427 | NDIS Registration Part 1

We see some very complicated tax issues. So making sure that your distance gets the appropriate tax at all, I see that from the tax lawyer or an accountant is quite important at the start because at top of no payroll tax superannuation, then you have potential CGT if there's any asset transfers, as well as having any sort of no consideration about your own asset protection. If you're going into high risk work, which is usually your SDA, your sale, your administrative practice, wherever you need to form a trust and if anything that you want to do down the track, you should start doing it now. When you start work, not in five or six years, when things are much less. You're listening to Australia's podcast for accountants, tax talks, the podcast to grow your firm. Welcome to episode 427 of tax talks. This is Heidi Robson and thank you to BGL corporate solutions for sponsoring this episode. As you probably know, BGL is Australia's leading provider of asset compliance, SMSF investment management, identity verification and AI powered paper to data software solutions. Now before we talk about today's episode, let me just quickly mention the text summit to you in Sydney. I just got back from it and I'm still on a bus. It was really good. There were a number of issues I hadn't been aware of and some really glad I went. That's the good thing about events like this. They really shine a light into your blind spots and you realise the things you have missed. So looking at the things I have missed so far, for example, the new breach reporting rules had saved past me. You're probably all across these new so-called client-doblin rules, but I had underestimated their significance. That was a big one I had missed and I hope to do an episode about these rules very soon. Then there were some small things I brushed up on, for example, the timing of dividends to fix division 7a. If you use a dividend to cover your minimum yearly repayments, then you need to declare that dividend by 30s of June. But if you use a dividend to get rid of the loan in the first place to avoid a division 7a issue of even arising, then you have under-lodgement or due date to declare that dividend. I found the sessions about trusts really helpful, especially the ones about family trust elections and interposed entity elections or this in light of the latest court cases. Then also tap and tap for outgoing clients really helpful. Because all my clients are SME, I mainly went to the SME stream and also the hot topic stream. But there was of course a corporate stream for you are working more in larger corporates. I also find it really helpful and this applies to any event. I find it really helpful to speak with you, to speak with other accountants like you, what you do, size, clients, what apps you use, how you quote, price, invoice, task, manage your communication. It's really good to do all that face to face. I find there is a lot of power in face to face. So I'm really glad I went. I had a very good time, it was a great event, but now all this is done and dusted and let's look at today's episode. When you saw the title for this episode, you probably wondered how NDIS registration could possibly be a topic for a text podcast. What does NDIS registration have to do with this text and the answer is GST, but not directly. Let me explain. So section 38, 38 of the GST Act. A supply is GST free. If it meets the four requirements. Number one, there is an NDIS plan in effect. Number two, the supply is listed in this plan as reasonable and necessary support. Number three, there is a written agreement between supply and participant. Can be an invoice, an email reference to terms and conditions. It doesn't have to be a 20 page agreement. And then number four, the supply is covered by the NDIS determination. The NDIS determination is a schedule where the legislator has listed the types of supplies that the NDIS can cover. The determination for example lists household tasks, travel assistance and interpreting and table one. So these are the conditions and if you service meets those, your service is GST free. But now you will have noticed that nowhere does it say that U.S. the supplier must be registered with the NDIA for the supply to be GST free. There is no mention that you must be a registered provider to get the GST exemption. So at first glance, NDIS registration and GST have nothing to do with each other. You can provide GST free services to an NDIS participant without being registered. The GST act does not link the GST status of a service per se to an NDIS registration. But indirectly, NDIS registration and GST can link in two ways. The first one is NDIA managed. NDIA managed participants cannot use unregistered providers. So if you are not registered, your supply to an NDIA managed participant is not covered by the NDIS and hence not GST free under section 38-38. It might still be GST free. For example, since it is covered by media care, but it won't be GST free through the NDIS exemption and section 38-38. That's the first one. The second possible link between registration and GST is if you need a registration to access certain funding in a participant's plan and without a registration, you can't access this funding. And then not getting funding, you go through another provider which is registered. So you basically subcontract to a registered provider. If you do that, then you no longer provide a service to an NDIS participant, but you provide the service to this registered provider and then your service is no longer a GST free service. So to summarize, the GST exemption in 38-38 doesn't require an NDIS registration per se, but if a registration is required to access the NDIS funding, then the two do start interacting. And so for that reason, let's look at NDIS registrations in this episode. Here, Astrid, Rivaland and Helen Young of Legal Vision, I started by asking Astrid what changes are in the pipeline for NDIS registrations. The task force had submitted a report on registration requirements and there will be major changes in this space in the next couple of months. At the moment, we have a registration system which is either your register or not registered and that's one of the other. The task force has recommended a tiered level of registration which will vary from tier 1, tier 2, tier 3, including where self-managed participants need to be registered to be able to self-manage. So the whole landscape of registration will be changing soon. We don't know yet what will be legislated and what will not be legislated. We only have the report and we have an en theory acceptance of the report. There's been no actual draft legislation for us to look at. But it is highly likely, well plus the affordance has ex-quit politics which changes the landscape. But it's been flagged as being highly likely to be changes in that area very soon. And the reason for that is there is a general assumption that unregistered providers commit more fraud than registered providers, which is debatable. But the answer to the fraud that is being seen and overcharging is to make registration compulsory for everyone. Our other registration is currently expensive. It's long. We're talking 12 to 18 months to become registered and anywhere between 10 to 20 thousand dollars, which is why they're bringing in a tiered level of registration which will be risk assessed depending on the type of work done by the provider. So someone like Harvey Norman for example, which only sells certain products, they're a registered provider would be a tier one registration to your SDA providers which are higher risk because they're dealing with high risk high needs by a sentence. There will be a tier three registration, but that hasn't been passed. So just flagging there will be changes and say who has written this report. It was commissioned by the NDIS and they formed a task force. There were a number of independent people. It was headed by Mrs. Natalie Wade, which is a disability rights lawyer. And we also had a number of Mr. Michael Borowick, which was a GP, the Honorable Vicky O'Halloran, and Professor Halleal Shales. There was a task force initiated by the NDIA and various individuals closely related to the industry where in this task force, and they made these suggestions. Yes. This report, written by the task force, was then presented to the NDIA and the NDIA. But it's probably not up to the NDIA to change the registration. That's probably something that needs to go through Parliament. That's correct. It will be those status. So that's what's part of the updates that were proposed that were passed two weeks ago, and we're 12 a cent, but which gives the NDIS power to back your rules. And there will be a lot of consultation with states and territories. So it's not anytime soon, but we will be, we expect to see proposed legislation on the topic in the next year. Did you just say something that the NDIA was authorized to make changes to the registration? So it basically has already been through. No, no, no, no. So what's. We have a new bill that went through the proposed, putting the NDIS back on track bill, I think was a dime. So that bill gave the flexibility to create some additional rules and subsidiary legislation. So taking from that, then we will get the subsidiary legislation, and we still have to go through the process of creating and going through the rules to be updated. This hasn't happened yet. What we do know is that they are still considering it, and they have to look at. They're going to engage with stakeholders in a disability community to see how feasible it is. Because one of the things that a lot of people have pointed out is that when you're remote or very rural, you do not have access to registered providers, or you have a very small portion of providers who are registered. By making a requirement that all most, if not all providers have to be registered, you are further restricting the choice of participants in rural and remote areas. So those are all things that will be taken into consideration when they're developing this new registration. And so this new legislation still has to go through the. Like any other law has to go through that pipeline. Okay, good. And so we're probably looking at years, then, don't we? Yes and no. There's been a lot of push from to cut the NDI's budget from quite a few billion. So that's the background. There's an overspend on the budget. The federal government is concerned because it's costing more than by the case, costing more than actually. When they did a audit and they have a new fraud task force, what they have identified is a number of providers and some participants, if misusing the funding or putting in some claims that should not be put in. And they have given a lot of examples. It's on the news now. For example, there were some providers apparently that were withdrawing money from plans to be pushing drugs. There were some providers that are claiming for services that were not actually delivered. There are providers that are claiming for services and doing substantive services. And we also have. There was an example supposedly on a newspaper that there was, for example, a car being purchased by a box. So they're trying to cut back on what they're forging and spending. In order to cut back on forging and spending, they want greater visibility. The way unregistered providers currently works is that if you're working with a self-managed participant, the invoices are automatically approved by the system that is now oversigned. So if I'm self-managed tomorrow, I look at the portal, I put in an invoice and the system won't actively base me. No one actually checks that the provider has delivered the work that I am claiming. And we also see some participants who have disabilities or would not have the capacity to fight back if they are being enforced for charges of having a bid actually. So they are thinking that by increasing their registration, requirements it will increase visibility from the NDIS about invoices and greater accountability for providers. So that's the thinking behind making a greater registration, well, more levels of registration and more providers being registered. There's also been a number of issues with participants being unsafe, with some concerning practices that are happening in still housing and with unregistered fighters that what they think is unregistered fighters. I'm not necessarily saying this is the case and the disability community generally will tell you that there are issues equally with registered and unregistered fighters. But the fact is registration remains out of reach for many of the smaller providers at the moment due to the cost and also the length of time they take to actually be registered. That's the future, this three-tier approach, but at the moment we just have one tier and that is your either license or you're not licensed. And actually I should correct my language, it's not actually a license, it's just a registration, you are either registered or you're not registered. And that is correct and the way that registration currently works, it's very, very personal to the provider. So in order to become registered, you have to make a lot of requirements, excluding your person, your key personnel have to be verified as being suitable. So you have to submit national police checks, you can't have a criminal history, you can't be a bandal, or be under bandal. You have to show that as you select your CEOs, your board of directors, your executives have to all be approved by the NDAIA to be suitable as a registered provider. They also look at your core structure. As a registered provider, the registration then becomes not only through your corporate entity, but who is in your corporate entity. And that everyone is suitable, then you have your registration requirements. What do you need to do to maintain the registration? There are far the number of legal compliance requirements, but for example, you have to make sure that you comply with the NDAIA's protest standards. And when you register, you have registration groups. So for example, if your registration for activities of the early life, this will be a different requirement if you are doing restrictive practices, or if you were doing specialist disability accommodation. Then you also have to make sure you comply with the code of conduct, that you have all the 50 million policies that you need internally. And that's a really big burden for an organization to make sure they are compliant. You have to have either certification or a verification audit, and you also have to have midterm audits down the track to make sure you remain comfortable. You also have to have mandatory reporting requirements where you have to report if there's any injury, illness, harassment, sexual harassment with your participant. And in some states, you also have to report if there's any course for concern or another service provider. So you have all those legal applications that you have on you as a registered provider. And there's quite a lot of admin and there's quite a lot of, I guess, compliance to be done to maintain your registration and to make sure that you're taking all the boxes. While we're registered providers, you only have to comply with the code of conduct and any applicable state on territory legislation. Is an unregistered provider even allowed to provide services to an NDIS participant? Yes, there's no rent. Well, you have to go back a step. So the way that the there's three tiers of NDIS funding. When you become a participant, you can choose between NDIA managed, plan managed or self managed. If you are NDIA managed, and this is either the NDIS has identified concerns with the way you're managing money or your under guardianship orders or there's some other high risk factor. This means your funding is NDIA managed and you can only work with registered providers. If you are a plan managed participant, your funding is managed by a plan manager. You get to choose your provider, but the invoices are paid by a plan manager. The plan manager has to be a registered provider, but apart from that, you have to free them to use either registered or unregistered providers. If you are self managed or self directed and sometimes called, that gives you the greatest flexibility. You can handle your funding the way you would like. You have to comply with the self management guide, but apart from that, you are able to choose registered or unregistered providers. You can negotiate better deals. You can negotiate the type of supports you need and gives you a lot greater flexibility to make your funding stretch further. And there are no restrictions where you can use provider that it means what's in your plan. So if you've been granted access and you've been funded for support work, you can't really take that funding and go and buy a modified fee. So provided that you use your funding in accordance with what's in your plan, you can work with registered or unregistered. And so that means people who are NDIA managed, nothing will really change for them because they think they'll change for them because more people will probably be registered. But it means NDIA managed participants always had to use registered providers. But I assume that once these changes come through, then if you are self managed, you will also need to only use registered providers most likely correct. No, that's one of the things that has been slagged as a potential option in the past force is that the self managed person and themselves become registered. And therefore, they still retain the flexibility to use their own registered providers. So what you see that a lot with people that have more than one participant, so if you're a family with three kids on the NDIS, you may choose to hire a university student to do the allied health therapy with your kids. And the one student would work across with all three children. She wouldn't be registered, would have no intention of being registered, they're just a uni student, but they bring very good value for money. You pay $40, $42 an hour, they're much cheaper allied health at $193.99 an hour. And the stretch of funding so much further, they also give some relationship between this person. So to be able to keep this flexibility for participants, they're saying that you, as a self-managed participant, will have to have some level of registration, and it won't be on risk to just be able to have the oversight of the invoices and make sure that you're making the requirements of the registration, but that the people working on the U.S. employees or contractors do not need to be registered. So that's a very good option, which I'm hoping to see being registered. So if this university student, she would not need to be registered correct, but if she was working for an organization, then that organization would need to be registered. - Most likely, yes. - And other proposed legislation, but not common. - So you have NDA managed, you have plan managed, and you have self-managed, and that wouldn't change under the proposed changes, only the registration itself would change. - That's great. - And we also see a lot of what's called service for once. And service for once is families who have complex children, usually when those children are becoming older and they don't necessarily want to go in the guardianship orders. So what they do is they either form a not-for-profit or they form a company, and that company then hires support workers, or maybe sometimes uses contractors, to create their own little, I guess, bubble for this child of high needs, but so they don't sit under guardianship. And there's a number of, you know, family trusts being set up, and also micro boards, or sometimes four boards that will look after the investment, or sometimes there's a disability trust sitting at the top, with which we'll fund this, basically the service for one for this particular person. This becomes quite useful when the child is over 18, and either has access to special disability accommodation, the support of independent living funding. Those are usually 24/7 types of support, and you need this extra level of funding to be able to get it working, but you also want the oversight, but you don't necessarily want to guide an impulse. It's working quite well. There's not many people doing it, because all the cost of setting it up will still be born by the families. You have to set up the trust, you have to set up the operation, you have to set up the even a lot of profit, or your BDYLTD, so that's quite substantial, you can come to set it up, but once it's set up, it does work. - Now, before we ask Estreet and Helen about the players in the NDIS fields, so about the difference between NDIS providers, plan managers, support coordinators, and local area coordinators. - Here's a quick word from our sponsor, BGL. - Hey, tax talkers. Imagine a company compliance solution that automatically reminds your clients to return company and trust documents, and even alerts them about outstanding asset debt. Sounds like a dream, right? Introducing CAS 360, Australia's leading company compliance management software. With CAS 360, automating streamline your workflows for companies, trusts, annual reviews, and client ID verification into one user-friendly solution. - Learn more, visit bglcorp.com/taxtalks. - And then also just to understand the players in the NDIS field, I understand you have NDIS providers, then you have plan managers, you have support coordinators, and you have local area coordinators, correct? - Yes, so local or higher coordinators, they represent the NDIS, they're usually responded to a tender, and they are called, they're basically the arm of the NDIS in the community. So they're things like your brother with the St. Lawrence website. The local area coordinators are the first point of contact for most families. They will contact, they will connect you with community support, whether it's from the NDIS or not. They will usually do the first planning meeting with the participant as well. So the planning meeting is where you get to know the participant. You have an idea of what their informal supports are, what their goals are, and where they need assistance. Duyen will craft the plan. The plan will be sent to the NDIS, where to a planner, and the planner will finalize the plan and allocate the funding. This is usually sent back to the LAC, which will contact the participant and will go through the plan. The support coordinator is independent from the NDIS, it's a provider. They're used to have to be registered that was changed during COVID, and they no longer have to be registered. The support coordinator, as the name implies, just coordinates supports. They're here to provide assistance to participants, usually in the first plan, who do not know how the NDIS works. So they will contact an OT, a physio, they will try and find support for them. If you have a complex participant who's been out in hospital, they will use the public system, they will use support workers, they will try and get the best support possible, and they will also attend the next planning meeting with the participants. So they're just to provide some assistance in navigating the NDIS and findings. Then managers are something only different. The plan managers provide financial services to the participant. They are registered provider, and their role is to pay invoices. They charge a flat rate per month, and that's included in the pilot's funding. The participant would instruct their providers to submit invoices to the plan manager, and then the plan manager would pay the invoices on behalf of the budget. They keep track of the budget, usually most bigger plan managers have an app, which will show how the budget is tracking, and you can just log into your portal, and you can see whether you've got three or four thousand dollars left, how it's being used. You may or may not be required to authorize the invoices, and this is where there are potentially some issues because there is no visibility. So if tomorrow the plan manager sitting there and receives invoices from provider A, that they've provided 30 hours of support to the participant, the plan manager will pay it. In no way does that mean that the participant has received 30 hours. The participant may not be even aware that the provider is still claiming, and we do see that happening. So when you see fraud with this, it's usually fraud being done without the knowledge of the participant correct. It's usually fraud committed by the provider only. That is not something I can speak to, because I don't have access to those numbers. I have certainly seen stories where participants have been involved, and stories where participants have not been involved. What the actual numbers are, I wouldn't be able to say, but from the type of work we do, because we mainly deal with providers not so much participants, I am all aware of what's happening at the provider level. You only have a plan manager if you plan managed correct. If you are NDIA managed or you are self managed, then you don't have a plan manager. Yes, so with the NDIA managed, the potential for fraud is still there, because of NDIA managed, instead of submitting the invoices to the plan manager, you just submit the invoices to the port. There's this new port, which is called PACE. Your participant just has to endorse you once, but they can choose to authorize invoices, so you can choose to do that. But a lot of participants who are in the IAM managed may not have the ability to improve the invoices all the time. And then the provider just goes in, puts invoices up and they get paid. So that, unless the NDIA has the oversight, the participant does not have the oversight, unless they choose to do so. So these are the key players in the NDIA landscape, the NDIA's provider. So that's the people who actually provide the services or goods, then the plan managers, which only come onto the scene when you are plan managed, then the support coordinators who coordinate the services you receive or the goods you receive. And then you have the local area coordinators, which are representative of the NDIA. Correct? Yeah. And not all of these need registration, you already touched on it. For example, and you said, for example, that the support coordinators don't need registration, the NDIA's providers also don't need registration. And the plan managers, I assume, always need registration, correct? Yeah. How difficult is it to transfer a registration from one entity to another? It's basically impossible, isn't it? It is. And this is a very gray area because the NDIA's notifiable event. So once you're a registered provider, you have to let the NDIA's commission know if there is a notifiable event, which is usually a change in your key personnel in changing your company structure. And the list on the commission website actually says a notifiable event is a change in the ABN. But in practice, what happens is you cannot sell a registration. So you cannot sell any corn transfer from an ABN. Your registration is attached to the ABN. So what we see is if you're changing from the sole trader to a company structure, you usually have to re-register. And Helen would deal with this more frequently than I do because I don't do restructures. But generally speaking, we have found it not possible to transfer registration. We just have to re-register. Yes. So you have to go through this entire 12 months process again and incur fees of up to $20,000. Depending on what type of fund you use. I mean, generally speaking, it would be less the second time around because you would have presumably passed the order the first time around and would have all your documents ready to go. And a lot of the costs are in preparing for the audit. Because for example, you have to have-- make sure you have your privacy policies are compliant on your service agreements. That if you're providing support and independent living, that you have waste management policies, that you have all your internal OHS policies. So forgetting all the documents is by the cost lies and get it. then obviously you're already, of course. You have to pay for the audio tickets. So the second time around, you might be more knowledgeable. You might know more about what you need to prepare. You might be able to cut and paste some of your policies across to the new entity name, but it's basically a completely new registration. And I'm not sure and maybe Helen wants to chime in there, but I think there may be tax implications as well when you're transferring the IP or your transferring assets from one structure to the other structure. Yes, that's right. So I think, I mean, the key that we're going to take away from this and that if you are thinking about setting up an NDIS business is that you're getting advice in the structure and the first instance, because one, you obviously have to do with the NDIS registration and having to do that twice. Obviously, it can be expensive and time consuming, but secondly, the tax implications when you're actually restructuring from, for example, a sole trader to a company. And then there are a rollover relief to deal with a restructure where the ownership is staying the same, that that type of restructure may be costly, depending on obviously what you're trying to achieve, how much value is already sitting in the company. You may need to get a valuation and what type of assets that you're moving from the individual sole trader to the company. And whether you're also need to move your any employee years or contractors and re-preparering or drafting the various contractor employment agreements as well. So it's not a, I guess, it's not a cheap process, even if you have nothing there, you still have to get tax and legal advice. So yeah, I guess the takeaway from my perspective is really speaking to someone first about what your intentions are and what that structure will look like before you start the registration process. We see it often, and it's painful to see that if someone had just obtained advice in the beginning, they wouldn't have to go through this process, and sometimes it rains in the process. Astrid Riverland and Helen Young of Legal Vision, sorry to cut you off here, I had meant to give you the interview in one go, but the episode just got far too long well over an hour. So let's stop here and continue in the next episode with the second part about NDIS registrations. Until then, thank you for listening and thank you to BGLCorpit Solutions for their support. To find out more, please go to bglcorp.com. Bye for now and see you in the next episode. you