Take Survey
NEWS  |  Leadership

ATO Finds Public Ancillary Fund Breaches

Thursday, 14th January 2010 at 10:31 am
Lina Caneva, Editor
ATO finds some Public Ancillary Funds in breach of their Trust Deed

Thursday, 14th January 2010
at 10:31 am
Lina Caneva, Editor



ATO Finds Public Ancillary Fund Breaches
Thursday, 14th January 2010 at 10:31 am

An Australian Tax Office investigation has found that a number of Public Ancillary Funds endorsed as deductible gift recipients (DGRs) are in breach of their trust deed.

Following a review the ATO says it found a number of common errors including:

  • distributions paid directly to entities located offshore
  • benefits provided to non-DGRs located in Australia
  • distributions to other ancillary funds.

The ATO says these disbursements are inconsistent with the trust obligations of a fund claiming to meet the character of a public ancillary fund and endorsed as a DGR.

Public ancillary funds are public funds established and maintained under a will or instrument of trust solely for the purpose of providing money, property or benefits to DGRs or the establishment of DGRs.

An ancillary fund must be exclusively for these purposes. It must not carry on any other activities. It is like a conduit or temporary repository for channelling gifts to other DGRs. An ancillary fund must not provide for or establish other ancillary funds.

The ATO says it found that a number of entities had remitted funds directly offshore to entities that were not DGRs. Other funds were found to be distributing to entities, located within Australia, that were not DGRs or they had made distributions to other ancillary funds. 

The Tax office says these distributions were inconsistent with the purposes recorded in their trust deed.

It says while the actions of the trustees were well intended and the aim was to assist individuals and communities in need, the disbursements were not in keeping with their trust obligations. 

Public ancillary fund trust deeds reflected purposes consistent with public ancillary fund endorsement, yet the ATO says trustees had failed to comply with the purposes outlined in the deed.

DGR endorsement is available to organisations and funds that meet the character and requirements of the DGR categories. Where an entity’s foundation documents record it as having a particular purpose and its actions are inconsistent with that purpose, it places its endorsement at risk.

The ATO says Public Ancillary Funds now have the opportunity to ensure that they are compliant and make any necessary changes.

There are 1600 Public Ancillary Funds currently endorsed in Australia. The Tax Office would not reveal the number of Funds that have breeched their trust deeds.


Lina Caneva  |  Editor  |  @ProBonoNews

Lina Caneva has been a journalist for more than 35 years, and Editor of Pro Bono Australia News since it was founded in 2000.

Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?

Get in touch at news@probonoaustralia.com.au

Tags : ATO, PAFs,


Get more stories like this


Write a Reply or Comment

Your email address will not be published. Required fields are marked *


Shaping Job Interviews to Build Diversity May Be a Game Changer

Maggie Coggan

Wednesday, 7th November 2018 at 5:12 pm

Australians Are Giving Less

Wendy Williams

Thursday, 14th June 2018 at 8:00 am

Australian Gift Deductions Take a Great Leap Forward

Lina Caneva

Thursday, 12th October 2017 at 8:10 am

NFPs Need to Be Aware of What Attracts ATO Attention

Terry Hayes

Wednesday, 22nd March 2017 at 12:57 pm


Report Uncovers Shocking Abuse and Neglect of Adults With Disability

Luke Michael

Monday, 5th November 2018 at 5:29 pm

White Ribbon CEO Puts Hasty Departure Down to Culture Clash

Maggie Coggan

Monday, 12th November 2018 at 5:49 pm

Government Backtracks on Cuts to Food Relief Charity

Maggie Coggan

Monday, 12th November 2018 at 5:42 pm

Disability Groups Cautious Over NDIS Independent Assessment Pilot

Luke Michael

Monday, 12th November 2018 at 5:38 pm

Take Survey
pba inverse logo
Subscribe Twitter Facebook

The social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!