Responses to Draft Legislation on Improving PPFs
Monday, 22nd June 2009 at 5:39 pm
Philanthropy Australia has warned that draft legislation aimed at improving the integrity of Prescribed Private Funds still leaves donors and trustees with an undesirable lack of certainty.
In its submission to the Federal Treasury, Philanthropy Australia commended the attempt to give rigour and accountability to the PPF system by ensuring that the Treasurer’s power to make binding guidelines about the establishment and maintenance of Private Ancillary Funds (PAFs) is subject to review by Parliament.
The exposure draft released earlier this year proposes that the Treasurer have the ability to make legally enforceable guidelines for PPFs, increases the Australian Taxation Office’s regulatory power over PPFs, and gives the Commissioner of Taxation full power over the administration (including the endorsement) of PPFs.
As PPFs will no longer be prescribed in the relevant legal sense, the name of PPFs will change to ‘private ancillary funds’.
However, Philanthropy Australia’s CEO Gina Anderson says the practical implication is that existing PPFs and future PAFs may be forced to comply with future material rules which are not currently defined and which may be compelled upon them without notice or warning.
Anderson says this is a serious disincentive for future donors who will be unwilling to make an irrevocable commitment of a large sum to the community without more certainty about the rules to which they are committing.
She says it will be a big deterrent both for donors to contribute more to their existing PPFs and for the establishment of new PAFs and will also diminish trust in the government’s commitment to furthering philanthropy.
Philanthropy Australia believes that both existing and potential donors and Trustees of existing PPFs and new PAFs need stronger assurances that they can proceed with some confidence that the ground rules under which they operate will not be changed without agreement.
It says the real success of the PPF structure has been that it provided a structure which has facilitated additional giving to the community.
It says because those setting up a PPF have made a substantial financial commitment to the Not for Profit sector, they have become intellectually engaged with issues facing society, bringing their time, their skills, their voice and their influence. They have encouraged their families, their friends and their peers to become engaged with the community sector. In so doing, the PPF has been a significant catalyst in building a culture of philanthropy in Australia which is so important in building a socially cohesive society.
The submission says ensuring that philanthropic sector remains vibrant, flexible and attractive to donors is not just in the best interests of the philanthropic sector but those of charitable organisations and the entire community which they serve. Philanthropy Australia believes that it is essential that the new law does not inadvertently cause further complications for existing PPFs and urges that the issues we have raised be fully addressed.
Federal Treasury has received 14 submissions in response to its consultation on draft of legislation to improve the integrity of Prescribed Private Funds (PPFs)
Twelve of these are public submissions, and two are confidential submissions. The submissions can be viewed at www.treasury.gov.au