Federal Government announces amendments to the Private Ancillary Fund guidelines

In a bid to incentivise philanthropy during these tough times, the Federal Government is providing credits for Private Ancillary Funds that exceed their minimum yearly distributions (see the announcement here).

 

Private Ancillary Funds (PAFs) are required to distribute 5% of their net assets each financial year. But, if in the 2019/20 and 2020/21 financial years collectively, a PAF distributes a total of 4% more than the required amounts, the PAF will receive a credit to offset its future distribution requirements.

This credit will be half of the total percentage points that exceed the PAF's minimum distributions for both financial years and will be able to offset future distribution requirements by up to 1% from the 2021/22 financial year.

For example, if your PAF has distributed 6% of the market value of its net assets in 2019/20 and 11% in 2020/21, there will be 7% in excess of the minimum requirements over the 2 years. The PAF will be entitled to a 3.5% credit. The PAF will be able to reduce its annual distribution requirements by up to 1% from 2021–22, until those credits are exhausted.

If you would like any further information on PAFs, please get in touch with the Private Clients team at McCabe Curwood.

Contributors

Guy Desmidt Law Clerk