The Public Ancillary Fund Guidelines 2022 came into effect on 25 February. They set the minimum standards for the governance and conduct of a public ancillary fund and its trustee.
An ancillary fund is a trust set up and maintained solely for the purpose of providing money, property, and benefits to deductible-gift-recipients. Although an ancillary fund is also a DGR, it does not undertake charitable work, acting as an intermediary between donors and DGRs that undertake such work.
Ancillary funds encourage philanthropy by allowing donors to receive an upfront tax deduction for gifts that are distributed over time to other DGRs.
The 2022 guidelines mirror their 2011 counterparts, and no changes were made to requirements. Language has been simplified for ease of comprehension and navigation to align with the Private Ancillary Fund Guidelines 2019.
To view the amended guidelines click here.
The Federal Government is consulting on ways to reduce red tape for Australia’s philanthropers.
To ensure that ancillary funds meet their philanthropic goals, guidelines made under the Taxation Administration Act 1953 require funds to (among other things) make a minimum distribution each financial year to type 1 DGRs that undertake charitable work and restrict the transfer of assets among ancillary funds.
The government is consulting on options for increased flexibility in ancillary-funds operations, particularly by improving their ability to support large projects or transfer assets to other ancillary funds that are better placed to support on‑the‑ground charities.
Ancillary funds play a significant role in Australian philanthropy by providing a bridge between donors and the thousands of deductible-gift recipients that contribute to Australia’s wellbeing through their work in welfare, education, research, arts, health, volunteer emergency services, and the environment.
In 2018‑19, ancillary funds held more than $10 billion in net assets and provided benefits of $9.6 million to other deductible-gift recipients.
The government welcomes views on policy options and other suggestions on how the operation of ancillary funds could be improved.
The discussion paper Distribution guidelines for ancillary funds – Consultation on possible policy changes is available on the Treasury website. Submissions are sought by 6 May.