The National Disability Insurance Scheme (NDIS) represents a significant shift in how disability services are funded and delivered in Australia. As an NDIS service provider, understanding your tax and Goods and Services Tax (GST) obligations is crucial to maintaining compliance and ensuring the financial health of your business. This article explores the key tax and GST considerations for businesses operating within the NDIS framework.
Tax Obligations for NDIS Businesses
1. Income Tax: NDIS service providers must declare all income received from NDIS participants and the NDIS itself as assessable income. This includes:
- Direct payments from the NDIS for services provided.
- Co-payments from participants.
- Any other revenue generated from NDIS-related activities.
It’s essential to keep accurate records of all income and expenses to determine your taxable income correctly. Deductions can be claimed for business expenses incurred in generating this income, including salaries, rent, utilities, and supplies. However, only expenses directly related to the NDIS business operations should be claimed.
2. Employee Obligations: If your NDIS business employs staff, you must comply with PAYG withholding requirements. This means you need to:
- Withhold tax from your employees’ wages and remit it to the Australian Taxation Office (ATO).
- Provide your employees with payment summaries at the end of each financial year.
- Report these amounts to the ATO through Single Touch Payroll (STP).
Superannuation must also be paid for eligible employees, ensuring contributions are made at least quarterly.
GST and NDIS Businesses
1. GST Registration: NDIS service providers must register for GST if their annual turnover meets or exceeds the GST registration threshold of $75,000. It’s important to note that the $75,000 threshold relates to your total turnover, not just your GST turnover. This means that even if all your supplies are GST-free, such as providing assistance with daily living, you may still need to register for GST. However, you will not be required to pay GST on your GST-free income.
Once registered, businesses need to:
- Charge GST on taxable supplies.
- Lodge Business Activity Statements (BAS) regularly.
2. GST-Free Supplies: Most services provided under the NDIS are GST-free. This includes services that meet the following criteria:
- They are provided under a written agreement between the provider and the NDIS participant.
- They are listed as reasonable and necessary supports in the participant’s NDIS plan.
Examples of GST-free services include:
- Daily personal activities assistance.
- Therapeutic supports.
- Home modifications.
It’s essential to understand which of your services are GST-free to correctly charge your customers and report in your BAS.
3. Mixed Supplies: In some cases, an NDIS business might provide both GST-free and taxable supplies. For example, if you sell assistive technology or mobility aids, these items might attract GST. In such scenarios, businesses must:
- Correctly identify and separate GST-free and taxable supplies.
- Ensure accurate invoicing to reflect the GST status of each supply.
Record Keeping and Compliance
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Maintaining comprehensive and accurate records is vital for NDIS businesses to meet their tax and GST obligations. Key records include:
- Invoices and receipts for all transactions.
- Written agreements with NDIS participants.
- Documentation supporting GST-free supplies.
- Employee payroll records and superannuation contributions.
Records must be kept for at least five years and be readily available for review by the ATO if required.
Remember, understanding and managing your tax and GST obligations is essential for the success of your NDIS business. Regularly review your compliance practices and consult with professionals to ensure you are on the right track.
Seeking Professional Advice
The complexity of tax and GST obligations for NDIS businesses underscores the importance of seeking professional advice. Accountants and tax advisors with experience in NDIS regulations can provide tailored guidance, ensuring your business remains compliant and optimises its tax position.
At AccountsDynamic, we specialise in assisting NDIS service providers with their tax and GST needs. Our team of experts is dedicated to helping you navigate the regulatory landscape, allowing you to focus on delivering essential services to your clients.
For more detailed information or to discuss your specific circumstances, please contact AccountsDynamic. Our experienced professionals are here to support your NDIS business at every step.
Contact Us:
- Phone: 1300 013 379
- Email: hello@accountsdynamic.com.au
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal, financial, or tax advice. For specific advice tailored to your business, consult with a qualified tax professional.