The Assistant Treasurer, Chris Bowen MP, today released an exposure draft of legislation that gives effect to the Government's 2008 Budget commitment to improve the integrity of prescribed private funds (PPFs).
PPFs are a form of ancillary trust fund designed to encourage private philanthropy by providing private groups, such as businesses, families and individuals, with greater flexibility to start their own trust funds for philanthropic purposes. Donors receive a tax deduction for donations to their PPF, and most PPFs are also income tax exempt.
The exposure draft proposes that the Treasurer have the ability to make legally enforceable guidelines for PPFs, increases the Australian Taxation Office's regulatory power over PPFs, and gives the Commissioner of Taxation full power over the administration (including the endorsement) of PPFs.
As PPFs will no longer be prescribed in the relevant legal sense, the name of PPFs will change to 'private ancillary funds'. The new streamlined approval arrangements of private ancillary funds are consistent with other kinds of organisations that collect tax deductible donations.
For reasons of Constitutional authority, all new private ancillary funds must be controlled by a single corporate trustee. Approximately 80 per cent of existing funds already meet this requirement, and the remainder will have until 1 July 2011 to comply.
The changes are planned to have effect from 1 October 2009.
The Assistant Treasurer encourages interested parties to provide their comments on the exposure draft by 29 May 2009. The exposure draft is available on the Treasury website.
Consultation has been undertaken on proposed guidelines. A further round of consultation will occur with the release of an exposure draft of new guidelines later this month.