PAFs & Philanthropy

We have also finalised new dates in early 2010 for the Understanding the Governance of Charitable Foundations Seminars, also run by Philanthropy Australia’s Treasurer, David Ward:

• Sydney: Tuesday 16 March 2010, 9:30am - 12:30pm
• Melbourne: Thursday 18 March 2010, 9:30am - 12:30pm

This seminar covers broader trustee issues and governance, though does touch on new Private Ancillary Fund (PAF) guidelines.

For PAF-focussed governance, we suggest registering for the PAF Governance Workshop instead.

For more information, booking forms and to register your interest, please visit the Understanding the Governance of Charitable Foundations Seminars page.

New dates for early 2010 have been finalised for the Private Ancillary Fund (PAF) Governance Workshops, run by Philanthropy Australia’s Treasurer, David Ward:

• Sydney: Wednesday 10 February 2010, 9:30am - 12:30pm
• Melbourne: Thursday 11 February 2010, 9:30am - 12:30pm

For more information, booking forms and to register your interest, please visit the PAF Governance Workshops page.

The Department of Justice has released guidelines for trustees of ancillary funds and Private Ancillary Funds (PAFs, formerly Prescribed Private Funds) wishing to distribute to government public hospitals in Victoria. The guidelines apply only to charitable trusts which are subject to Victorian law.

This follows the 2006 amendment of the Victorian Charities Act 1978. The Act was amended to enable the trustees of certain charitable trusts to provide money, property or benefits to, or for the establishment of, “eligible entities” as defined in section 7k of the Act. This gives power in some circumstances for trustees who choose to “opt in” to make distributions to deductible gift recipients which would be charities but for a connection to government.

The guidelines include preliminary questions for trustees to consider, instructions for opting in and seeking endorsement as an Income tax Exempt Fund (ITEF), and a list of public hospitals to which trustees may make distributions.

Trustees should obtain their own professional advice as to the application of the Act to their particular circumstances.

The Guidelines can be downloaded from the Department of Justice website.

With the commencement of the new regulatory regime governing Private Ancillary Funds (PAFs), formerly Prescribed Private Funds (PPFs) effective 1 October 2009, Philanthropy Australia has created a booklet which will serve as a handbook for all PAFs.

The PAF Handbook has been written by David Ward, the author of the very well received Trustee Handbook, and will be provided free on-line.

Members and Associates are invited to the launch of the Private Ancillary Fund Handbook by the Assistant Treasurer, Senator the Hon. Nick Sherry.

This event is being generously hosted by the Lord Mayor’s Charitable Foundation.

When: 10:00am - 11:00am, Tuesday 10 November 2009
Where: Condell Room, Level 1, Melbourne Town Hall, Corner Swanston and Collins Streets, Melbourne
RSVP: Bookings essential. Please contact Annie Scoufis: a.scoufis@philanthropy.org.au, (02) 9223 0155, by Thursday 05 November 2009

We hope to see you there!

The Australlian Taxation Office has released new information products to assist organisations seeking deductible gift recipient (DGR) status under the new category for private ancillary funds (PAFs), effective from 1 October 2009. The website includes information on the transitional arrangements for existing prescribed private funds (PPFs), which became PAFs on 1 October 2009.

The new information includes a private ancillary funds website that provides information about the new category, the requirements for endorsement and the transitional arrangements for PPFs. It also provides links to the other products for PAFs, including:

• the PAF model deed
• updated instructions for endorsement as a deductible gift recipient
• the PAF schedule
• the agreement to comply with the PAF guidelines
• the revocation of agreement to comply with the PAF guidelines, and
• the PAF guidelines, which are located on the Federal Register of Legislative Instruments

The Tax Office is in the process of developing a Frequently Asked Questions webpage to answer questions about PAFs. If your questions are not answered in the above products, the ATO encourages you to email them your questions for possible inclusion in the FAQ. Email your question by 6 November 2009 to npc-publications@ato.gov.au, putting ‘Private ancillary funds - frequently asked questions’ in the subject line.

The final Guidelines for Private Ancillary Funds have been released. The Guidelines can be downloaded from: http://www.comlaw.gov.au/comlaw/Legislation/LegislativeInstrument1.nsf/0/46B098606729DA20CA25763C00058CD6?OpenDocument&VIEWCAT=item&COUNT=999&START=1

There is also an explanatory statement which provides some explanation and clarification on the Guidelines, which we recommend that Members and interested parties read. It can be accessed by clicking on the tab reading “ES/SuppMaterial” at the above link.

The final Guidelines contain several differences to the draft version, including abolition of the requirement for PAFs to prepare and maintain a distribution strategy. Both the Guidelines and the Explanatory Statement include much of the clarification which Philanthropy Australia had requested in its response to the Draft Guidelines.

The new regulatory regime governing Private Ancillary Funds (PAFs) commences today, 1 October 2009. The ATO has advised Philanthropy Australia that they will be contacting existing PPFs to advise them of the changes and of the steps they will need to take to transition from a PPF to a PAF. They expect the transition period to take some months and are developing materials to help existing PPFs with the transition process.

The ATO has advised that the Prescribed Private Fund Information return for the period 1 July 2008 to 30 June 2009 is now available on the ATO’s website at http://www.ato.gov.au/nonprofit/content.asp?doc=/content/00213298.htm

The return form and accompanying instructions will not be mailed out this year and must be downloaded from the ATO. Trusts must complete and submit the information return for the year ended 30 June 2009 if they:

• are a private fund that is prescribed in the Income Tax Assessment Regulations 1997 regulation 995-1.02, or
• have been approved for prescription in the regulations before 1 July 2009 and have received written confirmation to that effect.

PPFs are still required to submit an information return for the 2008-09 year despite the tax law changes for PPFs that take effect from 1 October 2009.

For more information and to download the forms, please see the ATO’s website at http://www.ato.gov.au/nonprofit/content.asp?doc=/content/00213298.htm

Philanthropy Australia welcomes today’s release of new draft guidelines for Private Ancillary Funds, formerly known as Prescribed Private Funds (PPFs). It is pleasing that Treasury has adopted the recommendation of Philanthropy Australia, its members and the wider philanthropic sector to set a minimum distribution rate of 5%. This will ensure the continuing growth of a vibrant and healthy culture of giving and philanthropy.

Gina Anderson, CEO of Philanthropy Australia, said “This is a significant benefit for the entire community. Philanthropy Australia and the philanthropic sector have worked closely with Government on clarifying and revising the rules under which PPFs operate. For the first time support for the philanthropic sector is truly bipartisan. The PPF structure was introduced by the Howard government in 2001. It has now been refined and updated by the Rudd government following wide consultation. We welcome the opportunity to respond to these draft guidelines and look forward to working with the Government to improve the integrity of Private Ancillary Funds”.

The PPF structure was introduced in 2001 and since that time approximately 800 PPFs have been created with a collective value of over $1.2 billion. Over $120 million was distributed from PPFs to the community in the 06/07 financial year. The new guidelines ensure that existing PPFs and new PAFs can operate with renewed confidence, ensuring maximum community benefit and continuing to build an Australian culture of giving.

For further information: http://www.treasury.gov.au/contentitem.asp?NavId=002&ContentID=1568 for new guidelines and instructions on how to respond
Read the full Policy Alert for a more detailed explanation of the Guidelines (Members Only)
http://www.philanthropy.org.au/representation/submissions.html for Philanthropy Australia’s previous submissions.

Philanthropy Australia’s response to the PPF Draft Legislation is now available on our website. The Guidelines will not be issued for another couple of weeks.

We advised that it is extremely difficult to respond to the Exposure Draft without having seen the Guidelines. While we support in principle the objectives of the legislation we reserve support for the detail until the Guidelines are released and can be considered. The majority of issues raised by our Members will be covered in the Guidelines and we will take the opportunity to make further submissions on the legislation once the Draft Guidelines are released.

Download our response: http://www.philanthropy.org.au/representation/submissions.html

Exposure Draft: http://www.treasury.gov.au/contentitem.asp?NavId=&ContentID=1541

An exposure draft of legislation on Prescribed Private Funds (PPFs) was released last night with comments due to Treasury by Friday 29 May 2009.

The exposure draft 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’. The new streamlined approval arrangements of private ancillary funds are consistent with other kinds of organisations that collect tax deductible donations.

For reasons of Constitutional authority, all new private ancillary funds must be controlled by a single corporate trustee. Approximately 80 per cent of existing funds already meet this requirement, and the remainder will have until 1 July 2011 to comply.

An exposure draft of new guidelines will be released later this month. The changes are planned to have effect from 1 October 2009.

More information: Press Release at http://assistant.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2009/051.htm&pageID=003&min=ceb&Year=&DocType=

Information on submissions: http://www.treasury.gov.au/contentitem.asp?NavId=037&ContentID=1541