This week, as we keep moving through our payroll/hr series, we look at the Workplace Giving Program, what it is and how to go about setting it up. This is a little known program that can be quite affective for your business.
What is a Workplace Giving Program?
Often you will have you or your staff will have a connection with a charity and like to give to them regularly. The Workplace Giving Program is a simple and effective way for employees to regularly donate to charities or organisations that are entitled to receive tax deductions.
It is optional and both the employee and the employer must agree to participate. The charity or organisation that you are giving to must have deductible gift recipient (DGR) status.
What are the benefits of a Workplace Giving Program?
For Charitable Organisations, the program provides long term, stable funding for core programs. There is little or no administrative costs as there is no need to issue receipts or spend time attracting donors.
For employees, the program is affordable, through a program that is transparent and trustworthy, with no costly fundraising activities. Employees can make donations in an efficient and tax-effective manner, eliminating the need to collect receipts or wait until the end of the year to claim a tax refund.
For employers, workplace giving can provide a low cost, community/business partnership that has little administrative work while building employee morale, but mobilising significant funding and volunteer involvement.
How does a Workplace Giving Program Work?
If you would like to offer a Workplace Giving Program to your staff then there are a few steps involved.
- Choose what charities you would to have involved in the program (remember they must be a DGR.
- Invite your employees to enter into the program
- Your employees will nominate their preferred charity from your selection above
- Your employees with specify the amount they wish to donate – usually this is a set amount to be deducted from the salary or wages each pay day.
- You then pay the donation directly to the charity
The Workplace Giving Program does not affect the way your employees’ gross income, super guarantee payments or fringe benefits are worked out.
How to run a Workplace Giving Program?
If you like the idea of a Workplace Giving Program, then the following steps will help you ensure you meet your obligations as an employer.
- Decide on the charities you want to have in your Work Place Giving Program, invite them to participate – you can choose or or several charities
- Get the Charities you have chosen to give you their banking details so you are able to deposit directly into their account the lump sum amounts
- Work out if you want to specify a minimum amount per pay to be donated for each participating employee
- Decide if you are going to do the program as a salary sacrifice or as a deduction from your employee’s pays. If you do it by salary sacrifice this will reduce the amount of tax they will pay on their gross wages.
- Approach each of your staff members and find out if they are interested in participating in the program and if so, what charity/s are they wanting to donate to and the amount they are wanting to donate each pay.
- Deduct the agreed donation amount from the income you pay to each participating employee and pay it as a lump sum to each charity.
- Make sure you keep records of all transactions, from what is deducted from your staff to what is paid to the charity
- At the end of the financial year, advise each participating employee in writing of the amount they have donated
Keeping your employees informed
If you have employees participating in a Workplace Giving Program, they must be advised in writing of the total amount they have donated. They can be notified either by letter, email or on their payment summary.
If you choose to notify them by letter or email you must:
- Provide your name and ANB
- Provide the employee’s name
- Sate the total amount donated for the year
- State that the amount was donated to a charity
- State the financial year in which the donation was made
If you choose to provide the information in the employees’ payment summaries, working out where the information goes depends on what type of payment summary you are using.
Self-print payment summary
If you print your own payment summaries, the total amount of donations made by an employee under a Workplace Giving Program can be shown in the same way as union fees – that is, by adding a line of text in the free space on the payment summary.
You do not need to list each organisation, just show ‘Workplace Giving’ in the deductions section and the total amount of donations for the year.
ATO Payment Summaries
If you use ATO Payment Summaries and you do not deduct union fees on behalf of your payees, you can use the ‘Union Fees’ box to show your employee’s total donations to charities under the program. Under ‘name of Organisation’, write ‘Workplace Giving’ and include the total donations in the corresponding ‘amount’ box.
If you deduct union fees on behalf of your payees, you cannot use ATO payment summaries to notify your employees of the amount they have donated. You should provide your employees with a letter or email.
What happens when your employees do their tax returns?
Your employees’ individual tax returns are not affected by Workplace Giving. Donations made under a Workplace Giving arrangement and donations made direct to charities are reported in the same way on the tax return.
Total gross income and tax withheld, as notified on payment summaries, must be shown at item 1 (salary or wages). The total amount of donations made to charities should be shown at item D8 (gifts or donations).
So all in all, the Workplace Giving Program is fairly easy to set up and administer. I think it would awesome if all employees participated in this program. If you would like more information on the Workplace Giving Program you can go to the ATO’s website and look things up.