Why Charity Accounting Matters
Running a charity in Australia comes with significant financial responsibilities that go well beyond managing donations and expenses. Proper accounting is about transparency, sustainability, and legal compliance. Charities have a duty to their donors, beneficiaries, and the broader public to demonstrate that funds are being managed responsibly and used in accordance with the organisation's charitable purposes.
At Trinity Accounting Practice, we specialise in accounting for charities and not-for-profit organisations across Sydney and Australia. We help charities meet their reporting obligations, access tax concessions, and implement financial systems that support long-term sustainability.
ACNC Registration and Compliance
Every charity operating in Australia must be registered with the Australian Charities and Not-for-profits Commission (ACNC) and hold an Australian Business Number (ABN). Depending on the structure and activities, some charities also require a Tax File Number (TFN). Registration with the ACNC is a prerequisite for accessing most Commonwealth tax concessions, and maintaining registration requires ongoing compliance with governance standards and reporting obligations.
The ACNC has established governance standards that all registered charities must meet. These cover the purposes and not-for-profit nature of the charity, accountability to members, compliance with Australian laws, suitability of responsible persons (directors or committee members), and duties of responsible persons including care, diligence, good faith, and proper use of information and position. Our business advisory team helps charity boards understand and meet these standards.
Financial Reporting to the ACNC
The level of financial reporting required depends on your charity's annual revenue. All registered charities must lodge an Annual Information Statement (AIS) with the ACNC each year. In addition to the AIS:
Small charities (revenue under $500,000) lodge the AIS only — no financial report is required, although maintaining accurate financial records is still essential.
Medium charities (revenue between $500,000 and $3 million) must submit reviewed financial reports prepared in accordance with applicable accounting standards.
Large charities (revenue over $3 million) must provide audited financial statements prepared by a registered company auditor or audit firm.
The AIS must be lodged within six months of the end of the charity's financial year. Late or incomplete lodgement can result in compliance action, including warnings, directions to comply, or in serious cases, revocation of charity registration. Our team assists charities at all size levels with AIS preparation and financial report compilation.
Tax Concessions Available to Charities
Registered charities may be eligible for a range of tax concessions that can significantly reduce operating costs. These concessions are not automatic — charities must be endorsed by the ATO for each concession they wish to access.
Income tax exemption — most registered charities are exempt from paying income tax on their revenue, provided the income is applied towards the charity's purposes.
GST concessions — charities registered for GST can access certain concessions, including the ability to account for GST on a cash basis regardless of turnover, and concessional treatment of certain fundraising activities. Charities must register for GST once annual turnover reaches $150,000 (compared to the standard $75,000 threshold for other organisations).
Fringe Benefits Tax (FBT) exemptions and rebates — charities that are endorsed as Public Benevolent Institutions (PBIs) can access FBT exemptions, allowing them to offer salary packaging benefits to employees without incurring FBT. The FBT exemption cap for PBIs is $30,000 per employee per FBT year. Other charities that are not PBIs may still qualify for an FBT rebate of 48% on the grossed-up taxable value of fringe benefits provided to employees.
Deductible Gift Recipient (DGR) status — charities with DGR endorsement can receive tax-deductible donations, which significantly enhances their ability to attract donor funding. Not all charities automatically qualify for DGR status — the endorsement depends on the charity's purposes and activities, and must be applied for separately.
BAS, GST, and Payroll Obligations
Charities with annual turnover exceeding $150,000 must register for GST and lodge Business Activity Statements (BAS) either monthly or quarterly. The BAS reports GST collected on sales, GST paid on purchases, and PAYG withholding from employee wages.
If your charity employs staff, you must withhold PAYG tax from wages, pay superannuation at the current rate of 11.5% for 2024-25 on ordinary time earnings, and report through Single Touch Payroll (STP) Phase 2 with every pay run. Charities operating in sectors covered by specific awards — such as the SCHADS Award (Social, Community, Home Care and Disability Services) — must ensure payroll systems correctly apply the minimum pay rates, penalty rates, and allowances specified in the award.
Volunteers are not paid wages and are therefore not subject to PAYG, superannuation, or STP requirements. However, reimbursements paid to volunteers for out-of-pocket expenses (such as travel or materials) should be properly documented and recorded as expenses rather than wages. Our bookkeeping team helps charities configure Xero to handle award-based payroll, volunteer reimbursements, and BAS lodgement efficiently.
Salary Packaging for Charity Employees
One of the most significant employment benefits available to charities — particularly those endorsed as PBIs — is salary packaging. Salary packaging allows employees to receive part of their remuneration as non-cash benefits (such as mortgage payments, rent, or living expenses) that are exempt from FBT up to the relevant cap. For PBI employees, this effectively increases their take-home pay without increasing the charity's employment costs.
Implementing a salary packaging program requires careful structuring to ensure compliance with FBT rules and to avoid exceeding the exempt cap. Our team can help charities establish and manage salary packaging arrangements that attract and retain quality staff while maximising the tax advantages available.
Financial Controls and Fraud Prevention
Charities handle funds that belong to the public and must implement strong financial controls to protect those funds and maintain donor confidence. Best practices include separating financial duties so that different people are responsible for authorising payments, processing transactions, and reconciling accounts. Regular financial reviews and periodic internal audits help identify irregularities before they escalate. Clear written policies for handling cash donations, grant funds, and petty cash should be established and communicated to all staff and volunteers.
All donations and grants must be used in accordance with the donor's intentions and any grant conditions. Grant acquittal reporting — which demonstrates how grant funds were spent — is a common requirement for government and philanthropic grants, and accurate bookkeeping throughout the grant period makes acquittal preparation straightforward.
How Trinity Accounting Practice Supports Charities
We provide comprehensive accounting and advisory services tailored to the charity and not-for-profit sector. This includes ACNC and ATO compliance support including AIS preparation, DGR applications, and tax concession endorsements. We handle bookkeeping and payroll management including award-based payroll and salary packaging. Our tax team manages BAS lodgements, income tax exemption compliance, and FBT reporting. We prepare financial reports at all levels — from small charity AIS-only requirements through to audited financial statements for large charities.
For charities that need strategic financial oversight, our Virtual CFO division, VCFO Australia, provides budgeting, cash flow forecasting, board-level financial reporting, and governance support to help charity boards make informed decisions and demonstrate accountability to stakeholders.
Trinity Accounting Practice
Accounting Firm in Beverly Hills, Sydney
Phone: 02 9543 6804
Address: 159 Stoney Creek Road, Beverly Hills NSW 2209
Website: www.trinitygroup.com.au
Weekend and after-hours appointments available
Our Virtual CFO division, VCFO Australia, provides strategic financial management, budgeting, forecasting, and compliance support for growing businesses and not-for-profits.
Learn more about what we offer
Discover the industries we specialise in
Read more tax and accounting tips on our blog
Our mortgage brokerage division, Nexus Wealth Partners Pty Ltd, assists clients with home loans, refinancing, and business finance.
Disclaimer: Information provided on this website is intended as a general overview only and does not replace professional advice tailored to your personal circumstances.
