Amended guidelines for ancillary funds – to encourage philanthropic support for charities

The guidelines for private and public ancillary funds will be amended to encourage increased distributions to deductible gift recipients (DGRs) as a result of the COVID-19 pandemic.

Ancillary funds are trusts established to provide money, property and benefits to deductible gift recipients (DGRs).

Under normal guidelines public ancillary funds (PuAFs) and private ancillary funds (PAFs) are required to annually distribute at least 4% and 5% respectively, of the market value of the fund’s net assets to a DGR.

Private and public ancillary funds will receive a credit if they increase their distributions to DGRs by a total of at least 4 percentage points above the minimum distribution rate in 2019–20 and 2020–21.

The ancillary fund can choose to use this credit to reduce their minimum annual distribution by up to 1% in 2021–22 and for each financial year until the credit is exhausted, without applying to the Commissioner.

To view further detail and an example from the ATO, click here

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