Oz: Is the EEVblog An Educational or Scientific Organisation? - Page 1
Forum section: electronics / general

author: EEVblog
author_rank: Unknown
timestamp: May 18, 2017, 10:09:38 am
content: If so I could be income tax free. Hmm...https://www.ato.gov.au/Non-profit/Your-organisation/Do-you-have-to-pay-income-tax-/Types-of-income-tax-exempt-organisations/Educational-organisations/https://www.ato.gov.au/Non-profit/your-organisation/do-you-have-to-pay-income-tax-/types-of-income-tax-exempt-organisations/scientific-organisations/

author: Muttley Snickers
author_rank: Unknown
timestamp: May 18, 2017, 10:15:54 am
content: For some of us it's a religious institution so add this one below as well.https://www.ato.gov.au/non-profit/getting-started/in-detail/types-of-charities/religious-institutions--access-to-tax-concessions/#Religiousinstitution

author: cjm
author_rank: Contributor
timestamp: May 18, 2017, 10:28:12 am
content: and maybe even a community service organisation too?!https://www.ato.gov.au/Non-profit/your-organisation/do-you-have-to-pay-income-tax-/types-of-income-tax-exempt-organisations/community-service-organisations/

author: EEVblog
author_rank: Unknown
timestamp: May 18, 2017, 11:07:53 am
content: Quote from: cjm on May 18, 2017, 10:28:12 amFor forum is most certainly a community service.I have contacted my accountant to see what he thinks.Part of my email reasoning:1) The primary goal of my EEVblog Youtube channel for the last 8 yearshas been engineering and scientific education. It's basically all thechannel does.2) The primary goal and focus of my business is to produce educationalvideos which I provide for free to the public. There is no paidcontent or paid courses.3) About half of my income comes from companies who advertise on mychannel and website in order to generate income for me to produce moreeducational content.4) At least half of my new full time employee's job is to provideadditional free educational videos and content.5) I provide and maintain a public internet community forum that costsmoney to run, and it is free for the benefit of the public andengineering and scientific education.6) I take a wage and occasional bonuses, but basically all of thecompany profit goes back into running what is essentially a freeeducational business.I think I might have a good case to spin off the EEVblog into a tax-exempt educational institution

author: X
author_rank: Regular Contributor
timestamp: May 18, 2017, 11:18:06 am
content: Mate, I would love to see you pull this one off.If all else fails:7) Advancement of religion (by virtue of a "following" or fan base.)But what about the products you have such as EEVBlog meter and uCurrent? The ATO may see this as being taxable income.And given the nature oftax lawyou may even want to consult a tax lawyer (ie. not me) if the accountant can't sort it out.A brief look around also suggests some NSW-specific tax laws too, so this could get very interesting.

author: mrpackethead
author_rank: Super Contributor
timestamp: May 18, 2017, 11:24:28 am
content: Quote from: Muttley Snickers on May 18, 2017, 10:15:54 amArch Bishop DAVID.Members of the forum will be refered to as brothers or sisters.I am appointing my self as treasurer, you can send your mandatory 10% of your income to sendmeyourmoney@sendmeyourmoney.com

author: cjm
author_rank: Contributor
timestamp: May 18, 2017, 11:37:59 am
content: That all makes absolute sense Dave. One great educational value of the forum I see is that student members get to interact with experienced engineers from industry. So, the very best with this! I'm sure the forum here would support this in anyway possible - maybe letters of support from people involved in education and industry? I'm not an Aussie, so maybe not of any help, but I teach in an EE department (mostly software/networks unfortunately!) - but let me know if I can help.

author: Towger
author_rank: Super Contributor
timestamp: May 18, 2017, 12:07:24 pm
content: Selling products is where it gets murky. But the simple solution is to spin it off into a separate 'EEV Sales and Services' company. We did this then our government had a lower Corporation Tax rate for manufacturing companies. The down side was keeping two separate sets of accounts and associated costs.

author: Cerebus
author_rank: Super Contributor
timestamp: May 18, 2017, 01:39:15 pm
content: Quote from: Towger on May 18, 2017, 12:07:24 pmDepends. The London Internet Exchange (LINX), sells goods and services to its members but is constituted as a not-for-profit company limited by guarantee and that is recognised by the taxman (in the UK obviously). The turnover on goods and services is around £13 million. The amount of surplus (what would be profit for a fully commercial company) that can be retained without attracting taxation is limited compared to what a charity could retain from selling goods and services as a means of fund raising. I wouldn't be surprised if Australian tax law was similar in both respects. That is, there are not-for-profit endeavours that receive some tax concessions and there are fully fledged charities that are tax exempt, but both can trade in goods and services to raise funds for their principal aims.

author: EEVblog
author_rank: Unknown
timestamp: May 18, 2017, 02:25:34 pm
content: Quote from: X on May 18, 2017, 11:18:06 amYes, and I think it may need two companies to work, although that remains to be seen. One does the commercial products, the other does the free educational stuff.That's basically how it operates at the moment anyway, with the commercial product sales paying for a lot of the free stuff.Will be interesting.Of course I still pay personal income tax on my wages, no escaping that.

author: EEVblog
author_rank: Unknown
timestamp: May 18, 2017, 02:30:50 pm
content: Quote from: Towger on May 18, 2017, 12:07:24 pmYes, there is certainly extra cost in that. It needs a new company, bank accounts etc). But if the tax saving from the educational part pays for that then it's worthwhile.Off the bat I can't see why I couldn't do this, as it's the very reason the ATO have tax-free thresholds for education. Would be interesting to know if any other Oz online content producer (Youtube or otherwise) has done this before.

author: CJay
author_rank: Super Contributor
timestamp: May 18, 2017, 02:31:08 pm
content: It's easy to become an ordained minister, simple as paying a small fee and filling out your details on a form, some even do it for free but would you really want to?Best pursue the educational side of things and leave the magic to religious nuts and RF designers...

author: Jeroen3
author_rank: Super Contributor
timestamp: May 18, 2017, 02:35:05 pm
content: Do you have to pay any taxes on the value of mailbox items?

author: X
author_rank: Regular Contributor
timestamp: May 18, 2017, 02:48:14 pm
content: Quote from: CJay on May 18, 2017, 02:31:08 pmI've been considering this just out of principle, but have become rather preoccupied in recent times. I can become an ordained minister, then have some fun with various churches around the place. As an old saying goes, fight fire with fire.Quote from: Jeroen3 on May 18, 2017, 02:35:05 pmOnly on items he purchased from somewhere in Oz. I believe they have (or want to) introduce GST for overseas purchases too, but I'm not sure if this has been given the green light yet.

author: LaserSteve
author_rank: Super Contributor
timestamp: May 18, 2017, 02:56:12 pm
content: If EEVBLOG is a religion, will we violate the forum rules by declaring ourselves Anodist or Cathodelic? Is magic smoke holy?Just kidding..Steve

author: X
author_rank: Regular Contributor
timestamp: May 18, 2017, 03:11:14 pm
content: Quote from: EEVblog on May 18, 2017, 02:25:34 pmThis could turn into a mess if you're not careful, thecommonwealth Corporations Actis a beast. This act also covers small businesses that are not incorporated.Quote from: LaserSteve on May 18, 2017, 02:56:12 pmAnd new recruits shall henceforth be known astranbrothorsandtransistors.

author: skarecrow
author_rank: Regular Contributor
timestamp: May 18, 2017, 03:28:32 pm
content: Quote from: X on May 18, 2017, 03:11:14 pmAnd the non-followers resistors? :-DSent from my XT1565 using Tapatalk

author: cdev
author_rank: Super Contributor
timestamp: May 18, 2017, 03:40:56 pm
content: Its complicated and it might limit a great deal of what you do, at the same time, its obvious to me, you really like that aspect of EEVBlog and it shows. My first impulse was that yes, its a natural, but then thinking about the double edged sword of bureaucracy, I thought, maybe not.Maybe you could have a separate organization that was an educational nonprofit and share whatever functionality was legal to share without breaking rules on commingling funds.Keep in mind that whenever you are involved with government or government money, all sorts of new requirements kick in.As a nonprofit is a quasi-public entity they have to be somewhat accountable to the public.Also.. increasingly its not just local/state (or provincial)/national laws you may need to deal with, also now international rules and organizations exist, which currently few if any of us need to interact with, but thats changing fast and a new and quite bizarre world is emerging there - with its own share of corruption.. International orgs at the top level are variously open to in many cases totally opaque to external accountability at the human being level, and THEY also have rules that in the future (not so often but more often than we think) will likely apply, that are completely different.That said, its clear there will be huge opportunities opening up in technical education for society and I would much rather have a knowledgeable and pragmatic person like you involved in that than out of touch academics or purely for-profit entities that might have questionable business practices.The for-profit educational industry is becoming a real drain on many people's futures and for a long time Ive felt that people could do much better. What this blog seems to be extremely good at is facilitating peoples self-directed educational paths, helping them connect up with others with like skills and experiences. Its a very efficient new kind of education.

author: mtdoc
author_rank: Super Contributor
timestamp: May 18, 2017, 05:28:18 pm
content: I believe in the US you need to apply for and be granted non-profit status. Is that true in Australia? If so, why not just apply and see what happens?

author: mrpackethead
author_rank: Super Contributor
timestamp: May 19, 2017, 03:24:38 am
content: Quote from: skarecrow on May 18, 2017, 03:28:32 pmif you truely believe though you will be a transformer

author: Jeroen3
author_rank: Super Contributor
timestamp: May 19, 2017, 05:36:14 am
content: Quote from: X on May 18, 2017, 02:48:14 pmBut stuff is being sent in as gift, right? Doesn't that violate some rules regarding non-profits/tax-exempts?

author: Brumby
author_rank: Unknown
timestamp: May 19, 2017, 06:11:02 am
content: Dave has some homework to do on this, that's for sure.I, too, believe there will need to be two separate entities to allow this to fly - the trick will be putting the right stuff under the right entity....

author: amspire
author_rank: Super Contributor
timestamp: May 19, 2017, 06:55:53 am
content: Quote from: EEVblog on May 18, 2017, 02:25:34 pmI think this is the way to go. Trying to function as a pure research or educational organisation will have a lot of restrictions.You will have the fun of Dave Jones of EEVblog paying Dave Jones of EEVblog Research for a study of the various technologies visible in chip dies. Then Dave will have to pay Dave of EEVblog Education to make a video and for the cost of the Internet bandwidth and hosting costs. Then if you want to set up a charity foundation to encourage the setting up of electronics clubs in schools, Dave of EEVblog can donate money and equipment to Dave of the esteemed and respected EEVblog Foundation.

author: EEVblog
author_rank: Unknown
timestamp: May 19, 2017, 06:58:01 am
content: Just spoke to my accountant at length, and yes it's possible, but no there really isn't any tax advantage that he can find.Simplistic example - An educational institution really shouldn't be a profit making business, and if it is then that's iffy, and if it isn't (e.g. I take out all the income as wages) then there is no point being a tax-free entity. It gains you nothing.Also, there is a clause in the tax system that gets you for setting up entities and schemes with thesole purposeof minimising tax. This essentially comes under tax evasion.I can probably avoid that by saying I'm doing it for the good of the community (which I am of course), but it's still a red flag.He'll mull it over some more and talk to some colleagues, but basically it would a be a lot of hassle for little or no gain.

author: Brumby
author_rank: Unknown
timestamp: May 19, 2017, 07:07:14 am
content: I was wondering about the benefit of doing this and I'm not surprised by your accountant's comment.The only real benefit might be from access to other benefits - such as exemption from GST and other perks.Still, I'm not in a position to speak with any authority on this.

author: amspire
author_rank: Super Contributor
timestamp: May 19, 2017, 07:09:37 am
content: I think your accountant is forgetting you do do genuine education and research.To qualify for a research tax incentive, I think the research company has to have a budget of at least $20,000 and it qualifies if:QuoteIt may be an advantage if you can move the costs of buying equipment, parts, PCB prototyping, etc to the research company.

author: EEVblog
author_rank: Unknown
timestamp: May 19, 2017, 07:15:28 am
content: Quote from: amspire on May 19, 2017, 07:09:37 amHe's not. I can set up an educational organisation, but ultimately it comes down to how much you can claim and in what way based on your expenses, income sources, wage apportionment etc. It's hard to explain in detail.QuoteThat's called the R&D tax concession (unless you are talking about another thing entirely that I'm not aware of?) and is a different thing. I had my accountant calculate that the other month and what I can gain, and it's not a huge amount but worth registering for and doing. It's a very tricky and non-straight forward calculation.It doesn't matter how you move the money either, those expenses are just ordinary business expenses anyway, claimable under my current scheme or any other scheme.Every dollar I spend on equipment and services etc is automatically a business expense already.My company as it stands doesn't pay a huge amount of tax anyway (but still the 30% company tax rate of course) because the actual taxable business profit after all expenses and all wages is not huge.And regardless of how you do it, or what scheme you set up, you can't avoid personal income tax when you takes wages and franked dividends. The tax max has all bases covered.

author: mtdoc
author_rank: Super Contributor
timestamp: May 19, 2017, 07:21:13 am
content: In the U.S. perhaps the biggest benefit of being a non-profit is that it allows people to give you money or items and then deduct that from their taxes as charitable giving.I believe that is often the only reason to do it. For example my wife recently applied for and got non-profit status for our sons school PTO. It's a win-win since it encourages more donations while lowering the tax bill of those donating.It's not about personal financial gain for the person running the non-profit organization- or at least it shouldn't be!Perhaps in this case it could encourage donations via Patreon, etc at least for the Aussies - I'm not sure how that works internationaly.

author: amspire
author_rank: Super Contributor
timestamp: May 19, 2017, 07:27:19 am
content: I am not much good on tax, but my understanding is that if you spend $20,000 on R&D, you can claim a tax offset of 43.5% or $8,700. The incentives aren't as good as they used to be when you could get over 100% offsets.I think you can claim the R&D part of the EEVblog business anyway, but the paperwork can be difficult. If you have a separate company that only does R&D work, it may be easier to manage.I know absolutely nothing about being an Educational body, so I will leave that to others.Edit: I was involved with a company that moved its design team to a new research company. This was when there was a 125% offset. It did involve moving to a different building, and there was no overlapping staff. That was all to make it a clear as possible to auditors that our resources were not shared by the main company in any way (even though we were often in the manufacturing company sorting out production problems.)

author: Halcyon
author_rank: Unknown
timestamp: May 19, 2017, 07:31:13 am
content: Well all I can say Dave is your company would be more trustworthy and law-abiding than some of the other "educational institutions" and "religious organisations" which have previously set up shop in Australia.Also, come next Census, I'd be more than happy to list my religion as being a follower of "Dave Jones' Group of Mentors". Alternatively "Null" sounds just as good. ;-)

author: EEVblog
author_rank: Unknown
timestamp: May 19, 2017, 07:36:10 am
content: Quote from: mtdoc on May 19, 2017, 07:21:13 amYes, but that's not a great as many people think, and is actually a common misunderstanding about tax deductible items.ExampleAssume your taxable income after all deductions is $100,000, and you pay 25% tax, or $25,000Donating $10,000 to charity reduces your taxable income to $90,000, and you now pay $22,500 taxOk great, but you've spent $10,000 to save $2,500 in tax.But you feel good because at the end of the day you've only paid $7500 and the charity gets $10,000Believe it or not a lot of people think that they get the whole $10,000 back

author: Halcyon
author_rank: Unknown
timestamp: May 19, 2017, 07:43:14 am
content: Quote from: EEVblog on May 19, 2017, 07:36:10 amSame goes with "business expenses". People buy computers, laptops, phones, stationary etc... for the sake of it, thinking they can "just claim it back on tax". But you only get the GST component back (and a portion of any reduction in value depending on the asset).Sure, if it's something you're going to buy anyway and you can make it work for you in terms of a genuine work related expense, then great, you lower your taxable income, get a little back and possibly eliminate paying the Medicare levy surcharge.Otherwise it's a waste of money. You're better off just putting the money in the bank.

author: EEVblog
author_rank: Unknown
timestamp: May 19, 2017, 07:43:46 am
content: Quote from: amspire on May 19, 2017, 07:27:19 amI'm afraid it doesn't work like that, it's much sneakier (to the advantage of the ATO of course).This is the example from my accountant who had to spent a long time with the ATO to have them explain it:QuoteSo you pay $40k in R&D costs and only get back $6k, or 15%.As I said, still worth it, but not the 45%/43.5% you expect.The tax office equivalent to "banner specs"

author: mtdoc
author_rank: Super Contributor
timestamp: May 19, 2017, 07:46:25 am
content: Quote from: EEVblog on May 19, 2017, 07:36:10 amYes, of course. I didn't say or mean to impky that they saved money, only that they reduced their tax bill. That fact in itself motivates some people to give more. Win-Win because rhey get to feel good about giving and feel good about paying less taxes!Then again, maybe you're right, maybe some people are dumb enough to think they actually save money by giving it away.

author: EEVblog
author_rank: Unknown
timestamp: May 19, 2017, 08:08:45 am
content: Quote from: Halcyon on May 19, 2017, 07:43:14 amYou see them going crazy at the computer markets on the 30th June all with arms full of gear saying exactly that!

author: EEVblog
author_rank: Unknown
timestamp: May 19, 2017, 08:09:56 am
content: Quote from: mtdoc on May 19, 2017, 07:46:25 amYou'd be surprised at the number of people I know who actually think "I'll get it all back on tax"

author: dimkasta
author_rank: Regular Contributor
timestamp: May 19, 2017, 12:27:54 pm
content: You still get the VAT back, and the tax that corresponds to its cost.This drops the actual cost significantly.It does not make sense to spend money just for the sake of it, but if you need the equipment and can make money out of it, then it's a no-brainer.

author: rstofer
author_rank: Super Contributor
timestamp: May 19, 2017, 04:45:52 pm
content: Quote from: EEVblog on May 19, 2017, 07:36:10 amAnother way to look at it: You have just forced the government to pay $2500 to your favorite charity. A charity they may not like... The NRA comes to mind...

author: EEVblog
author_rank: Unknown
timestamp: May 20, 2017, 01:34:17 pm
content: Quote from: rstofer on May 19, 2017, 04:45:52 pmNo, you forced tax payers to donate to your favorite charity.

author: rstofer
author_rank: Super Contributor
timestamp: May 20, 2017, 03:04:47 pm
content: Quote from: EEVblog on May 20, 2017, 01:34:17 pmYup! That's ok too!Knowing that some of the taxpayers absolutely hate your favorite charity is just icing on the cake!Living in the ultra-liberal state of California, I get absolutely giddy about forcing them to sponsor my favorite charity!Second cool thing: It applies to State taxes as well. Kind of a two-fer...

author: amspire
author_rank: Super Contributor
timestamp: May 20, 2017, 04:08:49 pm
content: Quote from: rstofer on May 20, 2017, 03:04:47 pmThe problem is I have done some IT work for charities and I have seen the way money is wasted. I am talking about hundreds of thousands of dollars for charities that are complaining they are absolutely desperate for money. One of the big problems is they accept a free top-of-the-line service/hardware/whatever totally funded a major donor company. The boards of the charities are often immensely proud of landing this killer deal. Costs nothing! What could go wrong?Well after a few years, the donor company stops the payments and then the charity has to pay itself for this unnecessarily expensive and over-complicated service that they now totally depend on. I have seen small charities paying bills of over $60K a year for services that they would be better off without because of this problem.In many cases there are really excellent open source alternatives that would do the job far better. But the problem is the open source software is not free (there is some real labour involved in setting it up and running it) and it is hard to get donations for installing and running free software. It seems to often be much easier for charities to get $100K solutions approved/funded then for superior $5K solutions to solve the same problem.I don't know what can be done about it. It is just very frustrating seeing people who really need help from charities, but the money that could have helped them has been thrown away.

author: CJay
author_rank: Super Contributor
timestamp: May 20, 2017, 05:40:41 pm
content: My partner was employed by a couple of large UK charities for a while, she now refuses to have anything to do with the two she worked for after seeing how they poured money away on IT and other stuff in head office.

author: PointyOintment
author_rank: Frequent Contributor
timestamp: May 21, 2017, 09:12:02 pm
content: Quote from: rstofer on May 20, 2017, 03:04:47 pmQuote from: amspire on May 20, 2017, 04:08:49 pmMaybe set up a charity whose purpose is to provide the service of installing and operating free software to other charities?

author: Towger
author_rank: Super Contributor
timestamp: May 22, 2017, 08:23:07 am
content: Quote from: PointyOintment on May 21, 2017, 09:12:02 pmThat would actually be a good cause. I too have seen small charities spending 10's of k on specialist 'charity' software. Because... Well that's what they are told they need by the 'experts' or because others in the professional charity world have have heard of it or used it. There is one product from the UK which springs to mind. It might be useful if you are the likes of Oxfam, with huge budgets and salaries (at the management) level to match, but that's another rant.It it a total over kill when excel and access can do the job. If they want to do direct debiting, when then there dedicated products available for a few hundred, no need to spend the 40-50k plus on charity software.I would even extend this to accounts software, (at a lower cost) I have seen charities buying fill version of the likes of Sage, and I have to ask them why. They are cash in and cash out. There is normally no invoicing, VAT returns or stock code control etc.Actually there is a special charity version of Sage, but the sales man has no interest in flogging it!

author: mikeselectricstuff
author_rank: Super Contributor
timestamp: May 22, 2017, 08:54:30 am
content: Quote from: EEVblog on May 18, 2017, 11:07:53 amIsn't the primary goal to feed Dave & family ?If you didn't need the money, whould you still do it?How is this different from a teacher or freelance textbook writer ? They also get paid to provide educational material.And once you add the commercial aspects, advertising, equipment donated for review etc. I suspect it would get very messy and probably not worth the paperwork & hassle.Not to mention the paperwork and accounting hassle if you some day decided, or were forced due to circumstances, to pack it in and sell all the donated gear and/or the forum/domains.

author: Brumby
author_rank: Unknown
timestamp: May 22, 2017, 09:04:32 am
content: Certainly Dave and family need an income - and there are parts of what Dave does that does generate revenue. The thinking, as I understand it, is to examine the possibility of segmenting the activities into more than one entity where there might be some benefits in doing so.So far, the indications aren't exciting.

author: EEVblog
author_rank: Unknown
timestamp: May 22, 2017, 09:21:00 am
content: Quote from: mikeselectricstuff on May 22, 2017, 08:54:30 amYes, it's my hobby as well as my career. I did it for years before it became my full time job, earning practically nothing from it. And as with most successful Youtubers (at least back in the day), started the channel with absolutely no intention or thought it would be anything but a fun thing to do.Whilst it is now my full time job, it is still essentially just my hobby that happens to bring in enough income to live off.QuoteA teacher works for an educational institution, they are nottheeducational institution.There is nothing stopping me declaring and structuring myself as an educational organisation and legally paying no income tax. It simply becomes a matter of whether or not it's actually financially beneficial to so. It turns out the answer is likely not, for various reasons.

author: Halcyon
author_rank: Unknown
timestamp: May 22, 2017, 09:34:27 am
content: Quote from: amspire on May 20, 2017, 04:08:49 pmYep! This is why I only donate to my localNSW Rural Fire Brigade,Surf Live Saving NSWorNSW Police Legacy. It goes directly to those who support our community, without the massive overheads and waste of the other charities.

author: mikeselectricstuff
author_rank: Super Contributor
timestamp: May 22, 2017, 11:02:19 am
content: Quote from: EEVblog on May 22, 2017, 09:21:00 amBut presumably evan if the institution pays no tax, you'd still pay income tax on what the institution pays you.

author: EEVblog
author_rank: Unknown
timestamp: May 22, 2017, 12:18:43 pm
content: Quote from: mikeselectricstuff on May 22, 2017, 11:02:19 amSorry, yes, I meant the educational institution pays no company tax on profits. They call it income tax, but it's not an employees personal income tax, a company pays tax on the "taxable income" after expenses, i.e. the profit.It's basically not possible to avoid personal income tax unless you earn under $18k / year, and of course you have to live onsomething.So the educational institution could keep earning profits and building up cash until the cows come home and pay no tax on it, but that doesn't do the owner (me) any good personally if I can't use that money personally. The company can't legally pay my personal household bills, as that would be attract FBT (Fringe Benefit Tax).AFAIK the only way around personal income tax and companies is to set up a "foundation" and actually remove yourself form the taxation system entirely. The "foundation" then essentially pays for all your living needs (house, car, food etc). But it's a very sketchy way to do things as foundation actually operate outside the taxation system.https://www.ato.gov.au/Media-centre/Media-releases/ATO-reviews-the-legitimacy-of-not-for-profit-set-ups/

author: retrolefty
author_rank: Super Contributor
timestamp: May 22, 2017, 08:12:53 pm
content: Quote from: EEVblog on May 19, 2017, 08:09:56 amMany people are confused (or ignorant) by the difference between a tax deduction and a tax credit.