In the NFP and for-purpose sector, the word strategic gets used liberally, yet few organisations use it correctly. When operational tasks and tactical plans get mislabelled as “strategy”, it becomes harder to stay focused on purpose, deliver impact and make evidence-informed decisions. Drawing on insights from NFP Success , this article breaks down what strategic  really means for not-for-profits including how NFP organisations can strengthen strategic thinking, planning and execution. 1. Strategic thinking: seeing beyond day-to-day pressures Strategic thinking is a mindset, not a document. It’s the ability to step back, challenge assumptions and look ahead to emerging trends, risks and opportunities. For NFPs navigating shifting funding, policy changes and evolving community needs, this mindset is essential for staying agile and impact-focused. 2. Strategic planning: turning vision into a practical roadmap Where strategic thinking explores the future, strategic planning gives it structure. A true strategic plan should clarify: long-term priorities how resources will be allocated what success looks like what will be delivered across short, medium and long-term horizons. Too often, NFPs confuse quarterly work plans or program documents with strategy. These are important, but they are operational or tactical, not strategic. 3. Align strategy, operations and tactics (and know the difference) Effective organisations understand the three layers: Strategic: long-term direction and big-picture priorities Operational: systems, processes and resourcing that support strategy Tactical: day-to-day tasks that deliver programs and services. All three matter but only when they work together. Strategy sets the direction. Operations make it possible. Tactics bring it to life. 4. Anchor every decision in your Theory of Change For NFPs, strategy must be explicitly tied to purpose. That means connecting your strategic plan to your Theory of Change — the model that explains how your activities lead to outcomes and social impact. Every initiative should be tested against it: Does this move us toward our intended outcomes? Does it strengthen our impact? If not, why are we doing it? This clarity helps funders, Boards and communities see exactly how your choices advance the impact you promise. 5. Strategy is cultural, not just a document on a shelf Strategic thinking must be embraced across the organisation, starting with the Board. Without leadership commitment, strategy becomes overshadowed by reactivity, and innovation is quickly lost. When everyone understands the strategic direction — and how their work fits into it — execution becomes stronger, faster and more purposeful. What this means for your NFP organisation Being genuinely strategic is about disciplined choices, clear priorities and alignment across every layer of planning. For NFPs looking to strengthen outcomes, improve decision-making and position themselves for long-term impact, 2026 is the year to refine strategic thinking and reconnect planning to purpose. Ready to sharpen your strategy and align your organisation for greater impact? Contact our team to strengthen your strategic planning, clarify priorities and put purpose at the centre of every decision. Practical Strategies for NFP Growth, Governance and Sustainability

ATO Interest Charges are no longer deductible – What You Can Do Leaving debts outstanding with the ATO is now more expensive for many taxpayers. As covered in an earlier blog post on this topic , general interest charge (GIC) and  shortfall interest charge (SIC) imposed by the ATO is no longer tax-deductible from 1 July 2025. This applies regardless of whether the underlying tax debt relates to past or future income years. With GIC currently at 11.17%, this is now one of the most expensive forms of finance in the market — and unlike in the past, you won’t get a deduction to offset the cost. For many taxpayers, this makes relying on an ATO payment plan a costly strategy. Refinancing ATO debt Businesses can sometimes refinance tax debts with a bank or other lender. Unlike GIC and SIC amounts, interest on these loans might be deductible for tax purposes, provided the borrowing is connected to business activities. While tax debts will sometimes relate to income tax or CGT liabilities, remember that interest could also be deductible where money is borrowed to pay other tax debts relating to a business, such as: GST PAYG instalments PAYG withholding for employees FBT However, before taking any action to refinance ATO debt it is important to carefully consider whether you will be able to deduct the interest expenses or not. Individuals If you are an individual with a tax debt, the treatment of interest expenses incurred on a loan used to pay that tax debt really depends on the extent to which the tax debt arose from a business activity: Sole traders:  If you are genuinely carrying on a business, interest on borrowings used to pay tax debts from that business is generally deductible. Employees or investors:  If your tax debt relates to salary, wages, rental income, dividends, or other investment income, the interest is not deductible. Refinancing may still reduce overall interest costs depending on the interest rate on the new loan, but it won’t generate a tax deduction. Example:  Sam is a sole trader who runs a café. He borrows $30,000 to pay his tax debt, which arose entirely from his café profits. The interest should be fully deductible. However, if Sam also earns salary or wages from a part-time job and some of his tax debt relates to the employment income, only a portion of the interest on the loan used to pay the tax debt would be deductible. If $20,000 of the tax debt relates to his business and $10,000 relates to employment activities, then only 2/3rds of the interest expenses would be deductible. Companies and trusts If a company or trust borrows to pay its own tax debts (income tax, GST, PAYG withholding, FBT), the interest will usually be deductible if it can be traced back to a debt that arose from carrying on a business. However, if a director or beneficiary borrows money personally to cover those debts, the interest would not normally be deductible to them. Partnerships The position is more complex when it comes to partnership arrangements. If the borrowing is at the partnership level and it relates to a tax debt that arose from a business carried on by the partnership then the interest should normally be deductible. For example, this could include interest on money borrowed to pay business tax obligations such as GST or PAYG withholding amounts. However, the ATO takes the view that if an individual who is a partner in a partnership borrows money personally to pay a tax debt relating to their share of the profits of the partnership, the interest isn’t deductible. The ATO treats this as a personal expense, even if the partnership is carrying on a business activity. Practical takeaway Leaving debts outstanding with the ATO is now more expensive than ever because GIC and SIC are no longer deductible. Refinancing the tax debt with an external lender might provide you with a tax deduction and might also enable you to access lower interest rates. The key is to distinguish between tax debts that relate to a business activity and other tax debts. For mixed situations, you may need to apportion the deduction. If you’re unsure how this applies to you, talk to us before arranging finance. With the right strategy, you can manage tax debts more effectively and avoid costly surprises.

Trust Resolutions – Why Timing and Evidence Matter A recent decision of the Administrative Review Tribunal ( Goldenville Family Trust v Commissioner of Taxation  [2025]) highlights the importance of documentation and evidence when it comes to tax planning and the consequences of not getting this right. The case involved a family trust which generated significant amounts of income. For the 2015, 2016 and 2017 income years, the trustee attempted to distribute most of the income to a non-resident beneficiary. As the trustee believed the income was classified as interest (this was challenged successfully by the ATO), the trustee assumed that the income would be subject to a final Australian tax at 10%, under the non-resident withholding rules. This was clearly more favourable than having the income taxed in the hands of Australian resident beneficiaries at higher marginal rates. However, the ATO argued that the distribution resolutions were invalid and the Tribunal agreed. Why? The main reason was a lack of evidence to prove that the distribution decisions were made before the end of the relevant financial years. While there were some documents that were purportedly dated and signed “30 June”, the Tribunal wasn’t convinced that the decisions were actually made before year-end and it was more likely that these documents were prepared on a retrospective basis. The evidence suggested the decisions were probably made many months after year-end, once the accountant had finalised the financial statements. The outcome was that default beneficiaries (all Australian residents) were taxed on the income at higher rates. Timing of trust resolution decisions is critical For a trust distribution to be effective for tax purposes, trustees must reach a decision on how income will be allocated by 30 June each year (or sometimes earlier, depending on the trust deed). It might be OK to prepare the formal paperwork later, but those documents must reflect a genuine decision made before year-end. For example, let’s say a trust has a corporate trustee with multiple directors. The directors meet at a particular location on 29 June and make formal decisions about how the income of the trust will be appointed to beneficiaries for that year. Someone keeps handwritten notes of the meeting and the decisions that are made. On 5 July the minutes are typed up and signed. The ATO indicates that this will normally be acceptable, but subject to any specific requirements in the trust deed. If the ATO believes the decision was made after 30 June (or documents were backdated), the resolution can be declared invalid. In that case, you might find that one or more default beneficiaries are taxed on the taxable income of the trust or the trustee is taxed at penalty rates. This could be an unexpected and costly tax outcome and could also lead to other problems in terms of who is really entitled to the cash. Broader lessons – it’s not just about trust distributions The timing issue is not confined just to trust distribution situations. Other areas of the tax system also turn on when a decision or agreement is actually made, not just when it is eventually recorded. For example, if a private company makes a loan to a shareholder in a given year, that loan must be repaid in full or placed under a complying Division 7A loan agreement by the earlier of the due date or lodgement date of the company’s tax return for the year of the loan. If not, a deemed unfranked dividend can be triggered for tax purposes. If a complying loan agreement is put in place then minimum annual repayments normally need to be made to avoid deemed dividends being recognised for tax purposes. A common way to deal with loan repayments is by using a set-off arrangement involving dividends that have been declared by the company. However, in order for the set-off arrangement to be valid there are a number of steps that need to be followed before the relevant deadline. The ATO will typically want to see evidence which proves: When the dividend was declared; and When the parties agreed to set-off the dividend against the loan balance. If there isn’t sufficient evidence to prove that these steps were taken by the relevant deadline then you might find that there is a taxable unfranked deemed dividend that needs to be recognised by the borrower in their tax return. Documenting decisions before year-end The key lesson from cases like Goldenville  is that documentation shouldn’t be an afterthought — lack of contemporaneous documentation can fundamentally change the tax outcome. What normally matters most is when the relevant decision is actually made, not when the paperwork is drafted. In practice, this often means: Check relevant deadlines and what needs to occur before that deadline. If a decision needs to be made before the deadline, ensure that a formal process is followed to do this. For example, determine whether certain individuals need to hold a meeting or whether a circular resolution could be used. Produce contemporaneous evidence of the fact that the decision has been made. You might consider sending a brief email to your accountant or lawyer explaining the decision that has been made before the relevant deadline , basically providing a time-stamped record of the decision. Finalise paperwork: formal minutes of meetings can sometimes be prepared after year-end, but they must accurately reflect the earlier decision. Thinking carefully about timing — and building a habit of producing clear evidence of decisions as they are made — is often the difference between a tax planning strategy working as intended and an expensive dispute with the ATO. Don’t leave your trust resolutions until it’s too late. Speak with Collins Hume before 30 June to make sure your decisions are properly documented and compliant.

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