Most general accountants are across the business tax rules. Fewer are across the NFP-specific ones. Choosing the wrong accountant does more than create headaches at year-end. It can cost you tax concessions you were entitled to, or worse, put your charity's registration at risk.
Why a General Accountant Can Get It Wrong
NFP accounting involves specific Australian Accounting Standards that simply do not apply to commercial businesses. Whether a grant falls under AASB 1058 or AASB 15 depends on whether the agreement contains sufficiently specific performance obligations. Getting this wrong misrepresents your financial position.
When choosing not-for-profit accounting services, look for an accountant who can demonstrate familiarity with these standards rather than just saying they work with NFPs.
The Tax Concessions That Most Often Get Missed
That gap shows up most clearly in the tax concessions.
Fringe Benefits Tax (FBT) Exemptions and Rebates
Charities registered as Public Benevolent Institutions (PBIs) or Health Promotion Charities (HPCs) can access FBT exemptions that allow employees to salary package a portion of their income tax-free up to a grossed-up cap of $30,000 per employee per FBT year (or $17,000 for public and not-for-profit hospitals).
GST Registration Threshold and Concessions
The standard GST registration threshold in Australia is $75,000 in annual turnover. For NFPs, it is $150,000. An accountant unfamiliar with the NFP rules may flag a GST registration requirement that does not yet apply to your organisation, or conversely, miss that you are eligible for GST concessions on charitable activities, fundraising events, and non-commercial supplies.
Deductible Gift Recipient (DGR) Status
If your organisation has or is applying for DGR endorsement, this is where you really need someone who has done it before. DGR status allows donors to claim a tax deduction for gifts to your organisation, which is a significant fundraising advantage. But maintaining it requires ongoing compliance.
Restricted Funding and Grant Acquittals
If your organisation receives government grants or philanthropic funding, you often have legal obligations around how those funds are spent and how you prove they were spent correctly. Your accounting system needs to track restricted and unrestricted funds separately. A Xero setup using tracking categories, for instance, is one way this is done in practice. Your accounting system needs to track restricted and unrestricted funds separately, and the chart of accounts needs to reflect that structure.
Questions Worth Asking Before You Sign Anything
Step 1: Check Whether They Actually Know the NFP Rules
Find out how many NFP clients they currently work with, and specifically whether any of those are charities registered with the ACNC.
Step 2: Ask About ACNC Registration and DGR Applications
If you need help with an ACNC registration or DGR endorsement, or you are worried about maintaining your current status, ask whether they have actually navigated that process.
Step 3: Ask How They Handle FBT for Your Organisation Type
Depending on whether you are a PBI, HPC, or another charity type, the FBT concessions differ. Ask your prospective accountant to explain which concession applies to you and why.
Step 4: Understand What Financial Reports Look Like for Governance
Your board uses financial reports to govern. Ask whether the accountant produces reporting that separates restricted from unrestricted funds, shows variance against budget, and is readable by a non-accountant board member. Most general accountants don't, so it's worth asking upfront.
Step 5: Ask About Software and How They Handle Grant Reporting
Xero and MYOB are both commonly used in the NFP sector. What matters is whether the setup aligns with how you receive and report on grants.
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