS’)

The ATO requires small businesses in certain industries to report information about payments they make to contractors.  The building and construction industry has been reporting TPRS for a while now, and in the 2018-2019 financial year it was extended to cleaners and couriers.  For the 2019-2020 financial year it has been further extended to road freight, IT, security, investigation or surveillance.  The businesses which may not actually identify as operating within those particular industries are now caught in the change and will be included in those covered services.  As an example of a business which provides courier services, even if it’s only part of their services, they now may need to lodge a taxable payments annual report each year and include payments to contractors and subcontractors that provide courier services on their behalf.  The ATO website notes that businesses supplying “road freight, security, investigation, surveillance or IT services will need to report payments to contractors if the payments are for road freight, security, investigation or IT services”, with the first annual report due to be lodged by 28 August 2020.

AUSKey to be scrapped

The AUSKey system will no longer be used for businesses to report to the ATO.  AUSKey was a way to send business information to the government online.  From 1 April 2020, you will need to use MyGovID and Relationship Authorisation Manager (‘RAM’) instead.  The ATO believe this new process will be more secure, streamlined and flexible way to report information.  According to the Australian Business Registration website, “AUSKey and Manage ABN Connections will continue to be supported while you move to MyGovID and RAM.”

It states that access to business services after 31 March will first require businesses to link their ABN to their MyGovID using RAM.  MyGovID requires the app to be downloaded on your smart devices which can be downloaded on more than one device and will need you to provide a passport, driver’s license and/or Medicare card with the option to include your birth certificate.

Once you have scanned these documents on the app, you will need to follow the steps when logging into the Business Services on the ATO “Online Services”.  MyGovID will be used for Individuals, Sole Trader, Partnerships and Companies.

If you have any questions or would like us to write on a specific topic, please do not hesitate to contact us.

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