The Assistant Treasurer has released for public consultation an exposure draft of legislation (and explanatory material) and draft guidelines which provides a new regulatory framework for public ancillary funds.
A public ancillary fund is one of two types of ancillary trust fund that can qualify for deductible gift recipient status (DGR) status and income tax exempt status under the ITAA 1997 (the other being private funds). A public ancillary fund collects tax deductible donations from the public which they on-distribute to other DGRs that they consider to be for worthwhile causes.
The exposure draft among other things:
- gives the Treasurer the power to make legislative guidelines about the establishment and maintenance of public ancillary funds;
- gives the Commissioner the power to impose administrative penalties on trustees that fail to comply with the guidelines and to remove or suspend trustees of non-complying funds; and
- defers the start date of 1 July 2011 as announced in the Budget measure of 2010-11 until 1 January 2012.
The legislative guidelines provide for improved standards of governance and accountability, ensure regular valuation of assets, clarify investment and distribution rules, and provide for a system of administrative penalties.