New laws introduced on 1 January 2012 change the way public ancillary funds are structured, operated and wound up.
On 1 January 2012, new laws governing the definition and operation of public ancillary funds came into force. The definition is now the cornerstone for organisations seeking to have their ancillary fund endorsed by the Australian Taxation Office as a deductible gift recipient.
Trustees of and donors to public ancillary funds should be aware that:
- new Public Ancillary Fund Guidelines 2011 (the Guidelines) now apply to certain public ancillary funds;
- the Guidelines stipulate minimum levels of distributions from the public ancillary fund during a financial year;
- the Commissioner now has powers to suspend and remove trustees of certain public ancillary funds, and appoint acting trustees in circumstances where the Guidelines are not complied with;
- the legislation transitions most public ancillary funds into being managed by corporate trustees which meet certain constitutional criteria;
- administrative penalties apply for breaches of certain rules in the Guidelines;
- such administrative penalties can be imposed on directors of the corporate trustee in certain circumstances; and
- there is a “phase-in” period specified for public ancillary funds that are already endorsed as deductible gift recipients.
The introduction of a monetary penalty system and a system of penalising trustees through suspensions and removal, means that this is a critical time for trustees of public ancillary funds to be across all the rules that pertain to the management of their fund, from an establishment level right through to the stage of winding up.
Feel free to contact us to assess what your public ancillary fund needs to do to comply not only with the new Federal laws but also the founding Trust Deed and applicable State and Territory laws.