WORKPLACE GIVING PROGRAM PAYROLL …

1 ACF EMPLOYER RESOURCE SERIES: WORKPLACE GIVING PROGRAM PAYROLL requirements THE AUSTRALIAN CHARITIES FUND OPERATIONS LIMITED 2012 RWORKPLACE GIVING PROGRAM PAYROLL REQUIREMENTSACF EMPLOYER RESOURCE SERIES: WORKPLACE GIVING PROGRAM PAYROLL requirements THE AUSTRALIAN CHARITIES FUND OPERATIONS LIMITED 20122 WORKPLACE GIVING PROGRAM PAYROLL REQUIREMENTSI ntroducing WORKPLACE GivingBecause investing in the community is a great way for employers to make a difference on social and environmental issues many organisations, like ours, are establishing WORKPLACE GIVING programs . It can be very beneficial for business AND it can be very beneficial for our employees as well: It s a tax effective and convenient way to donate. It makes us feel good about working here and job satisfaction in general. It encourages community involvement with our colleagues.

2 We have a say on which charities to support and an opportunity to gain new skills and networks. Collective GIVING allows for bigger sums and more , like most things in life, diligence pays! The more organized and better run our WORKPLACE GIVING PROGRAM , the greater the rewards for everyone employees, employers and charities alike. And that s where PAYROLL comes in!How it works - in briefHere s a quick overview of how a WORKPLACE GIVING PROGRAM operates. WORKPLACE GIVING is a process allowing employees to donate money to one or more charities via pre-tax PAYROLL deductions. Many employers choose to match their employees donations, or to make one-off donations to the selected charities, as a way to show support for their employees. If applicable <employer name> has chosen to contribute <matching details>.

3 The employee must consent to the deductions. The consent can be given for ongoing regular donations (usually on each pay day) or a one-off donation. Charities to which donations are made via WORKPLACE GIVING must have Deductible Gift Recipient (DGR) status. A Deductible Gift Recipient is an organisation approved by the Australian Taxation Office (ATO) to receive tax deductible donations. The ATO permits employers to calculate tax on an employee s pay net of WORKPLACE GIVING donations. This means the employee in effect receives an immediate tax refund and is not required to keep a receipt. RACF EMPLOYER RESOURCE SERIES: WORKPLACE GIVING PROGRAM PAYROLL requirements THE AUSTRALIAN CHARITIES FUND OPERATIONS LIMITED 20123 100% of pre-tax donations from an employee are sent by the employer directly to the charity.

4 Here s an example: An employee (with a marginal tax rate of 30%) directs their employer to send a $5 donation to charity X. The employer sends $5 to charity X but reduces the employee s pay by only $ (reflecting the fact that, if the employee gave $5 to charity X outside the WORKPLACE , they would be entitled to a $ tax refund). PAYROLL requirementsHere are a few key points: All modern PAYROLL systems can facilitate a WORKPLACE GIVING PROGRAM . The process for setting up WORKPLACE GIVING deductions is quite straightforward. A WORKPLACE GIVING donation reduces the donor s PAYG liability but it does not decrease their gross income. WORKPLACE GIVING is different to salary sacrificing. WORKPLACE GIVING does not affect an employee s superannuation or PAYROLL tax calculations and is not counted as a fringe benefit.

5 WORKPLACE GIVING eliminates the need for employees to keep receipts or records of their donations to charity. Instead, it guarantees that each pay period they receive the tax benefits that come from making a donation. RINSIGHT ..Only 36% of Australians remember to claim tax deductible donations in their annual return. (Source: Givewell 2007)When an employee makes a deduction through pre-tax WORKPLACE GIVING , they effectively receive the benefit of an immediate tax EMPLOYER RESOURCE SERIES: WORKPLACE GIVING PROGRAM PAYROLL requirements THE AUSTRALIAN CHARITIES FUND OPERATIONS LIMITED 20124 Set up is easy for PAYROLL similar to other packaged items. One payment to each charity partner is made each pay run by our PAYROLL Australian Taxation Office (ATO) WORKPLACE GIVING Guidelines can be found here PAYROLL set-upIn summary, the process charity bank details and set up as vendors in completes and submits donation keys in occur automatically each month s end PAYROLL sends funds to the charity with bank narration on should acknowledge receipts of funds to produces monthly report for PROGRAM provides written advice of annual donations that employee can declare on their tax returnHere is how it works in more detail.

6 These points are all important to details: The PROGRAM Manager will provide PAYROLL with the charity s bank account and contact category: PAYROLL should create a new PAYROLL category/deduction code within the PAYROLL or accounts payable system for each charity in the forms: When an employee joins the WORKPLACE GIVING PROGRAM , they should complete a donation form (either online or paper based) and submit it to the PAYROLL Department. The PROGRAM Manager or PAYROLL can access sample forms for The Australian Charities Fund website and you can add any specific requirements like Employee : Code the employee s deduction information into the PAYROLL system. The deduction should occur automatically each pay period (PAYG withholding is reduced).Pay slip reporting: The donation amount is reported on the employee s pay slip.

7 The employee is responsible for checking that the deductions have been made correctly. RACF EMPLOYER RESOURCE SERIES: WORKPLACE GIVING PROGRAM PAYROLL requirements THE AUSTRALIAN CHARITIES FUND OPERATIONS LIMITED 20125 Remittance: After each pay period, or at end of the month, the total of all employee donations is calculated and remitted to each charity within the PROGRAM . This can be made via electronic funds transfer or cheque with a deposit narration: The recommendation is that you use a bank deposit narration that includes 3 letters to identify our organisation and 3 letters to identify that the funds relate to a WORKPLACE GIVING PROGRAM . The bank narration deposit enables charity partners to easily identify where donations have come from and that they are attributable to a WORKPLACE GIVING PROGRAM .

8 For example, XYZ Limited s WORKPLACE GIVING bank deposit narration would be XYZWPG . Include a unique bank deposit narration whenever you send a WORKPLACE GIVING donation to the charity partners. The donation should combine both the employee donations and our company s matching amount. Receipts: A charity is permitted to acknowledge the donations with one receipt per employer partner. They will send the receipt to us for our : The PAYROLL Department will be asked to generate a high-level report for the PROGRAM Manager. This data is important because it will help to assess the impact of the PROGRAM and help to guide the development of the PROGRAM . The report will record: The number of employees participating in the PROGRAM The level of financial support each charity is receiving The total amount of donations being channelled through the WORKPLACE GIVING PAYROLL is drawing up the report each donor should be counted only once a person donating to three charities is treated as one unique of financial year: At the end of the financial year PAYROLL must provide each employee with written advice on their annual donations so that the employee can declare it on their tax return.

9 This advice can be provided in a letter, by email or on their payment summary. The employee s gross income, as recorded on the PAYG Payment Summary, should not be reduced by the amount of the employee must then record their annual donation amount in their tax return in the Deductions section to ensure they don t incur any further tax liability. For more details refer to page three of The Australian Taxation Office (ATO) WORKPLACE GIVING Guidelines. Privacy: Privacy laws prohibit an employer from providing charities with an employee s personal details unless they are authorised to do so by the employee. If you are asked to provide an employee s details please refer the query to the PROGRAM EMPLOYER RESOURCE SERIES: WORKPLACE GIVING PROGRAM PAYROLL requirements THE AUSTRALIAN CHARITIES FUND OPERATIONS LIMITED 20126 Other useful informationOne of the important things about our WORKPLACE GIVING PROGRAM is our ability to measure its progress and see how we can improve it.

10 PAYROLL can assist greatly! How? By working with the PROGRAM Manager to provide additional information. Here are some examples of what you may be able to provide: Employee participation (%) by job classification/role; division; location Total donation amount ($) by job classification/role; division; location Number of donors to each charity by job classification/role; division; location Employment start date for each donor Gender of each donor vs gender breakdown of total workforce Changes in GIVING , number of people who increase their donation and $ Amount of increase; number of people who decrease their donation and $ amount of decrease; number of people who stop donating but remain with the organisation Amounts raised for charity partners through special WORKPLACE fundraising events (if relevant) The number of employee volunteer hours contributed to charity partners through employer approved events, activities and skill sharing projects (if relevant)When it comes to planning the future of our WORKPLACE GIVING PROGRAM all of this information is you have any questions about the WORKPLACE GIVING PROGRAM or the role of PAYROLL please contact < PROGRAM Manager> on <phone or email> Thank you!