The Private Ancillary Fund and Public Ancillary Fund Amendment Guidelines 2015 (amending guidelines) propose to amend the currentPrivate Ancillary Fund Guidelines 2009 and the Public Ancillary Fund Guidelines 2011 (together, the Guidelines), with the changes to apply from 1 July 2016.  The Guidelines set minimum standards for the governance and conduct of ancillary funds and their trustees, breach of which can result in a revocation of charitable and/or concessional tax status.  Therefore, trustees of ancillary funds need to familiarise themselves with these changes.

The amending guidelines update the current Private Ancillary Fund Guidelines 2009 to incorporate improvements made in the subsequently enacted Public Ancillary Fund Guidelines 2011.  A key change to achieve greater uniformity in the Guidelines relates to the portability of funds, which would allow private ancillary funds to transfer their net assets to another private ancillary fund, subject to certain requirements being met and the agreement of the Commissioner of Taxation being obtained.  

The amending guidelines also update the Guidelines to amongst other things:

  • recognise the role of the Australian Charities and Not-for-Profits Commission (ACNC) in regulating ancillary funds that are registered charities;
  • reduce duplication of reporting requirements, including ensuring that where materials have been provided to the ACNC, the same materials do not have to also be provided to the Australian Taxation Office;
  • update the matters to be considered by trustees in developing and maintaining an investment strategy, including the status of the fund as a registered charity, and any perceived or actual material conflicts of interest in holding particular investments;
  • amend the investment strategy rules including to: remind trustees of their core obligations; to clarify that trustees can consider non-binding preferences of donors prior to making distributions; and to increase the penalty for failing to comply with investment strategy rules;
  • amend the investment limitations to allow a fund to provide a loan guarantee over its assets for the sole benefit of a deductible gift recipient, provided that such a guarantee is consistent with the governing rules of the fund; and
  • reduce the minimum annual distribution requirements to provide greater flexibility in unexpected economic conditions.

The closing date for submissions to Treasury on the amending guidelines is 12 February 2016.

For further information regarding compliance with the Guidelines, please contact our not-for-profit experts:

Ashleigh Wall
Special Counsel
T: 03 5226 8559

Dianne Sisak Penjalov
Senior Associate
T: 03 5226 8582

Ella Vines
T: 03 5225 5216