Changes to Public Ancillary Funds
Monday, 22nd November 2010 at 11:24 am
The Federal Government has released a Discussion Paper for public consultation on improving the integrity of public ancillary funds which aims to increase public confidence in the philanthropic sector.
A public ancillary fund is an ancillary fund to which the public can make tax deductible donations, for the purpose of disbursing funds to a range of non-ancillary or ‘doing’ deductible gift recipients.
These funds are generally used as vehicles for community fund raising.
In the 2010-11 Budget, the Government announced changes to improve the accountability of public ancillary funds and give Australians more certainty that their donations are being used wisely.
The Assistant Treasurer, Bill Shorten says the changes will provide trustees of public ancillary funds with greater certainty as to their philanthropic obligations and provide donors and the charitable sector with greater confidence that donations are being used effectively.
The proposed changes introduce a new regulatory framework similar to that introduced on 1 October 2009 for private ancillary funds.
The new rules will apply to public ancillary funds as from 1 July 2011.
Bill Shorten says public ancillary funds have a duty to distribute these donations as efficiently as possible to the many worthy charities seeking valuable public support.
Shorten says that in 2007-08, Australians provided over $2.3 billion in tax deductible donations to various charities around Australia, some of which passed through around 1,500 public ancillary funds, including groups like the Australian Koala Foundation, Comic Relief Australia and various workplace charity funds.
He says he has no doubt the vast majority of the charities involved do their best, but this proposed new regulatory framework will give donors more confidence their donations are being distributed properly.
The discussion paper outlines the Government's views on the essential characteristics of a new framework for public ancillary funds. It proposes several changes to the current regulatory system, including the introduction of legislative guidelines.
As outlined in the discussion paper, these guidelines will allow for regular valuation of assets, will clarify investment and distribution rules and will contain a system of administrative penalties for small breaches instead of the harsh 'all or nothing' penalty system that currently applies.
As well it recommends
- providing legislative guidelines to, among other things, clarify the current administrative requirements including the amount of compulsory distributions;
- imposing new requirements such as the regular valuation of assets at market rates, the preparation of accounts and financial statements, audit requirements and investment rules;
- improving disclosure requirements; and
- giving the ATO greater regulatory powers.
The Assistant Treasurer has encouraged interested parties to provide their comments on the paper by 17 December 2010.
Address written submissions to:
Philanthropy and Exemptions Unit
Personal and Retirement Income Division
PARKES ACT 2600
For enquiries, please call Robyn Vincent on (02) 6263 2758.