The amendments maintained the current minimum annual payout rate of 4% for PUAF and 5% for FAPs, but gave the Commissioner a margin of appreciation to reduce this rate in certain circumstances. In addition, this stricter approach was complemented by a slight increase (of 5 penalty units) in the penalty for non-compliance with the rules of the investment strategy. In addition, private aid funds with revenues and assets of less than $1,000,000 have the option of requesting a review of their financial report and compliance with paf guidelines rather than a full review, thereby reducing compliance costs through audit fees. Following a review of the compliance of aid funds by the ATO, it was found that a small number of funds had reckless investments with related parties or had entered into a series of transactions with related companies and individuals with donors and founders of the Fund. If you would like to discuss the impact of the new aid fund rules on you or your clients, please contact Frank Hinoporos, the head of our public and private philanthropy team. Private AFs are created by private groups such as companies, families and individuals for philanthropic purposes. To obtain tax-deductible gifts, a private AF must be confirmed by the ATO as a deduction recipient (DGR). The introduction of this discretion should provide additional flexibility to support funds in exceptional circumstances, for example.B. where a fund receives a significant donation subject to investment restrictions or where a fund has made significant distributions in previous years. The Commissioner may choose to apply his discretion, but also to set conditions on the PuAF or the PAF. To request the exercise of the Commissioner`s discretion, a PuAF or FAP must meet all of its annual submission obligations and submit a written request to the Commissioner indicating the necessary details of the fund.
The Income Tax Act defines the funds, public authorities or institutions that may be DGR. The table in section 30-15 of the Income Tax Assessment Act 1997 identifies them as follows: in the case of FAPs, the Commissioner may now accept, under certain conditions, the transfer of assets from the PAF to another relief fund. This provides greater flexibility for FAPs who might want to wrap themselves up, but do not wish to transfer their net assets to one DGR, but can now transfer them to another PAF or PuAF. A private aid fund (private AF) is a trust fund that: in practice, this means that the trustee must take these issues into account and document them annually in his investment strategy. The trustee must take into account these issues and the broader investment strategy and act in accordance with them. Failure to submit to the Commissioner, upon request, the investment strategy or the implementation of the investment strategy is punishable under both guidelines. A final point is that the requirements imposed on the persons responsible have been extended to include anyone who can attend a legal declaration. While there are overlaps with categories of people already listed as "people with some degree of responsibility to the Australian community", such as for example. B any person belonging to a professional organization having a code of ethics and rules of conduct, it can now include people with 5 years or more of experience, given that, for example, nurses, bankers, government employees, teachers.
Accordingly, the amendments adapt the issues that Directors must take into account in developing and maintaining their fund`s investment strategy, which must reflect the purpose and circumstances of the Fund. In addition to current mandatory considerations (such as the risk, composition and liquidity of the Fund`s investments), the strategy must take into account, inter alia, the following: private funds are limited to distributions to DGR under section 30 to 15(1) of the Income Tax Assessment Act 1997, or the creation of such DGR. . . .