Ancillary fund guidelines, natural disaster declaration

Information from ATO, 6 May 2020

Amended ancillary fund guidelines and natural disaster declaration

As you may have seen, the Government made an announcement this morning amending the ministerial guidelines for public and private ancillary funds that changes the way they are administered during the COVID-19 pandemic. The amended approach assists charities to deal with the effects of the economic downturn, by creating an incentive for philanthropic funds to increase distributions to Deductible gift recipients (DGRs) at a time when they need it most.

Key points

  • The amended guidelines will provide a credit to public and private ancillary funds that increase distributions to DGRs, by an aggregate of at least four percentage points above the minimum during 2019-20 and 2020-21. The credit received is equal to half the percentage points that exceeded the minimum distribution of funds. The fund may use this credit to reduce their minimum distribution by up to one percentage point in 2021-22, and in each financial year until the credit is exhausted.
  • Public advice and guidance will be updated on shortly.
  • If an ancillary fund has special circumstances affecting their ability to meet the minimum distribution requirements, they may still apply to the Commissioner to request a reduction. During 2019-20 and 2020-21 the Commissioner will consider the applicants specific circumstances in balance with the COVID-19 administrative approach, and exercise discretion in exceptional circumstances.
  • A COVID-19 pandemic across Australia has also been declared. The COVID‑19 pandemic began on 18 March 2020 and has caused widespread injury and death across Australia. This declaration will allow Australian Disaster Relief Funds that are established for the relief of people affected by the COVID‑19 pandemic to receive tax-deductible donations. Donations to Australian disaster relief funds, established to provide relief from the COVID‑19 pandemic, will be tax deductible when made within two years of the day specified in this declaration as the first day of the event.
  • Disaster relief funds will need to apply for formal endorsement as a DGR fund through the NFP Centre. This requires charity registration with the Australian Charities and Not-for-profits Commission. Organisations seeking to establish a DGR can contact the ATO’s NFP Premium Phone Service on 1300 130 248 between 8.00am and 6.00pm AEST, Monday to Friday. Alternatively emails can be sent to outside of these times.

Further information

You can review the media release at Incentivising increased support for charities in response to COVID-19

An ancillary fund with questions about minimum annual distribution requirements and disaster relief funds, can contact the ATO Not-for-profit Premium Phone Service on 1300 130 248 between 8.00am and 6.00pm AEDT. Alternatively they can email outside of these times.

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