| Feature/Terms |
Private Ancillary Fund |
| Overall purpose |
To hold and distribute property for the sole purpose of advancing charitable purposes.
|
| Regulations |
See attached Schedule: Legal Framework
|
| Trustee |
Corporate with at least 1 responsible person director who cannot be:
- The founder;
- A donor that has contributed more than $10,000; or
- An associate of the above.
|
| Location |
Established and operated only in Australia
|
| Source of contributions |
- Must not solicit donations from the public.
- Must be a close relationship between those who establish the fund and those who donate to it.
- In any one financial year, fund must not accept donations totalling more than 20% of market value of assets from entities other than:
- The founder;
- Associates of the founder;
- Employees of the founder; or
- The deceased estate of any of the above.
|
| Beneficiaries |
Can only make distributions to ‘Item 1’ Deductible Gift Recipients.
|
| Minimum annual distribution |
5% of market value of the fund’s net assets (as at end of previous financial year)*
OR
$11,000 (or the remainder of the fund).
No distribution is required in the year of establishment of the Fund.
* This rate will likely increase to 6%, pending formalisation of proposed changes.
|
| Distribution and investments |
Trustee’s power is limited as follows:
- Cannot borrow money or maintain an existing borrowing of money (subject to limited exceptions).
- Investments must be made and maintained on arm’s length basis.
- Must not give security over, or in relation to, an asset of the Fund.
- Must not acquire asset (except by way of gift) from:
- Founder;
- Donor;
- Trustee; or
- Director, officer, agent, member or employee of above entities,
- unless by way of arm’s length commercial basis, and on terms more favourable to fund than that expected at arm’s length.
- Must not make a loan or provide any other kind of financial assistance to:
- Founder;
- Donor;
- Trustee; or
- Director, officer, agent, member or employee of above entities,
- unless by way of arm’s length commercial basis, and on terms more favourable to fund than that expected at arm’s length.
- Must not acquire asset if it is capable of being a ‘collectable’ (e.g. artwork, jewellery, ancient manuscripts etc).
- Must not carry on a business (subject to limited exceptions).
|
| Records, financial statements & reporting |
- Must prepare and maintain current investment strategy that complies with requirements of the Guidelines.
- Must issue a receipt for all gifts received, including name & ABN of fund, name of donor and confirmation that contribution is a gift.
- Must:
- Estimate market value of assets annually (except for land – once every 3 years); and
- Report that estimation to ATO annually.
- Must prepare financial statements each financial year in accordance with accounting standards.
- Must make financial statements available to ATO on request (unless already provided to ACNC).
- Must report annually either:
- If registered with ACNC: by lodging Annual Information Statement by 31 March each year; or
- If not registered with ACNC: by lodging Annual Information Return in paper format to ATO by 28 February each year.
- Must notify ATO or ACNC of any changes to Governing Rules within set timeframes.
|
| Audit |
Annual accounts must be:
- Audited if either revenue or assets over $1 million for financial year; or
- Reviewed or audited if both revenue and assets under $1 million.
|
| Winding up/vesting |
Surplus assets must be distributed to Item 1 Deductible Gift Recipient (unless Commissioner approves otherwise).
|
| Tax position |
- Donations to the Fund can be claimed as a tax deduction by the donor.
- If registered with the ACNC:
- Income Tax Exempt (incl. CGT); and
- Able to claim franking credits.
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