Foreword

Navigating the National Disability Insurance Scheme (NDIS) in Australia can be quite a challenge, especially for smaller operators. The NDIS sets high standards to ensure the safety and well-being of participants, and keeping up with these standards is essential. Many providers find compliance tough due to limited resources and ever-changing regulations. However, having effective back-office processes like thorough documentation, regular staff training, and good incident management can make a big difference. These practices not only help avoid fines and damage to reputation but also improve the quality of services provided.

Putting solid operational structures in place can make compliance a part of everyday routine rather than a daunting task. Investing in good back-office practices such as regular audits and seeking expert advice helps NDIS providers stay on top of their regulatory requirements. This proactive approach not only reduces risks but also promotes continuous improvement, benefiting both providers and participants in the NDIS community.

 

  Guide for NDIS Providers in Australia: Staying Compliant

 

1. The Current Compliance Requirements for NDIS Providers

Overview of NDIS Compliance: The National Disability Insurance Scheme (NDIS) sets stringent standards to ensure the safety, well-being, and rights of participants. Compliance is mandatory for all providers, regardless of size. Key areas include:

• Registration Requirements: Providers must be registered with the NDIS Quality and Safeguards Commission. This involves meeting specific criteria, including qualifications, experience, and capability to provide services.
• NDIS Practice Standards: These standards cover various aspects such as participant rights, provider governance, service delivery, and the environment. Providers must demonstrate adherence to these standards during audits. Learn more about NDIS Practice Standards.
• Worker Screening: Ensuring that all workers have passed the NDIS Worker Screening Check is essential. This check assesses the background of workers to ensure they do not pose a risk to participants.
• Incident Management: Providers must have processes in place to manage incidents, including reporting and responding to incidents involving participants. Detailed guidelines can be found here.
• Complaints Management and Resolution: Providers need to have a robust system for managing complaints to ensure participants’ concerns are addressed promptly and effectively. For more information, visit Complaints Management and Resolution.
• Quality Management Systems: Implementing and maintaining a quality management system helps ensure continuous improvement and compliance with NDIS standards.
• Documentation and Record-Keeping: Maintaining accurate and comprehensive records is also crucial. This includes service agreements, incident reports, worker training records, and participant feedback.

 

How does this impact your back office?

This heightened level of compliance requires NDIS providers to take back office operations seriously, ensuring that financial records are also maintained to a certain standard, not jut operational information. Key scenarios include:

• Detailed Record-Keeping: Ensure all transactions, including payments to workers, services provided, and any incidents or complaints, are meticulously documented. Accurate records help in tracking compliance and financial health.
• Compliance with Worker Screening Payments: Regularly verify that payroll includes only those workers who have passed the NDIS Worker Screening Check. This prevents potential legal issues and ensures participant safety.
• Incident Management Records: Document all incidents in financial records to ensure transparency and preparedness for audits. Incident-related costs should be tracked and analysed.
• Accurate Billing and Invoicing: Maintain precise records of all services provided to ensure accurate billing and compliance with NDIS funding guidelines. This helps in avoiding disputes and ensures timely payments.

 

2. NDIS Audits and Common Issues

How NDIS Audits Work:

After being audited (usually every 18 months), your auditor will evaluate how well you meet the NDIS Practice Standards and give you one of four scores:

1. Conformity with Elements of Best Practice: This is a high praise for your processes – well done!
2. Conformity: You meet all the basic requirements. It’s a pass, but there’s room for improvement.
3. Minor Non-Conformity: Usually a documentation issue. You’ll need to submit a Corrective Action Plan to the NDIS Commission within five days. If you have fewer than three minor issues, they’ll check your fixes at your next regular audit, 18 months later.
4. Major Non-Conformity: This means you have three or more minor issues or something more serious. Immediate action is needed.

If You Fail an NDIS Audit:

Whether you get minor or major non-conformities, start by submitting a Corrective Action Plan within five days.

• Minor Non-Conformities: You have 18 months to fix the issues.
• Major Non-Conformities: You need to act quickly. Implement your plan and book a corrective audit within three months.

After the corrective audit, you’ll get one of three results:

• Conformity: You fixed the issues and now meet the standards. Your next audit will be in 18 months.
• Minor Non-Conformity: Issues are downgraded to minor. You’ll be audited again in nine months.
• Major Non-Conformity: If issues remain, the NDIS Commission will decide if you can continue providing services.

Common Reasons for Failing Audits:

1. Poor Documentation: Not having adequate documentation is a common issue. Use NDIS management software to keep everything organized and up-to-date.
2. Lack of Preparation: Auditors need to see evidence of your compliance. Make sure all your documents, incident records, and risk assessments are ready for review.
3. Outdated Staff Information: Ensure your staff’s qualifications and competencies are up-to-date and documented. Use software that helps manage staff information and qualifications.

Ramifications of Non-Compliance: Failing to meet NDIS compliance requirements can lead to severe consequences, including:

• Financial Penalties: Providers can face substantial fines for non-compliance. These fines can be a significant financial burden, especially for smaller providers.
• Suspension or Revocation of Registration: Serious breaches can result in the suspension or cancellation of a provider’s registration. This can lead to the loss of ability to provide services under the NDIS, affecting revenue and business operations.
• Damage to Reputation: Non-compliance can lead to loss of trust and damage to the provider’s reputation, affecting their ability to attract and retain participants. A tarnished reputation can have long-term impacts on business growth and sustainability.

 

3. The Operational Structures and Expert Resources Recommended to Remain Compliant

Establishing Effective Operational Structures:

• Governance and Leadership: Strong leadership and governance structures are vital. This includes a dedicated compliance officer or team responsible for overseeing compliance efforts. Effective governance ensures accountability and strategic oversight.
• Staff Training and Development: Regular training sessions for all staff on NDIS standards, incident management, and complaint handling are essential. Continuous professional development helps staff stay updated on best practices and regulatory changes.
• Internal Audits and Reviews: Conducting regular internal audits helps identify and address compliance gaps before external audits. Internal audits should cover all aspects of service delivery and administrative processes.

Leveraging Expert Resources:

• Compliance Consultants: Hiring NDIS compliance consultants can provide valuable insights and guidance on maintaining compliance.
• Legal Advisors: Legal experts can help navigate complex regulatory requirements and ensure all legal obligations are met. Legal resources for NDIS providers.
• Technology Solutions: Implementing compliance management software can streamline documentation, incident reporting, and audit processes. Explore technology solutions.

Checklist: Operational Structures

1. Appoint a dedicated compliance officer
2. Establish compliant financial processes
3. Establish governance and leadership structures
4. Conduct regular staff training and development sessions
5. Implement internal audits and reviews
6. Leverage expert resources and technology solutions

Impacts on Bookkeeping and Payroll: Red tape and extra compliance requirements can mean more headaches, especially for the inexperienced operator. Accessing expert resources early in your establishment can greatly improve your operational efficiency and avoid issues in future.

• Be Audit Ready: Prepare financial records for internal and external audits, ensuring all transactions are accurately recorded and categorised. Regularly review and reconcile accounts to maintain audit readiness. Maintain best practice bookkeeping and payroll processes will be critical!
• Governance and Oversight Costs: Budget for the salaries of compliance officers or consultants. Ensure financial plans include provisions for compliance oversight.
• Training Expenses: Allocate funds for regular staff training sessions and development.

 

4. The Ongoing Processes and Timings to help you Remain Compliant and Complete ‘Self-Audits’

Ongoing Compliance Processes:

• Regular Training and Updates: Continuous education for staff on updated NDIS standards and practices. Regular updates ensure that staff are aware of any changes in compliance requirements.
• Incident and Complaint Management: Promptly addressing and documenting all incidents and complaints. A proactive approach to incident management helps in mitigating risks and maintaining trust.
• Participant Feedback: Regularly collecting and acting on feedback from participants to improve service quality. Participant feedback is crucial for continuous improvement and ensuring service satisfaction.

Suggested Timing for Compliance Activities:

• Monthly: Review incident and complaint logs, conduct staff training sessions. Monthly reviews help in early identification of potential compliance issues.
• Quarterly: Internal audits to assess compliance with NDIS standards, review participant feedback. Quarterly audits ensure ongoing compliance and allow for timely corrective actions.
• Annually: Comprehensive self-audit, update quality management systems, renew worker screening checks, and ensure all documentation is up-to-date. Annual self-audits provide a thorough review of all compliance aspects and help in preparing for external audits.

Self-Audit Checklist:

1. Review of Compliance Documentation: Ensure all required documents are complete and up-to-date. This includes policies, procedures, incident reports, and training records.
2. Staff Training Records: Verify that all staff have completed necessary training. Maintain a log of all training sessions and participant details.
3. Incident and Complaint Logs: Check for thorough documentation and appropriate responses. Review incident logs for patterns and take corrective actions as needed.
4. Participant Feedback: Evaluate feedback for areas of improvement. Implement changes based on feedback to enhance service quality.
5. Quality Management System Review: Assess the effectiveness of the quality management system and identify areas for enhancement. Ensure that the quality management system aligns with NDIS standards and best practices.

Impacts on Bookkeeping and Payroll:

• Documentation Review: Regularly review financial documents to ensure compliance with NDIS standards. This includes ensuring that all expenses are properly recorded and justified.
• Training Costs: Track and manage costs associated with staff training and development. Include training expenses in financial forecasts.
• Audit Costs: Budget for the costs of internal and external audits. Ensure that audit costs are factored into the annual financial plan.
• Incident Management Costs: Document and manage costs related to incident management and resolution. Include these costs in financial reports to ensure transparency.

By following these guidelines, smaller NDIS providers can maintain compliance, ensuring the safety and satisfaction of their participants while avoiding potential pitfalls.

 

How Visory Can Help You Stay Compliant

Navigating NDIS compliance can be challenging, but you don’t have to do it alone. Visory specialises in helping providers like your financial compliance requirements smoothly and efficiently. Here’s how we can support you:

• Expert Guidance: Our team of experts will support you through the financial compliance process, ensuring you meet financial NDIS standards.
• Document Management: We help you maintain thorough and organised financial documentation, so you’re always audit-ready.
• Audit Preparation: We assist you in preparing for audits, making sure all necessary financial documentation is up to date and accessible.

Don’t let compliance issues disrupt your service delivery. Reach out to Visory today for expert support and ensure your business remains compliant and successful.

Visit us at www.visory.com.au to learn more and get started.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small businesses are always looking for ways to reduce their tax bills, whether it’s through tax offsets or deductions. But did you know that you may be eligible for a Small Business Income Tax Offset? The Australian government offers it to help qualified businesses with their taxes. 

If you are eligible, you’ll receive a rebate of up to $1,000. The Australian Taxation Office (ATO) calculates the offset based on the part of your business income subject to taxes. It’s important to note that there is a turnover threshold limit. 

This comprehensive guide will provide the answers to questions you may have about tax offsets, tax deductions, and more.

What Is a Tax Offset?

A tax offset is a discount on the amount of taxes you owe. The amount of taxes you pay gets reduced by the amount of your rebate. So, if you owe $1,000 in taxes and have a $200 offset, you only pay $800 in taxes.

It could reduce your payable income tax to zero. There are two types of offsets: refundable and non-refundable.

• Refundable offsets: can be used to reduce the amount of tax you owe to zero, and if you have a balance of rebate left over, you will receive a refund for the amount.
• Non-refundable offsets: can only be used to reduce the amount of tax you owe—they cannot give you a refund.

The amount of rebate you receive depends on individual circumstances. However, the ATO notes that most are non-refundable.

What Is a Small Business Income Tax Offset?

The Small Business Income Tax Offset is an offset available to unincorporated small businesses in Australia. The rebate is available for the business’s taxable income. The ATO caps it at $1,000 per annum.

The offset helps small businesses with their tax liability and encourages entrepreneurship and growth. To be eligible for the compensation, companies must have an annual turnover of less than $5 million.

The Small Business Income Tax Offset is one of several offsets that are available to small businesses in Australia. Other offsets include the Small Business Capital Gains Tax Concessions and the Small Business CGT Exemption.

Small Business Income Tax Offset vs. Tax Deduction

One way to reduce your tax bill is by taking advantage of tax offsets and deductions. What is the difference between a tax offset vs. a tax deduction?

A tax offset is a reduction in the amount you owe after taxes. If you owe $10,000 in taxes but have a $1,000 rebate, you will only owe $9,000 in taxes.

A tax deduction, on the other hand, reduces the amount of income before taxes. So, if you have $100,000 in taxable income but you can deduct $10,000 in business expenses (excluding personal costs), then only $90,000 of your payment will be taxed.

Business expenses may include: 

• Employee salaries
• Marketing expenses
• Financing expenses 

Who Is Eligible for a Small Business Tax Offset?

The offset is strictly available to individuals who operate a small business as a sole proprietor or have a portion of the net small business revenue from a partnership or trust distribution. Foreign residents qualify if they meet the requirements—as well as foreign businesses of Australian residents.

From the 2021–22 income year forward, individuals must have an overall turnover of less than $5 million. If you meet these criteria, you may be eligible for a Small Business Income Tax Offset with a rate of up to 16% offset.

Eligibility requirements are: 

• Less than $5 million annual turnover in the 2022–23 financial year 
• A due lodgment date of no later than 31 October 2023 for the 2022–23 financial year 
• Must be an individual obtaining a small business organisation income (unincorporated entity)

Who Is Not Eligible?

If you do not meet the above criteria, you will not be eligible for the Small Business Income Tax Offset. 

The following are not eligible:

• Incorporated companies 
• Corporate unit trusts, public trading trusts
• Individuals with an annual turnover of more than $5 million 
• Any individual with a business controlled by another entity or person
• Businesses that are part of a group of entities with a combined turnover of more than $5 million

How Is the Tax Offset Calculated?

The ATO calculates the offsets based on the Small Business Income Tax Offset rates and thresholds that apply for the relevant financial year. As mentioned, the ATO calculates the rebate using a 16% rate of offset. The ATO also uses a business’s tax return data to calculate the offset amount.

The balance then gets sent to you as a line item on the notice of assessment. But if you are math savvy, you can estimate your rebate.

Example:

Oliver is a sole proprietor. He has a $50,000 taxable income and a $12,500 tax burden for the 2022–2023 income year. His total assessable income from his firm is $25,000.

Oliver must first determine what proportion of his taxable income is attributable to his firm (taxable income divided by total net small business income):

• $25,000 / $50,000 = .05 (50%)

Oliver’s business accounts for half of his taxable income. Oliver then applies this to calculate how much of his entire net revenue is attributable to his tax liability:

• $12,500 x 0.5 = $6,250

He calculates his rebate from the small business he owns using the small business offset rate (16%): 

• $6,250 x 0.16 = $1000

Oliver’s final offset is the maximum cap limit of $1000. It’s important to note that the offset is non-refundable, so any excess it generates above a person’s tax burden is forfeited. If the final rebate had been $3,000, it would decrease to the limit of $1,000. You can use the offset calculator to determine what to enter on your return. 

What Is a Tax Offset Calculator?

The ATO Small Business Income Tax Offset calculator helps you figure out the amount you must provide in the field labelled “Net small business income” on your return. However, this calculator will not determine your offset amount—as specified above. The ATO is in charge of this.

How Do You Claim Your Small Business Tax Offset?

Your business can claim the Small Business Tax Income Offset if you meet all eligibility requirements by filing a tax return for the relevant year. You don’t need to submit a form. 

Final Take

Do you still have questions about what is a tax offset? If you want to know more about tax offsets or any other aspect of your business’s taxes, it’s best to speak to an accountant or tax professional. They will be able to give you tailored advice that considers your circumstances.

Visory’s bookkeeping service can help you prepare for tax time and take advantage of small business income tax offsets and deductions. Our marketplace of finance experts can take accounts payable, accounts receivable, payroll, reporting, and more off your hands. You can book a meeting with the Visory team to learn more about our services here.

As the old saying goes – with new levels come new devils. Just as you’re getting your head wrapped around running your new business, it starts growing!

Great, congratulations! You’re hiring employees and building teams and with that comes essential reporting to track your business’s development. Top line figures are easy to capture, but with this wave of new and different information there are many hazards to avoid, and strategies needed for you to gain the most insight.

Time Periods & Performance Metrics

Not all months are created equal. A known and irrefutable fact. However, you’ll often see monthly reports that say sales increased 2% or that the number of customers decreased 3%, without explanation. Dig a little deeper before jumping to conclusions and running the risk of making business decisions without an informed view.

Turn your attention to performance-related measures and ratios. Sales dropped over the month? Check your daily sale averages. Number of customers dropped? Check to see your appointment vacancies compared to last month.

In short, don’t simply look at what has occurred, but use relevant performance measures and ratios to confirm why or how this might have resulted. If you still find a variance in desired performance, then you are at least left with a more detailed insight into where your business needs to improve.

Standardise or Die

Yes, the standardisation of calculations is that extreme.

This issue can be straightforward to resolve. But as your business grows, things can become lost in translation easily, so it needs to be revisited often. With reporting streams and responsibilities being shared, place effort into not only agreeing on KPIs and business wide reports, but also ensure that involved parties understand why you are working towards those goals AND how they are calculated.

If you are looking at CAC (Customer Acquisition Cost), make sure you agree on the expenses included in the calculation.

When looking at sales for the month, decide if existing client upsell is included in the total.

If you are looking at client churn, clarify if this includes involuntary churn or not.

Simple decisions, clear lines of communication, and constant reflection will help to ensure the report you read is interpreted the same way throughout your business.

A|B Testing

Not every business will be able to A|B test. Such testing lends itself to mature tracking and data environments, which not all industries or business models have access to. However, those that do utilise this capability need to be wary of reading too deeply into their results and drawing conclusions to fit their hypothesis rather than challenge it.

Say you have a website to convert customers, and you test a landing page variation. You split traffic evenly and track how many customers add an item to cart or leave their details for your sales team. After a few weeks, you check the results to find that your new page variation outperformed your original page. Eureka, your business has improved, sales will go through the roof, and you’ll guarantee retirement by 45.

Wrong.

All this test proved is that you had more people adding an item to cart or leaving you their contact details. Did those carts lead to purchases? Were those carts above your average cart size? What was the average mark-up on items in those carts? Did the contact details you captured result in a meeting? Did any result in a sale?

These are tough questions to answer, and not always necessary to conclude testing. Although if you aren’t reporting the full journey of your user, make sure you don’t overreach with your interpretations. Every unanswered question leaves an assumption, and you should make note of this when reporting results or making strategic decisions. For assistance in comparing your test results, use this A|B test calculator to ensure you are following best practice.

As your business grows you will encounter these and many more issues for the first time, which can be challenging to tackle along with the day-to-day running of your business. Whether it is validating the information you are seeing or ensuring your performance measures are accurately calculated, it takes time, experience, and investment to get right. Visory provides real-time customised reporting to suit your specific needs, and a complete back-office team to validate all your information, giving you the confidence to continue growing your business, your way