Law Administration Practice Statement PS LA 2014/1
Administration of penalties for failure to comply with Ancillary Fund Guidelines
Date of issue: 20 February 2014
Date of effect: 20 February 2014
Draft: False
Withdrawn: False

1. What is this practice statement about?: The Private Ancillary Fund Guidelines 2009 and the Public Ancillary Fund Guidelines 2011 (Guidelines) provide the rules that ancillary funds and their trustees must comply with if the funds are to be, or are to remain, endorsed as Deductible Gift Recipients (DGR). If a fund breaches the Guidelines, an administrative penalty may be payable by the trustee of the fund. This practice statement provides guidance on the administration of these penalties, including their imposition and remission. [1] | 2. Administrative penalties - general rules: Section 426-120 of Schedule 1 to the Taxation Administration Act 1953 (TAA) sets out the general rules for the imposition of the penalties. The purpose of the penalty regime is to ensure that trustees are properly accountable and act in the manner expected of a trustee holding philanthropic funds for a broad public benefit. The persons liable for the penalty are: • The trustee of the ancillary fund, and/or • If the trustee is a constitutional corporation [2] from which the penalties cannot reasonably be recovered, the directors of that corporation. • The trustee of the ancillary fund, and/or • If the trustee is a constitutional corporation [2] from which the penalties cannot reasonably be recovered, the directors of that corporation. Liability to the penalty is joint and several, meaning that any amount paid by one trustee or director will reduce the amount that the other trustees and/or directors are liable to pay by the same extent. The liability cannot be reimbursed from the ancillary fund. | 3. Administration of the penalties: The following are relevant when administering the penalties (including in any review process undertaken): • The principles underpinning the compliance model, including being fair to those trustees wanting to do the right thing, and being firm but fair with those choosing to disengage and avoid their taxation obligations. • The statements and principles in the Taxpayer's Charter. This means a trustee should be presumed to have been honest, unless there is information which suggests otherwise. • Penalty decisions must be supported by the available facts and evidence. Conclusions about the trustee's actions or behaviour should only be made where they are supported by facts, or where reasonable inferences can be drawn from those facts. • The trustee should normally be contacted and given the opportunity to explain their actions before making a penalty decision. • The principles underpinning the compliance model, including being fair to those trustees wanting to do the right thing, and being firm but fair with those choosing to disengage and avoid their taxation obligations. • The statements and principles in the Taxpayer's Charter. This means a trustee should be presumed to have been honest, unless there is information which suggests otherwise. • Penalty decisions must be supported by the available facts and evidence. Conclusions about the trustee's actions or behaviour should only be made where they are supported by facts, or where reasonable inferences can be drawn from those facts. • The trustee should normally be contacted and given the opportunity to explain their actions before making a penalty decision. There are four basic steps which must be followed: Step 1 - Determine if a penalty is imposed by law Step 2 - Determine who should be liable for the penalty Step 3 - Determine if all or a part of the penalty should be remitted. Step 4 - Notify each trustee and/or each director of the corporate trustee of the liability to pay the penalty. These steps are explained in sections 4 to 7 of this practice statement. | 4. Step 1 - Determine if a penalty is imposed by law: Once a breach of a guideline is established, the relevant Guidelines set the amount of the penalty and this is tailored to the severity or consequence of the breach. A list of guidelines in each Ancillary Fund Guideline and the corresponding penalty for the breach are contained in Appendix 1 and Appendix 2 of this practice statement. | 5. Step 2 - Determine who should be liable to the penalty: Where an ancillary fund has a corporate trustee, you must determine whether, in addition to the corporate trustee, the directors of the corporate trustee are also liable to the administrative penalty. We can seek to recover from any or all of the directors of the corporate trustee if it is clear that the penalty, or part of it, cannot be recovered from the corporate trustee alone. In making this decision, you need to take into account • any potential defences available to the directors (explained further below) • the director's capacity to pay, and • other relevant factors including the director's history with other entities. • any potential defences available to the directors (explained further below) • the director's capacity to pay, and • other relevant factors including the director's history with other entities. If we have information regarding the financial position of the directors, we would usually take action against those directors from whom recovery would be expected to be achieved in the most timely way. However, if our knowledge of the directors is limited, it may be necessary to initiate action against all directors. Potential defences available to the directors in relation to the breach A statutory defence is available to directors [3] in the following instances. The director was not aware of the breach, and it would not have been reasonable to expect them to have been aware of the breach As a general principle, it is expected that the directors should be aware of the decisions being made by the corporation, as governed by the Corporations Act 2001. This defence needs to be decided by applying an objective test - viewing the facts as they would be by a reasonable and prudent director of reasonable ability, who in the proper discharge of duties as a director had reasonable grounds for expecting the breach. In the same circumstances, a director of the corporate trustee who is a 'responsible person' would also need to comply with the same degree of responsibility in the proper discharge of his or her duties. The meaning of the word 'expect' [4] is to be understood according to its ordinary use, that is 'to regard as likely to happen' or 'to expect to find'. Overall, the director must act in a manner consistent with a director of a constitutional corporation that is a trustee of a trust holding philanthropic funds for broad public benefit. The effort required is one commensurate with all the director's circumstances, including the director's knowledge, education, experience and skill. The director took all reasonable steps to ensure that the breach did not occur This means that the director acted with care and diligence in complying with the guidelines. In deciding what is 'reasonable' you need to have regard to all relevant circumstances, for example when and for how long the person was a director, what the director did in the context of his or her knowledge of the options available to the director, and the director's continuing efforts to achieve compliance with his statutory obligations. There were no such steps that the director could have taken The onus of proving that one of the defences applies to them is on the director, and a decision on whether they are able to meet the terms of that statutory defence will depend on the facts of each case. The power of the court under section 1318 of the Corporations Act 2001 to grant relief in case of breach of director's duty does not apply to a liability of a director for this administrative penalty. | 6. Step 3 - Determine if all or a part of the penalty should be remitted: The Commissioner has a discretion to remit all or part of the penalty imposed under section 426-120. [5] The decision to exercise the discretion needs to be made separately for each trustee or director liable to an administrative penalty. The following points need to be considered when making your remission decision - noting that your decision may result in no remission, partial remission or full remission of the penalty. These are not exhaustive and are not intended to prescribe the only factors. They are intended to encourage an analytical approach to each case and the application of sound judgment in making the remission decision. • As a starting point, the quantum of penalties prescribed is considered appropriate for the breaches of the Ancillary Fund Guidelines. • You need to undertake an objective analysis of all the relevant factors in a case • You must have regard to the purpose of the provision. Remember that: - a high level of care is expected of trustees of philanthropic funds - they are required to act with care, skill and diligence as they control funds donated for a broad public benefit. Breaches giving rise to private gain will be treated most seriously. - a major objective of the penalty regime is to promote consistent treatment by specifying the amount of penalty for the breach of each guideline. That objective would be compromised if the amount of penalties specified in the law were remitted without just cause, arbitrarily or as a matter of course. • You should consider if the trustee has acted as would reasonably be expected of a competent trustee in the same circumstances, and this needs to be based on an objective test. The fact that the trustee genuinely tried to act with care and diligence is not the test - what is relevant is whether, on an objective analysis, a trustee in the same position and circumstances would have acted in the same way as the trustee in question. • Your decision needs to be fair and reasonable, and ensure that the prescribed amount of penalty does not cause unintended or unjust results, having regard to all the relevant acts or omissions leading to the breach of the Guidelines. For example, an unjust result may occur in situations where multiple administrative penalties from various breaches of the Guidelines could arise. If this is the case, you should consider whether the cumulative penalty applied is defensible, proper and just having regard to the overall circumstances of the case. Were they connected, and the penalties arise from a single course of conduct, or a single error? If so, it would be unjust to apply multiple penalties and the administrative penalty that applies should be the one that is the most specific to the situation. • Guidelines 34 to 37 and 41 to 42 are integrity assurance measures to ensure appropriate practices and processes are in place to safeguard moneys donated to the ancillary fund, and that tax deductible donations are used for an appropriate approved purpose. Therefore, remission of the penalty in relation to breaches of these guidelines would only occur in exceptional cases. • As a starting point, the quantum of penalties prescribed is considered appropriate for the breaches of the Ancillary Fund Guidelines. • You need to undertake an objective analysis of all the relevant factors in a case • You must have regard to the purpose of the provision. Remember that: - a high level of care is expected of trustees of philanthropic funds - they are required to act with care, skill and diligence as they control funds donated for a broad public benefit. Breaches giving rise to private gain will be treated most seriously. - a major objective of the penalty regime is to promote consistent treatment by specifying the amount of penalty for the breach of each guideline. That objective would be compromised if the amount of penalties specified in the law were remitted without just cause, arbitrarily or as a matter of course. • You should consider if the trustee has acted as would reasonably be expected of a competent trustee in the same circumstances, and this needs to be based on an objective test. The fact that the trustee genuinely tried to act with care and diligence is not the test - what is relevant is whether, on an objective analysis, a trustee in the same position and circumstances would have acted in the same way as the trustee in question. • Your decision needs to be fair and reasonable, and ensure that the prescribed amount of penalty does not cause unintended or unjust results, having regard to all the relevant acts or omissions leading to the breach of the Guidelines. For example, an unjust result may occur in situations where multiple administrative penalties from various breaches of the Guidelines could arise. If this is the case, you should consider whether the cumulative penalty applied is defensible, proper and just having regard to the overall circumstances of the case. Were they connected, and the penalties arise from a single course of conduct, or a single error? If so, it would be unjust to apply multiple penalties and the administrative penalty that applies should be the one that is the most specific to the situation. • Guidelines 34 to 37 and 41 to 42 are integrity assurance measures to ensure appropriate practices and processes are in place to safeguard moneys donated to the ancillary fund, and that tax deductible donations are used for an appropriate approved purpose. Therefore, remission of the penalty in relation to breaches of these guidelines would only occur in exceptional cases. - a high level of care is expected of trustees of philanthropic funds - they are required to act with care, skill and diligence as they control funds donated for a broad public benefit. Breaches giving rise to private gain will be treated most seriously. - a major objective of the penalty regime is to promote consistent treatment by specifying the amount of penalty for the breach of each guideline. That objective would be compromised if the amount of penalties specified in the law were remitted without just cause, arbitrarily or as a matter of course. | 7. Step 4 - Notify each trustee and/or each director of the corporate trustee of the liability to pay the penalty: We must give a written notice to the trustee and/or director informing them of their liability to pay the penalty, and of the reason why they are liable to pay the penalty. If the penalty has not been remitted in full, we must also provide an explanation of why this has not occurred either before, or at the same time. We must ensure the reasons are supplied prior to or at the same time as the trustee and/or director are given the written notice. If there was a part payment made in respect of the administrative penalty, we also need to notify the remaining trustees and/or directors that their liabilities have been reduced to the extent of the payment. A trustee or director who is dissatisfied with a decision to refuse to remit, in full or in part, an amount of penalty may object in the manner set out in Part IVC of the TAA if the amount of penalty remaining after the decision is more than two penalty units. | 8. Examples: The following examples are indicative only. They also assume that the trustee of the ancillary fund is a constitutional corporation. Example 1 Guideline 19 requires a private ancillary fund to distribute at least 5 per cent of the market value of the fund's net assets (as at the end of the previous financial year) unless the Commissioner has reduced the minimum distribution rate upon an application under guidance 19.7. A private ancillary fund, prior to the start of a taxation audit, disclosed that it had failed to comply with guideline 19 in its second year of operation. The trustee had distributed 5 per cent of the fund's net assets, including a large distribution to a Children's Hospital Foundation in a major city. The trustee subsequently discovered that the Children's Hospital Foundation was a public ancillary fund, and was not eligible to receive a distribution from the private ancillary fund. The trustee rectified the mistake by arranging for training and education for those responsible for making grants on behalf of the private ancillary fund to ensure the same mistake would not reoccur. In this instance, a full penalty remission is warranted. The trust was in its second year of operation, and the trustee's actions in this case were in accordance with what is reasonably expected of a competent trustee in the same circumstances. Once the discrepancy was discovered, the trustee took steps to ensure it would not happen again. The trustee also voluntarily disclosed this breach to the ATO officer prior to the start of the audit. Example 2 A private ancillary fund applies to the Commissioner to exercise his discretion under guideline 19.7 to reduce the minimum annual distribution rate to 2% for the current year. The Fund has a very limited investment strategy. Its investments are not adequately diversified exposing the fund to increased risk. Due to changes in the general market conditions in Australia, the income from the fund's investment is not sufficient to meet the 5% minimum annual distribution rate required under guideline 19 for private ancillary funds. Guideline 30 requires a fund to prepare and maintain a current investment strategy. The strategy must have particular regard to, among other things, the composition of the fund's investments as a whole, including the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification. The fund's current investment strategy does not give sufficient regard to diversification of investments, leaving the fund exposed to increased risk. The Commissioner exercises the discretion and reduces the rate to 2% for the current year on the condition that the fund reviews its investment strategy within the next 12 months having regard to the appropriate level of diversification of the fund's investments in accordance with guideline 30 to be able to generate sufficient income to meet the minimum annual distribution rate for the following financial year. The fund does not comply with the conditions imposed by the Commissioner and fails to take action to review its investment strategy. As a result, the fund is again not able to meet the minimum annual distribution requirement the following financial year for the same reason. The variation to the minimum distribution rate is conditional. If conditions are imposed and the fund fails to comply with those conditions, then the variation to the distribution rate no longer applies. This means the reduced distribution rate no longer applies, and instead, the fund is required to distribute at least 5% in accordance with guideline 19. The fund has only distributed 2% of the market value of the fund's net assets. As the fund has not met the minimum distribution rate, the fund has failed to comply with guideline 19. A penalty for not having an investment strategy that complies with guideline 30 could also apply. As the trustee may be liable for penalties under both guideline 19 and guideline 30, consideration should be given to whether maintaining both penalties would produce an unjust result to justify a remission of one of the penalties. Example 3 Guideline 24 requires the maintenance of proper accounts in respect of all receipts and payments of the fund and all financial dealings connected with the fund, and must retain those accounts for a period of at least five years. The trustee did not maintain proper accounts for the public ancillary fund. For instance, the trustee did not always record the payments. Where receipts for a deductible contribution were issued, the trustee left out relevant details or issued receipts with incorrect details. The trustee admitted that several donors had queried the incomplete information in their receipts. The trustee promised to re-issue the receipts but had been continually engaged in big fund raising events, and had not found time to correct the errors and re-issue the receipts. The trustee had greatly neglected the accounting and financial administration of the ancillary fund. It was not inadvertent book-keeping errors only. It was also clear that the trustee was aware of the contravention, or should have been aware, and did not take steps to remedy the breach. There was no specific reason for the trustee not to pay attention to its proper record keeping. A busy professional role would not justify the application of a lower standard of care in meeting obligations nor compromise the trustee's capacity to comply with Guideline 24. A reasonable trustee in the same circumstances would be expected to devote sufficient time to maintaining proper accounts of receipts and payments. No remission of penalty was warranted. Example 4 For one financial year subject to a review, a trustee of a private ancillary fund was found not to have kept proper accounts in respect of all receipts and payments of the fund and all its financial dealings in contravention of guideline 24. The fund's net assets were not sizeable. A director of the corporate trustee advised he had a serious illness. He provided documentary evidence to show that he had two major surgeries in that financial year. The director's illness affected his ability to complete his duties. While recovering from both surgeries, the director depended on a part-time bookkeeper to manage the payments and receipts. The bookkeeper retained all documentation but did not use a proper accounting system to record transactions. The director provided all the receipts and invoices for that financial year to an ATO officer but the accounting of all the fund's dealings was not completed. During the audit, the director had to reconcile the records again to provide an accurate accounting of the fund for that financial year. Further evidence showed the director had properly administered the money in the fund (that is, consistent with its investment strategy and in accordance with other guidelines). Under these circumstances, the ATO was satisfied that the statutory defence was available to the director. The following matters were relevant to support his defence: The director's illness contributed to his failure to correctly record and manage the financial dealings of the private ancillary fund. Similarly, an appropriate conclusion is that a trustee in the same circumstances might not be as thorough or as organised in keeping records as a trustee who was not dealing with major health issues. Given his ill health and the size of the fund, it is also reasonable for the trustee to rely on a part-time book-keeper. Therefore, it was reasonable to form the view that the director took all reasonable steps to ensure that the breach did not occur. The same statutory defence would not apply to the other directors of the corporate trustee. The other directors may still be liable for the penalty and consideration of the facts should be conducted for each director's case. Example 5 Guideline 27 requires ancillary funds to make financial statements available to the ATO upon request unless the fund has already provided the Australian Charties and Not-for-profit Commission (ACNC) with its financial statements. The ATO requested various details from a public ancillary fund, including its last financial statement. The ancillary fund was large, and the funds at risk sizeable. The fund did not supply the requested financial statement to the Commissioner and had not already provided this information to the ACNC. No responses were forthcoming despite numerous attempts to contact the trustees. A decision was made not to remit the penalty imposed for breach of guideline 27, as the notices had not been complied with and there was no evidence to suggest the trustee was unable to provide the information requested. It is reasonable to expect that a competent trustee in the same circumstances would have made the financial statement available. A penalty for not preparing the financial statement under guideline 26 could also apply. If the evidence supported this conclusion, then the trustee would be liable for both penalties under guideline 27 and 26. Further, if the ancillary fund is registered with the ACNC then it must meet its reporting obligations under the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act). If the fund prepares a report in accordance with Subdivision 60-C of the ACNC Act, it will meet the requirements of guideline 26. However, if the ancillary fund fails to meet its obligations under the ACNC Act and fails to provide a financial statement to the ATO, then the ancillary fund may be liable to penalty under both the ACNC Act and guideline 26 Consideration should be given to whether maintaining both penalties would produce an unjust result. In this case, the penalties relating to the two breaches of Ancillary Fund Guidelines are from two separate actions (that is, failure to prepare a financial statement, and failure to comply with the ATO request). If the ancillary fund is not registered with the ANC and therefore not subject to a penalty under the ACNC Act there is no unjust result justifying any remission. Example 6 Following on from example 4 of this practice statement, it was clear from the facts that the corporate trustee had no available funds. The ATO, therefore, should seek to recover the penalty from the directors of the corporate trustee who are jointly and severally liable for the penalty. The facts showed the three directors of the corporate trustee had different special responsibilities: one director concentrated on organising fund-raising activities and dealing with charitable institutions; the other two directors were responsible for the financial management. Six months before the fund review, the fund-raising director became concerned that the two other directors were not performing their duties proficiently. The fund-raising director reviewed the accounting records and engaged an external professional accountant to help. However, the two other directors were uncooperative and did not provide the relevant information to allow the accountant to review the records. When considering whether to commence action against some or all of the directors, the ATO personnel should take into account the potential defences available to the directors, the directors' capacity to pay and other relevant factors. In this case, it was reasonable to form the view that the fund-raising director took all reasonable steps. To the extent that he did not take steps, there were no more effective steps available to him. He was faced with uncooperative co-directors. This strongly suggested that the statutory defence was available to the fund-raising director. The ATO considered it appropriate to commence actions against the two other directors only. Example 7 Guideline 40 states the fund must not carry on a business. A private ancillary fund held a small number of shares and rental properties for the purpose of deriving income to be distributed to deductible gift recipients. A couple of years after formation, the fund achieved good results from its investments and started to undertake more substantial investigation and investment activities to take advantage of the potential for even greater returns. The activities undertaken were planned, organised and carried out in a similar manner to those of other investment companies. The fund did not only manage rental properties to maximise returns, it also engaged in property development. The activities were of reasonable size and scale. The fund engaged consultants and employed staff to manage its property development function. After considering all the factors, it was determined that guideline 40 was breached and a penalty of 25% of the net profits for each financial year was imposed. Given the sizeable activities and the change in the nature of trade, it was concluded that the fund was no longer merely holding investments - it had started a business. There were no grounds for remission of the penalty, as the trustees did not act with care regarding guideline 40. It was considered that in the same circumstances, other trustees could be expected to have known that the activities undertaken by the fund constituted the carrying on of a business. The fund was in breach of Guideline 40. Example 8 A private ancillary fund provided interest-free loans to family members of the founder and paid an excessive salary to the founder incommensurate to the minimal activities undertaken by him on behalf of the fund. The trustee had also failed to make any payments in pursuit of its charitable purposes, and advised it did not have immediate plans to do so. There was evidence the fund had been set up to provide material tax and other benefits to the founder, and was not being maintained solely for charitable purposes. The fund had been in existence for some years. It had access to advice and had sizeable funds. Given the sophistication of technical resources available to the fund, it was clear the trustee was or should have been aware of the contraventions but chose to deliberately disregard its obligations. Under these circumstances, the trustee was potentially liable for penalties relating to breaches of: guideline 36 (loans and financial assistance); guideline 41 (uncommercial transactions); and guideline 42 (benefits to founder/donor). After further investigation, the trustee was also considered likely to have contravened: guideline 19 (not meeting minimum annual distributions); guideline 28 (not auditing the financial statements of the fund); guideline 31 (failure to implement and follow the investment strategy); and guideline 32 (investment strategy and decision-making processes not in writing). The ATO personnel followed the four main steps in sections 4 to 7 when assessing the administrative penalties for the trustee. The following factors were relevant in establishing the breaches of the Ancillary Fund Guidelines: • a high level of care is expected of a trustee of a philanthropic fund. There was no evidence showing the trustee made any attempt to comply with the obligations imposed by the guidelines. It is a reasonable conclusion that a trustee in the same circumstances was expected to have known it should not have provided these loans and financial assistance. • the related parties (that is, founder and its family members) gained a real benefit from the breaches of these guidelines. The evidence supported the conclusion that the trustee intended to provide a benefit to those parties, and chose to deliberately disregard its obligations. • the trustee's actions were contrary to a philanthropic fund's intent, which is providing for a broad public benefit. • a high level of care is expected of a trustee of a philanthropic fund. There was no evidence showing the trustee made any attempt to comply with the obligations imposed by the guidelines. It is a reasonable conclusion that a trustee in the same circumstances was expected to have known it should not have provided these loans and financial assistance. • the related parties (that is, founder and its family members) gained a real benefit from the breaches of these guidelines. The evidence supported the conclusion that the trustee intended to provide a benefit to those parties, and chose to deliberately disregard its obligations. • the trustee's actions were contrary to a philanthropic fund's intent, which is providing for a broad public benefit. Each of these are serious breaches and all relevant administrative penalties would be imposed without remission in respect of each breach. The Commissioner would also consider the suspension of the trustee under section 426-125 of the TAA. If the ancillary fund is a registered charity with the ACNC, consideration should also be given to referring the matter to the ACNC. Example 9 Following on from Example 8 of this practice statement, the ATO also sought to initiate action against all three directors of the corporate trustee. The ATO's knowledge about the directors was limited (for example, information regarding the financial position of the directors), however, the evidence showed the corporate trustee had limited funds. One director raised a defence after he was issued a notice to pay. He argued he was unaware of the breach, and it would not have been reasonable to expect him to have been aware of the breach. The director presented evidence that the two co-directors acted fraudulently and kept their actions from him. He was a newly appointed director. He was not a director when the co-directors made the pertinent decisions which resulted in the breaches. Furthermore, the co-directors made false representations and provided bogus financial statements to him. The director reviewed the financial statements and relied on them to be true and accurate. The facts pointed towards the director taking a proper responsible role in the management of the fund. It was found that the director had not been negligent, or failed to make inquiries, or otherwise participate in the decision-making processes of the fund, because he was not a director at the time and he later relied on the information provided by the co-directors. The director had no access to legitimate financial information, which could have otherwise led him to make further inquiry or seek clarification of the fund's activities. The ATO accepted the director's defence. Based on the available facts of this case, the director was not aware of the breaches and it is not reasonable to expect a prudent director of reasonable ability to have been aware of these breaches. The penalty was not therefore imposed on this director. Example 10 A private ancillary fund was established without a written investment strategy because the trustees thought it was obvious that the fund should have its assets in cash in the first year. The founder had an investment strategy in the first year of term deposits in Australian financial institutions. The following year, the trustees produced a written investment strategy that the composition of the fund's investment as a whole could only be blue-chip shares in Australian companies and term deposits in Australian financial institutions. At the urging of the founder, the trustees purchased speculative shares in a little known company overseas but there was no change in the fund's written investment strategy. The trustee failed to document any associated decision-making processes used in acquiring the international shares. Under these circumstances, the trustee was potentially liable for penalties relating to breaches of: guideline 31 (Implement the investment strategy) and guideline 32 (Written form). It was determined the trustee was liable for the penalties relating to breaches of guideline 32 in the first year of operation and guideline 31 in the subsequent year. The breaches arose from separate courses of conduct. Private Ancillary Fund Guidelines Description Penalty Units Guideline 17 Change to governing rules 17. The trustee must notify the Commissioner in the *approved form (within 21 days) of any change to the fund's governing rules. Note: Certain changes to the governing rules may require the fund to seek re-endorsement as a deductible gift recipient 17.1. However, the trustee does not need to notify the Commissioner under this guideline if the trustee is required to notify the Commissioner of the Australian Charities and Not-for-profits Commission of the same information under Division 65 of the Australian Charities and Not-for-profits Commission Act 2012. 5 penalty units Guideline 19 Minimum annual distribution 19. During each *financial year, a *private ancillary fund must distribute at least 5 per cent (minimum annual distribution rate) of the *market value of the fund's net assets (as at the end of the previous *financial year). Note 1: While net assets are used to determine the fund's minimum distribution, the amount of the distribution itself is not net of any amount (for example, expenses of the fund). Note 2: The minimum annual distribution rate may be lowered under Guidelines 19.2 and 19.7 for a financial year. 19.1 The fund must distribute at least $11,000 (or the remainder of the fund if that is worth less than $11,000) during that *financial year if any expenses of the fund in relation to that financial year are paid directly or indirectly from the fund's assets or income. Note: This means that if a fund's expenses are met from outside the fund, its minimum annual distribution is the amount calculated under Guideline 19. If any of a fund's expenses are paid out of the fund's assets or income, its minimum distribution is $11,000 or the amount calculated under Guideline 19, whichever is greater. 19.2 No distribution is required during the *financial year in which the fund is established. 19.3 A distribution includes the provision of money, property or benefits. If the fund provides property or benefits, the *market value of the property or benefit provided is to be used in determining whether the fund has complied with this guideline. Example 1: If a private ancillary fund makes a gift of land to a public benevolent institution, it would include the market value of the land in calculating how much it has distributed. Example 2: If a private ancillary fund leases office space to a deductible gift recipient at a discount to the market price, the fund is providing a benefit whose market value is equal to the discount. Example 3: If a private ancillary fund invests in a social impact bond issued by a deductible gift recipient with a return that is less than the market rate of return on a similar corporate bond issue, the fund is providing a benefit whose market value is equal to the interest saved in the financial year by the deductible gift recipient from issuing the bond at a discounted rate of return. Example 4: If a private ancillary fund lends money to a deductible gift recipient at a discount to the interest rate which would be charged on a comparable loan sourced from a financial institution at arm's length, the fund is providing a benefit whose market value is equal to the discount. Example 5: If a private ancillary fund guarantees a loan provided by a financial institution to a deductible gift recipient, the fund is providing a benefit whose market value is equal to the discount to the interest rate which would be charged on a comparable arm's length unsecured loan sourced from that financial institution. Example 6: Continuing example 5, if the deductible gift recipient defaults on the loan and the fund is called on under the guarantee to make a payment to the financial institution on behalf of the deductible gift recipient, the payment is a distribution (being the provision of money, property or benefits). Note 1: The Commissioner may approve safe harbour valuation methodologies to assist trustees in calculating the market value of a benefit provided to a deductible gift recipient - see Subdivision 960-M of the Income Tax Assessment Act 1997. 19.4 The penalty for a contravention of this guideline is 30 penalty units if the shortfall is greater than $1,000. 30 penalty units if the shortfall is greater than $1,000 19.5 If the Commissioner requests the trustee to rectify a shortfall in the distribution for a *financial year, the trustee must comply with the request within 60 days. If the trustee does not, the penalty is 10 per cent of the shortfall as at the end of the 60 days reduced by any penalty (but not below nil) under guideline 19.4. 19.6 A distribution made to rectify a contravention of this guideline does not count towards compliance with this guideline for the year of the rectification. 10% of shortfall reduced by penalty under Guideline 19.4 Guideline 24 Accounts 24. The trustee must keep, or cause to be kept, proper accounts in respect of all receipts and payments of the fund and all financial dealings connected with the fund, and must retain those accounts for a period of at least 5 years after the completion of the transactions or acts to which they relate. Note: See also Subdivision 382-B in Schedule 1 to the Taxation Administration Act 1953 for rules about record keeping obligations of deductible gift recipients. 10 penalty units Guideline 25 25. The trustee must make the accounts available to the Commissioner upon request. 10 penalty units Guideline 26 Financial statements 26. The trustee must prepare, or cause to be prepared, financial statements showing the financial position of the fund at the end of each *financial year. 26.1 The financial statements must be prepared in accordance with the *accounting standards. Note: If a fund is required to prepare, and does prepare, a financial report in accordance with Subdivision 60-C of the Australian Charities and Not-for-profits Commission Act 2012, it will meet this requirement. 26.2 All transactions between the fund and a founder of the fund, a donor to the fund, the trustee, a director, officer, *agent, *member or employee of the trustee, or an *associate of any of these entities must be disclosed in the financial statements. 26.3 The financial statements must be prepared before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. 10 penalty units Guideline 27 Request for financial statements 27. The trustee must make the financial statements available to the Commissioner upon request, unless the financial statements have already been given to the Commissioner of the Australian Charities and Not-for-profits Commission. 10 penalty units Guideline 28 Audit 28. Each *financial year the trustee must arrange for an auditor to audit: • the financial statements of the fund; and • compliance with these Guidelines by the fund and the trustee. 28.1 The auditor must be registered under Part 9.2 of the Corporations Act 2001. 28.1.1 The Public Trustee of a state or territory may have the Auditor-General of that state or territory undertake the audit. 28.1A. Unless the Commissioner, by written notice, provides otherwise, a *private ancillary fund with both revenue and assets of less than $1 million in relation to a particular financial year, may instead have its financial statements and compliance with these guidelines reviewed rather than audited. 28.1A.1 A reviewer must be a registered company auditor (within the meaning of the Corporations Act 2001). However, an individual who is taken to be a registered company auditor under section 324BE of the Corporations Act 2001 is taken to be a registered company auditor for the purpose of this guideline. Note: This has the effect of widening the class of individuals who can undertake a review. 28.2 The auditor must provide the fund with an audit report in accordance with the *auditing standards. 28.3 The audit must be finalised before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. 10 penalty units Guideline 29 Request for audit report 29. The trustee must make the report available to the Commissioner upon request, unless the report has already been given to the Commissioner of the Australian Charities and Not-for-profits Commission. 10 penalty units Guideline 30 Investment strategy 30. The trustee must prepare and maintain a current investment strategy for the fund. 30.1 An appropriate investment strategy should set out the investment objectives of the fund and detail the investment methods the trustee will adopt to achieve those objectives. 30.2 The strategy must reflect the purpose and circumstances of the fund and have particular regard to (but not be limited to): • the risk involved in making, holding and realising, and the likely return from, the fund's investments, having regard to the fund's objectives and its expected cash flow requirements (including distribution requirements); and • the composition of the fund's investments as a whole, including the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification; and • the liquidity of the fund's investments, having regard to its expected cash flow requirements (including distribution requirements); and • the ability of the fund to discharge its existing and prospective liabilities; and • the investment requirements imposed by *State laws or *Territory laws; and • status of the fund as a registered charity (where applicable); and • perceived or actual material conflicts of interest in holding particular investments (including those relating to individuals involved in the decision making of the fund); and • the terms and other circumstances relating to any gift to the fund under a will. 10 penalty units Guideline 31 Implement the investment strategy 31. The trustee must implement the investment strategy, and must ensure that all investment decisions are made in accordance with it. 15 penalty units Guideline 32 Written form 32. The investment strategy (and a record of the associated decision-making processes) must be available in a written form so that the trustee, an auditor, a reviewer, or the Commissioner can determine whether the fund has complied with these Guidelines and other *Australian laws. 10 penalty units Guideline 33 Investment limitations - borrowings 33. The trustee must not *borrow money or maintain an existing borrowing of money. 33.1 However, this guideline does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to make a distribution to a *deductible gift recipient, which the trustee must make under these guidelines and which, apart from the borrowing, the trustee would be unable to make; and • the period of the borrowing does not exceed 90 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.2 This guideline also does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of a financial instrument; and • at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and • the period of the borrowing does not exceed 14 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.3 Guideline 33 also does not apply to the acquisition of a financial instrument excluded by the Commissioner from that guideline. 30 penalty units Guideline 34 Investment limitations - arms length 34. The fund's investments must be made and maintained on an *arm's length unless another guideline allows otherwise. 30 penalty units Guideline 35 Investment limitations - assets not to be offered as security 35. The trustee must not give a security over, or in relation to, an asset of the fund. 35.1 However, this guideline does not apply to: • the acquisition of a financial instrument excluded by the Commissioner from that guideline; or • an agreement to guarantee the repayment of any money lent by a creditor for the sole benefit of one or more *deductible gift recipients. 30 penalty units Guideline 36 Investment limitations - assets acquired at arms length 36. The fund must not acquire an asset (except by way of gift) from, and must not make a loan or provide any other kind of financial assistance to, a founder of the fund, a donor to the fund, the trustee, a director, officer, agent, *member or employee of the trustee, or an *associate of any of these entities except: • by way of an arms' length commercial transaction; or • on terms more favourable to the fund than would otherwise be expected under an arms' length transaction. 30 penalty units Guideline 37 Investment limitations - assets kept separate 37. The trustee must keep the assets of the fund separate from all other assets. 37.1 However, this guideline does not prevent a licensed trustee company or the Public Trustee of a state or territory from operating common funds for investment purposes. 30 penalty units Guideline 38 Investment limitations - Collectables 38. The fund must not acquire an asset (except by way of gift) if the asset is capable of being a *collectable. 38.1 If the fund acquires such an asset by way of gift, it must sell or distribute the asset within 12 months after acquiring it. 30 penalty units Guideline 40 Investment limitations - carrying on a business 40. The fund must not *carry on a *business. 40.1A However, a fund does not contravene this guideline merely because its investment activities, because of repetition, volume and regularity, mean that it is *carrying on a *business. Note: The holding of investments, such as shares or rental properties, for the purpose of deriving income that can be distributed to deductible gift recipients is not considered to be carrying on a business. 40.1 The penalty for a contravention of this guideline is an amount equal to 25 per cent of the net profits of the business for each *financial year during all or part of which the contravention continues. Penalty amount equal to 25% of the net profits of the business Guideline 41 Uncommercial transactions 41. The fund must not enter into any transaction that is uncommercial when entered into, unless the transaction is: • with a *deductible gift recipient covered by item 1 in the table in section 30-15 of the ITAA 1997; and • in the course or furtherance of the fund's purpose. 41.1 However, the fund may enter into an uncommercial transaction if it is on terms more favourable to the fund than would otherwise be expected under an arms' length transaction. 30 penalty units Guideline 42 Benefits to founder/donor or associates 42. The fund must not *provide any benefit (except as set out in guideline 43), directly or indirectly, to: • the trustee; or • a *member, director, employee, *agent or officer of the trustee; or • a donor to the fund; or • a founder of the fund; or • an *associate of any of those entities (other than a deductible gift recipient). Penalty amount equal to the amount or value of the benefit provided Guideline 45 Donors - public appeals 45. The fund must not solicit donations from the public. 30 penalty units Guideline 46 Donors - sources of donations 46. In any *financial year, the fund must not accept donations totalling more than 20 per cent (in total) of the *market value of its assets (determined at the end of the previous financial year) from entities other than: • a founder of the fund; or • *associates of the founder; or • employees of the founder; or • a deceased estate of any of those entities. 10 penalty units Change to governing rules Note: Certain changes to the governing rules may require the fund to seek re-endorsement as a deductible gift recipient 17.1. However, the trustee does not need to notify the Commissioner under this guideline if the trustee is required to notify the Commissioner of the Australian Charities and Not-for-profits Commission of the same information under Division 65 of the Australian Charities and Not-for-profits Commission Act 2012. Minimum annual distribution Note 1: While net assets are used to determine the fund's minimum distribution, the amount of the distribution itself is not net of any amount (for example, expenses of the fund). Note 2: The minimum annual distribution rate may be lowered under Guidelines 19.2 and 19.7 for a financial year. 19.1 The fund must distribute at least $11,000 (or the remainder of the fund if that is worth less than $11,000) during that *financial year if any expenses of the fund in relation to that financial year are paid directly or indirectly from the fund's assets or income. Note: This means that if a fund's expenses are met from outside the fund, its minimum annual distribution is the amount calculated under Guideline 19. If any of a fund's expenses are paid out of the fund's assets or income, its minimum distribution is $11,000 or the amount calculated under Guideline 19, whichever is greater. 19.2 No distribution is required during the *financial year in which the fund is established. 19.3 A distribution includes the provision of money, property or benefits. If the fund provides property or benefits, the *market value of the property or benefit provided is to be used in determining whether the fund has complied with this guideline. Example 1: If a private ancillary fund makes a gift of land to a public benevolent institution, it would include the market value of the land in calculating how much it has distributed. Example 2: If a private ancillary fund leases office space to a deductible gift recipient at a discount to the market price, the fund is providing a benefit whose market value is equal to the discount. Example 3: If a private ancillary fund invests in a social impact bond issued by a deductible gift recipient with a return that is less than the market rate of return on a similar corporate bond issue, the fund is providing a benefit whose market value is equal to the interest saved in the financial year by the deductible gift recipient from issuing the bond at a discounted rate of return. Example 4: If a private ancillary fund lends money to a deductible gift recipient at a discount to the interest rate which would be charged on a comparable loan sourced from a financial institution at arm's length, the fund is providing a benefit whose market value is equal to the discount. Example 5: If a private ancillary fund guarantees a loan provided by a financial institution to a deductible gift recipient, the fund is providing a benefit whose market value is equal to the discount to the interest rate which would be charged on a comparable arm's length unsecured loan sourced from that financial institution. Example 6: Continuing example 5, if the deductible gift recipient defaults on the loan and the fund is called on under the guarantee to make a payment to the financial institution on behalf of the deductible gift recipient, the payment is a distribution (being the provision of money, property or benefits). Note 1: The Commissioner may approve safe harbour valuation methodologies to assist trustees in calculating the market value of a benefit provided to a deductible gift recipient - see Subdivision 960-M of the Income Tax Assessment Act 1997. 19.4 The penalty for a contravention of this guideline is 30 penalty units if the shortfall is greater than $1,000. if the shortfall is greater than $1,000 19.6 A distribution made to rectify a contravention of this guideline does not count towards compliance with this guideline for the year of the rectification. Accounts Note: See also Subdivision 382-B in Schedule 1 to the Taxation Administration Act 1953 for rules about record keeping obligations of deductible gift recipients. Financial statements 26.1 The financial statements must be prepared in accordance with the *accounting standards. Note: If a fund is required to prepare, and does prepare, a financial report in accordance with Subdivision 60-C of the Australian Charities and Not-for-profits Commission Act 2012, it will meet this requirement. 26.2 All transactions between the fund and a founder of the fund, a donor to the fund, the trustee, a director, officer, *agent, *member or employee of the trustee, or an *associate of any of these entities must be disclosed in the financial statements. 26.3 The financial statements must be prepared before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. Request for financial statements Audit • the financial statements of the fund; and • compliance with these Guidelines by the fund and the trustee. 28.1 The auditor must be registered under Part 9.2 of the Corporations Act 2001. 28.1.1 The Public Trustee of a state or territory may have the Auditor-General of that state or territory undertake the audit. 28.1A. Unless the Commissioner, by written notice, provides otherwise, a *private ancillary fund with both revenue and assets of less than $1 million in relation to a particular financial year, may instead have its financial statements and compliance with these guidelines reviewed rather than audited. 28.1A.1 A reviewer must be a registered company auditor (within the meaning of the Corporations Act 2001). However, an individual who is taken to be a registered company auditor under section 324BE of the Corporations Act 2001 is taken to be a registered company auditor for the purpose of this guideline. Note: This has the effect of widening the class of individuals who can undertake a review. 28.2 The auditor must provide the fund with an audit report in accordance with the *auditing standards. 28.3 The audit must be finalised before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. Request for audit report Investment strategy 30.1 An appropriate investment strategy should set out the investment objectives of the fund and detail the investment methods the trustee will adopt to achieve those objectives. 30.2 The strategy must reflect the purpose and circumstances of the fund and have particular regard to (but not be limited to): • the risk involved in making, holding and realising, and the likely return from, the fund's investments, having regard to the fund's objectives and its expected cash flow requirements (including distribution requirements); and • the composition of the fund's investments as a whole, including the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification; and • the liquidity of the fund's investments, having regard to its expected cash flow requirements (including distribution requirements); and • the ability of the fund to discharge its existing and prospective liabilities; and • the investment requirements imposed by *State laws or *Territory laws; and • status of the fund as a registered charity (where applicable); and • perceived or actual material conflicts of interest in holding particular investments (including those relating to individuals involved in the decision making of the fund); and • the terms and other circumstances relating to any gift to the fund under a will. • the risk involved in making, holding and realising, and the likely return from, the fund's investments, having regard to the fund's objectives and its expected cash flow requirements (including distribution requirements); and • the composition of the fund's investments as a whole, including the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification; and • the liquidity of the fund's investments, having regard to its expected cash flow requirements (including distribution requirements); and • the ability of the fund to discharge its existing and prospective liabilities; and • the investment requirements imposed by *State laws or *Territory laws; and • status of the fund as a registered charity (where applicable); and • perceived or actual material conflicts of interest in holding particular investments (including those relating to individuals involved in the decision making of the fund); and • the terms and other circumstances relating to any gift to the fund under a will. Implement the investment strategy Written form Investment limitations - borrowings 33.1 However, this guideline does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to make a distribution to a *deductible gift recipient, which the trustee must make under these guidelines and which, apart from the borrowing, the trustee would be unable to make; and • the period of the borrowing does not exceed 90 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. • the purpose of the borrowing is to enable the trustee to make a distribution to a *deductible gift recipient, which the trustee must make under these guidelines and which, apart from the borrowing, the trustee would be unable to make; and • the period of the borrowing does not exceed 90 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.2 This guideline also does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of a financial instrument; and • at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and • the period of the borrowing does not exceed 14 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. • the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of a financial instrument; and • at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and • the period of the borrowing does not exceed 14 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.3 Guideline 33 also does not apply to the acquisition of a financial instrument excluded by the Commissioner from that guideline. Investment limitations - arms length Investment limitations - assets not to be offered as security 35.1 However, this guideline does not apply to: • the acquisition of a financial instrument excluded by the Commissioner from that guideline; or • an agreement to guarantee the repayment of any money lent by a creditor for the sole benefit of one or more *deductible gift recipients. • the acquisition of a financial instrument excluded by the Commissioner from that guideline; or • an agreement to guarantee the repayment of any money lent by a creditor for the sole benefit of one or more *deductible gift recipients. Investment limitations - assets acquired at arms length • by way of an arms' length commercial transaction; or • on terms more favourable to the fund than would otherwise be expected under an arms' length transaction. Investment limitations - assets kept separate 37.1 However, this guideline does not prevent a licensed trustee company or the Public Trustee of a state or territory from operating common funds for investment purposes. Investment limitations - Collectables 38.1 If the fund acquires such an asset by way of gift, it must sell or distribute the asset within 12 months after acquiring it. Investment limitations - carrying on a business 40.1A However, a fund does not contravene this guideline merely because its investment activities, because of repetition, volume and regularity, mean that it is *carrying on a *business. Note: The holding of investments, such as shares or rental properties, for the purpose of deriving income that can be distributed to deductible gift recipients is not considered to be carrying on a business. 40.1 The penalty for a contravention of this guideline is an amount equal to 25 per cent of the net profits of the business for each *financial year during all or part of which the contravention continues. Uncommercial transactions • with a *deductible gift recipient covered by item 1 in the table in section 30-15 of the ITAA 1997; and • in the course or furtherance of the fund's purpose. 41.1 However, the fund may enter into an uncommercial transaction if it is on terms more favourable to the fund than would otherwise be expected under an arms' length transaction. Benefits to founder/donor or associates • the trustee; or • a *member, director, employee, *agent or officer of the trustee; or • a donor to the fund; or • a founder of the fund; or • an *associate of any of those entities (other than a deductible gift recipient). Donors - public appeals Donors - sources of donations • a founder of the fund; or • *associates of the founder; or • employees of the founder; or • a deceased estate of any of those entities. Public Ancillary Fund Guidelines Description Penalty Units Guideline 17 Changes to governing rules 17. The trustee must notify the Commissioner in the *approved form (within 21 days) of any change to the fund's governing rules. Note: Certain changes to the governing rules may require the fund to seek re-endorsement as a deductible gift recipient. 17.1 However, the trustee does not need to notify the Commissioner under this guideline if the trustee is required to notify the Commissioner of the Australian Charities and Not-for-profits Commission of the same information under Division 65 of the Australian Charities and Not-for-profits Commission Act 2012. 5 penalty units Guideline 19 Minimum annual distribution 19. During each *financial year, a *public ancillary fund must distribute at least 4 per cent (minimum annual distribution rate) of the *market value of the fund's net assets (as at the end of the previous *financial year). Note 1: While net assets are used to determine the fund's minimum distribution, the amount of the distribution itself is not net of any amount (for example, expenses of the fund). Note 2: The minimum annual distribution rate may be lowered under Guidelines 19.2 and 19.7 for a financial year. 19.1 The fund must distribute at least $8,800 (or the remainder of the fund if that is worth less than $8,800) during that *financial year if any expenses of the fund in relation to that financial year are paid directly or indirectly from the fund's assets or income. Note: This means that if a fund's expenses are met from outside the fund, its minimum annual distribution is the amount calculated under Guideline 19. If any of a fund's expenses are paid out of the fund's assets or income, its minimum distribution is $8,800 or the amount calculated under Guideline 19 whichever is greater: 19.2 No distribution is required during the *financial year in which the fund is established or during the next 4 financial years. Note: While these guidelines do not set a minimum annual distribution for the first four financial years, the trustee should consider making an appropriate distribution each year in accordance with the purpose of the fund. 19.3 A distribution includes the provision of money, property or benefits. If the fund provides property or benefits, the *market value of the property or benefit provided is to be used in determining whether the fund has complied with this guideline. Example 1: If a public ancillary fund makes a gift of land to a public benevolent institution, it would include the market value of the land in calculating how much it has distributed. Example 2: If a public ancillary fund leases office space to a deductible gift recipient at a discount to the market price, the fund is providing a benefit whose market value is equal to the discount. Example 3: If a public ancillary fund invests in a social impact bond issued by a deductible gift recipient with a return that is less than the market rate of return on a similar corporate bond issue, the fund is providing a benefit whose market value is equal to the interest saved by the deductible gift recipient from issuing the bond at a discounted rate of return. Example 4: If a public ancillary fund lends money to a deductible gift recipient at a discount to the interest rate which would be charged on a comparable loan sourced from a financial institution at arm's length, the fund is providing a benefit whose market value is equal to the discount. Example 5: If a public ancillary fund guarantees a loan provided by a financial institution to a deductible gift recipient, the fund is providing a benefit whose market value is equal to the discount to the interest rate which would be charged on a comparable arm's length unsecured loan sourced from that financial institution. Example 6: Continuing example 5, if the deductible gift recipient defaults on the loan and the fund is called on under the guarantee to make a payment to the financial institution on behalf of the deductible gift recipient, the payment is a distribution (being the provision of money, property or benefits). Note 1: The Commissioner may approve safe harbour valuation methodologies to assist trustees in calculating the market value of a benefit provided to a deductible gift recipient - see Subdivision 960-M of the Income Tax Assessment Act 1997. 19.4 The penalty for a contravention of this guideline is 30 penalty units if the shortfall is greater than $1,000. 30 penalty units if the shortfall is greater than $1,000 Guideline 19 Failure to comply with a request under Guideline 19 19.5 If the Commissioner requests the trustee to rectify a shortfall in the distribution for a *financial year, the trustee must comply with the request within 60 days. If the trustee does not, the penalty is 10 per cent of the shortfall as at the end of the 60 days reduced by any penalty (but not below nil) under guideline 19.4. 19.6 A distribution made to rectify a contravention of this guideline does not count towards compliance with this guideline for the year of the rectification. 10% of shortfall reduced by penalty under Guideline 19.4 Guideline 24 Accounts 24. The trustee must keep, or cause to be kept, proper accounts in respect of all receipts and payments of the fund and all financial dealings connected with the fund, and must retain those accounts for a period of at least 5 years after the completion of the transactions or acts to which they relate. Note: See also Subdivision 382-B in Schedule 1 to the Taxation Administration Act 1953 for rules about record-keeping obligations of deductible gift recipients. 10 penalty units Guideline 25 Request for accounts 25 The trustee must make the accounts available to the Commissioner upon request. 10 penalty units Guideline 26 Financial statements 26. The trustee must prepare, or cause to be prepared, financial statements showing the financial position of the fund at the end of each *financial year. 26.1 The financial statements must be prepared in accordance with the *accounting standards. Note: If a fund is required to prepare, and does prepare, a financial report in accordance with Subdivision 60-C of the Australian Charities and Not-for-profits Commission Act 2012, it will meet this requirement. 26.2 All transactions (except for gifts) between the fund and a founder of the fund, a donor to the fund, the trustee, a director, officer, *agent, *member or employee of the trustee, or an *associate of any of these entities must be disclosed in the financial statements. 26.3 The financial statements must be prepared before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. 10 penalty units Guideline 27 Request for financial statements 27. The trustee must make the financial statements available to the Commissioner upon request, unless the financial statements have already been given to the Commissioner of the Australian Charities and Not-for-profits Commission 10 penalty units Guideline 28 Audit 28. Except as set out below, each *financial year the trustee must arrange for an auditor to audit: • the financial statements of the fund; and • compliance with these Guidelines by the fund and the trustee. 28.1 The auditor must be a registered company auditor (within the meaning of the Corporations Act 2001). 28.1.1 The Public Trustee of a state or territory may have the Auditor General of that state or territory undertake the audit. 28.2 Unless the Commissioner, by written notice, provides otherwise, a public ancillary fund with revenue and assets of less than $1 million in relation to a particular financial year, may instead have its financial statements and compliance with these guidelines reviewed rather than audited. 28.2.1 A reviewer must be a registered company auditor (within the meaning of the Corporations Act 2001). However, an individual who is taken to be a registered company auditor under section 324BE of the Corporations Act 2001 is taken to be a registered company auditor for the purpose of this guideline. Note: This has the effect of widening the class of individuals who can undertake a review. 28.3 The auditor or reviewer must undertake the review or audit, and provide the fund with a report, in accordance with the *auditing standards. 28.4 The audit or review must be finalised before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. 10 penalty units Guideline 29 Request for audit report 29. The trustee must make the report available to the Commissioner upon request, unless the report has already been given to the Commissioner of the Australian Charities and Not-for-profits Commission. 10 penalty units Guideline 30 Investment strategy 30. The trustee must prepare and maintain a current investment strategy for the fund. 30.1 An appropriate investment strategy should set out the investment objectives of the fund and detail the investment methods the trustee will adopt to achieve those objectives. 30.2 The strategy must reflect the purpose and circumstances of the fund and have particular regard to (but not be limited to): • the risk involved in making, holding and realising, and the likely return from, the fund's investments, having regard to the fund's objectives and its expected cash flow requirements (including distribution requirements); and • the composition of the fund's investments as a whole, including the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification; and • the liquidity of the fund's investments, having regard to its expected cash flow requirements (including distribution requirements); and • the ability of the fund to discharge its existing and prospective liabilities; and • the investment requirements imposed by *State laws or *Territory laws. • status of the fund as a *registered charity (where applicable); and • real or perceived material conflicts of interest in holding particular investments (including those relating to individuals involved in the decision-making of the fund); and • the terms and other circumstances relating to any gift to the fund under a will. 10 penalty units Guideline 31 Implement investment strategy 31. The trustee must implement the investment strategy, and must ensure that all investment decisions are made in accordance with it. 15 penalty units Guideline 32 Written form 32. The investment strategy (and a record of the associated decision-making processes) must be available in a written form so that the trustee, an auditor, a reviewer, or the Commissioner can determine whether the fund has complied with these Guidelines and other *Australian laws. 10 penalty units Guideline 33 Investment limitations - Borrowings 33. The trustee must not *borrow money or maintain an existing borrowing of money. 33.1 However, this guideline does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to make a distribution to a *deductible gift recipient, which the trustee must make under these guidelines and which, apart from the borrowing, the trustee would be unable to make; and • the period of the borrowing does not exceed 90 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.2 This guideline also does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of a financial instrument; and at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and • the period of the borrowing does not exceed 14 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.3 Guideline 33 also does not apply to the acquisition of a financial instrument excluded by the Commissioner from that guideline. 30 penalty units Guideline 34 Investment limitations - arms length 34. The fund's investments must be made and maintained on an *arm's length Unless another guideline allows otherwise. 30 penalty units Guideline 35 Investment limitations - security over funds assets 35. The trustee must not give a security over, or in relation to, an asset of the fund. However, this guideline does not apply to: • the acquisition of a financial instrument excluded by the Commissioner from that guideline; or • an agreement to guarantee the repayment of any money lent by a creditor for the sole benefit of one or more *deductible gift recipients. 30 penalty units Guideline 36 Investment limitations - assets acquired at arms length 36. The fund must not acquire an asset (except by way of gift) from, and must not make a loan or provide any other kind of financial assistance to, a founder of the fund, a donor to the fund, the trustee, a director, officer, agent, *member or employee of the trustee, or an *associate of any of these entities except: • by way of an arm's length commercial transaction; • on terms more favourable to the fund than would otherwise be expected under an arm's length transaction. 30 penalty units Guideline 37 Investment limitations - assets kept separate 37. The trustee must keep the assets of the fund separate from all other assets. 37.1 However, this guideline does not prevent a licensed trustee company or the Public Trustee of a state or territory from operating common funds for investment purposes. 30 penalty units Guideline 38 Investment limitations - collectable 38. The fund must not acquire an asset (except by way of gift) if the asset is capable of being a *collectable. 38.1 If the fund acquires such an asset by way of gift, it must sell or distribute the asset within 12 months after acquiring it. 30 penalty units Guideline 40 Investment limitations - not carrying on a business 40. The fund must not *carry on a *business. 40.1 However, a fund does not contravene this guideline merely because its investment activities, because of repetition, volume and regularity, mean that it is *carrying on a *business. 40.2 A fund also does not contravene this guideline if it undertakes public fundraising appeals. Note 1: The holding of investments, such as bonds, shares or rental properties, for the purpose of deriving income that can be distributed to deductible gift recipients is not subject to the carrying on a business restrictions. Note 2: Fundraising appeals, such as public donation appeals, lamington drives, raffles, and charity balls, are not subject to the carrying on a business restrictions. 40.3 The penalty for a contravention of this guideline is an amount equal to 25 per cent of the net profits of the business for each *financial year during all or part of which the contravention continues. 25% of the net profits of the business for each *financial year during all or part of which the contravention continues. Guideline 41 Uncommercial transactions 41 The fund must not enter into any transaction that is uncommercial when entered into, unless the transaction is: • with a *deductible gift recipient covered by item 1 in the table in section 30-15 of the ITAA 1997; and • in the course or furtherance of the fund's purpose. 41.1 However, the fund may enter into an uncommercial transaction if it is on terms more favourable to the fund than would otherwise be expected under an arm's length transaction. 30 penalty units Guideline 42 Material benefits 42 The fund must not *provide any material benefit (except as set out in guideline 43) directly or indirectly, to: • the trustee; or • a *member, director, employee, *agent or officer of the trustee; or • a donor to the fund; or • a founder of the fund; or • an *associate of any of those entities (other than a *deductible gift recipient). Penalty amount equal to the amount or value of the benefit provided Changes to governing rules Note: Certain changes to the governing rules may require the fund to seek re-endorsement as a deductible gift recipient. 17.1 However, the trustee does not need to notify the Commissioner under this guideline if the trustee is required to notify the Commissioner of the Australian Charities and Not-for-profits Commission of the same information under Division 65 of the Australian Charities and Not-for-profits Commission Act 2012. Minimum annual distribution Note 1: While net assets are used to determine the fund's minimum distribution, the amount of the distribution itself is not net of any amount (for example, expenses of the fund). Note 2: The minimum annual distribution rate may be lowered under Guidelines 19.2 and 19.7 for a financial year. 19.1 The fund must distribute at least $8,800 (or the remainder of the fund if that is worth less than $8,800) during that *financial year if any expenses of the fund in relation to that financial year are paid directly or indirectly from the fund's assets or income. Note: This means that if a fund's expenses are met from outside the fund, its minimum annual distribution is the amount calculated under Guideline 19. If any of a fund's expenses are paid out of the fund's assets or income, its minimum distribution is $8,800 or the amount calculated under Guideline 19 whichever is greater: 19.2 No distribution is required during the *financial year in which the fund is established or during the next 4 financial years. Note: While these guidelines do not set a minimum annual distribution for the first four financial years, the trustee should consider making an appropriate distribution each year in accordance with the purpose of the fund. 19.3 A distribution includes the provision of money, property or benefits. If the fund provides property or benefits, the *market value of the property or benefit provided is to be used in determining whether the fund has complied with this guideline. Example 1: If a public ancillary fund makes a gift of land to a public benevolent institution, it would include the market value of the land in calculating how much it has distributed. Example 2: If a public ancillary fund leases office space to a deductible gift recipient at a discount to the market price, the fund is providing a benefit whose market value is equal to the discount. Example 3: If a public ancillary fund invests in a social impact bond issued by a deductible gift recipient with a return that is less than the market rate of return on a similar corporate bond issue, the fund is providing a benefit whose market value is equal to the interest saved by the deductible gift recipient from issuing the bond at a discounted rate of return. Example 4: If a public ancillary fund lends money to a deductible gift recipient at a discount to the interest rate which would be charged on a comparable loan sourced from a financial institution at arm's length, the fund is providing a benefit whose market value is equal to the discount. Example 5: If a public ancillary fund guarantees a loan provided by a financial institution to a deductible gift recipient, the fund is providing a benefit whose market value is equal to the discount to the interest rate which would be charged on a comparable arm's length unsecured loan sourced from that financial institution. Example 6: Continuing example 5, if the deductible gift recipient defaults on the loan and the fund is called on under the guarantee to make a payment to the financial institution on behalf of the deductible gift recipient, the payment is a distribution (being the provision of money, property or benefits). Note 1: The Commissioner may approve safe harbour valuation methodologies to assist trustees in calculating the market value of a benefit provided to a deductible gift recipient - see Subdivision 960-M of the Income Tax Assessment Act 1997. 19.4 The penalty for a contravention of this guideline is 30 penalty units if the shortfall is greater than $1,000. Failure to comply with a request under Guideline 19 19.6 A distribution made to rectify a contravention of this guideline does not count towards compliance with this guideline for the year of the rectification. Accounts Note: See also Subdivision 382-B in Schedule 1 to the Taxation Administration Act 1953 for rules about record-keeping obligations of deductible gift recipients. Request for accounts Financial statements 26.1 The financial statements must be prepared in accordance with the *accounting standards. Note: If a fund is required to prepare, and does prepare, a financial report in accordance with Subdivision 60-C of the Australian Charities and Not-for-profits Commission Act 2012, it will meet this requirement. 26.2 All transactions (except for gifts) between the fund and a founder of the fund, a donor to the fund, the trustee, a director, officer, *agent, *member or employee of the trustee, or an *associate of any of these entities must be disclosed in the financial statements. 26.3 The financial statements must be prepared before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. Request for financial statements Audit • the financial statements of the fund; and • compliance with these Guidelines by the fund and the trustee. 28.1 The auditor must be a registered company auditor (within the meaning of the Corporations Act 2001). 28.1.1 The Public Trustee of a state or territory may have the Auditor General of that state or territory undertake the audit. 28.2 Unless the Commissioner, by written notice, provides otherwise, a public ancillary fund with revenue and assets of less than $1 million in relation to a particular financial year, may instead have its financial statements and compliance with these guidelines reviewed rather than audited. 28.2.1 A reviewer must be a registered company auditor (within the meaning of the Corporations Act 2001). However, an individual who is taken to be a registered company auditor under section 324BE of the Corporations Act 2001 is taken to be a registered company auditor for the purpose of this guideline. Note: This has the effect of widening the class of individuals who can undertake a review. 28.3 The auditor or reviewer must undertake the review or audit, and provide the fund with a report, in accordance with the *auditing standards. 28.4 The audit or review must be finalised before the fund is required to give to the Commissioner its *income tax return for the relevant *financial year. Request for audit report Investment strategy 30.1 An appropriate investment strategy should set out the investment objectives of the fund and detail the investment methods the trustee will adopt to achieve those objectives. 30.2 The strategy must reflect the purpose and circumstances of the fund and have particular regard to (but not be limited to): • the risk involved in making, holding and realising, and the likely return from, the fund's investments, having regard to the fund's objectives and its expected cash flow requirements (including distribution requirements); and • the composition of the fund's investments as a whole, including the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification; and • the liquidity of the fund's investments, having regard to its expected cash flow requirements (including distribution requirements); and • the ability of the fund to discharge its existing and prospective liabilities; and • the investment requirements imposed by *State laws or *Territory laws. • status of the fund as a *registered charity (where applicable); and • real or perceived material conflicts of interest in holding particular investments (including those relating to individuals involved in the decision-making of the fund); and • the terms and other circumstances relating to any gift to the fund under a will. • the risk involved in making, holding and realising, and the likely return from, the fund's investments, having regard to the fund's objectives and its expected cash flow requirements (including distribution requirements); and • the composition of the fund's investments as a whole, including the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification; and • the liquidity of the fund's investments, having regard to its expected cash flow requirements (including distribution requirements); and • the ability of the fund to discharge its existing and prospective liabilities; and • the investment requirements imposed by *State laws or *Territory laws. • status of the fund as a *registered charity (where applicable); and • real or perceived material conflicts of interest in holding particular investments (including those relating to individuals involved in the decision-making of the fund); and • the terms and other circumstances relating to any gift to the fund under a will. Implement investment strategy Written form Investment limitations - Borrowings 33.1 However, this guideline does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to make a distribution to a *deductible gift recipient, which the trustee must make under these guidelines and which, apart from the borrowing, the trustee would be unable to make; and • the period of the borrowing does not exceed 90 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. • the purpose of the borrowing is to enable the trustee to make a distribution to a *deductible gift recipient, which the trustee must make under these guidelines and which, apart from the borrowing, the trustee would be unable to make; and • the period of the borrowing does not exceed 90 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.2 This guideline also does not prohibit a trustee from *borrowing money if: • the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of a financial instrument; and at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and • the period of the borrowing does not exceed 14 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. • the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of a financial instrument; and at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and • the period of the borrowing does not exceed 14 days; and • the borrowing, when made, would not result in total borrowings exceeding 10 per cent of the *market value of the fund's assets. 33.3 Guideline 33 also does not apply to the acquisition of a financial instrument excluded by the Commissioner from that guideline. Investment limitations - arms length Investment limitations - security over funds assets However, this guideline does not apply to: • the acquisition of a financial instrument excluded by the Commissioner from that guideline; or • an agreement to guarantee the repayment of any money lent by a creditor for the sole benefit of one or more *deductible gift recipients. • the acquisition of a financial instrument excluded by the Commissioner from that guideline; or • an agreement to guarantee the repayment of any money lent by a creditor for the sole benefit of one or more *deductible gift recipients. Investment limitations - assets acquired at arms length • by way of an arm's length commercial transaction; • on terms more favourable to the fund than would otherwise be expected under an arm's length transaction. Investment limitations - assets kept separate 37.1 However, this guideline does not prevent a licensed trustee company or the Public Trustee of a state or territory from operating common funds for investment purposes. Investment limitations - collectable 38.1 If the fund acquires such an asset by way of gift, it must sell or distribute the asset within 12 months after acquiring it. Investment limitations - not carrying on a business 40.1 However, a fund does not contravene this guideline merely because its investment activities, because of repetition, volume and regularity, mean that it is *carrying on a *business. 40.2 A fund also does not contravene this guideline if it undertakes public fundraising appeals. Note 1: The holding of investments, such as bonds, shares or rental properties, for the purpose of deriving income that can be distributed to deductible gift recipients is not subject to the carrying on a business restrictions. Note 2: Fundraising appeals, such as public donation appeals, lamington drives, raffles, and charity balls, are not subject to the carrying on a business restrictions. 40.3 The penalty for a contravention of this guideline is an amount equal to 25 per cent of the net profits of the business for each *financial year during all or part of which the contravention continues. Uncommercial transactions • with a *deductible gift recipient covered by item 1 in the table in section 30-15 of the ITAA 1997; and • in the course or furtherance of the fund's purpose. 41.1 However, the fund may enter into an uncommercial transaction if it is on terms more favourable to the fund than would otherwise be expected under an arm's length transaction. Material benefits • the trustee; or • a *member, director, employee, *agent or officer of the trustee; or • a donor to the fund; or • a founder of the fund; or • an *associate of any of those entities (other than a *deductible gift recipient). Private Ancillary Fund Guidelines 2009 Description Guideline 59 Governing Rules Inconsistent With These Guidelines 59. If a fund does not have a trustee that is a *constitutional corporation, then guideline 14.1 does not apply to the fund. Instead, at least one individual with a degree of responsibility to the Australian community as a whole must be a trustee of the fund. Guideline 60 Governing Rules Inconsistent With These Guidelines 60. If a fund has an existing borrowing as at 30 September 2009, the fund may maintain that borrowing despite guideline 33. However, the fund may not alter the terms of the borrowing without the prior agreement of the Commissioner. Public Ancillary Fund Guidelines 2011 Description Guideline 51 Transitional Rules for Public Ancillary Funds 51. These transitional rules apply to a *public ancillary fund that was a public fund endorsed as a *deductible gift recipient in item 2 in the table in section 30-15 of the ITAA 1997 at the end of 31 December 2011. 51.1. These transitional rules are intended to help a public ancillary fund make the transition into the new regime. Guideline 56 Governing Rules Inconsistent With These Guidelines 56. If a fund does not have a trustee that is a *constitutional corporation, then guideline 14 does not apply to the fund. Instead, at least a majority of individuals who are trustees of the fund must have a degree of responsibility to the Australian community as a whole. Guideline 57 Governing Rules Inconsistent With These Guidelines 57. If a fund has an existing borrowing as at 31 December 2011, the fund may maintain that borrowing despite guideline 33. However, the fund may not alter the terms of the borrowing without the prior agreement of the Commissioner. Governing Rules Inconsistent With These Guidelines Governing Rules Inconsistent With These Guidelines Transitional Rules for Public Ancillary Funds 51.1. These transitional rules are intended to help a public ancillary fund make the transition into the new regime. Governing Rules Inconsistent With These Guidelines Governing Rules Inconsistent With These Guidelines

Related practice statements: PS LA 2011/6
Legislative references: TAA 1953 | TAA 1953 Pt IVC | TAA 1953 Sch 1 Div 298 | TAA 1953 Sch 1 298-5(c) | TAA 1953 Sch 1 298-20 | TAA 1953 Sch 1 298-20(2) | TAA 1953 Sch 1 Subdiv 382-B | TAA 1953 Sch 1 Subdiv 426-D | TAA 1953 Sch 1 426-102(1) | TAA 1953 Sch 1 426-103 | TAA 1953 Sch 1 426-103(b) | TAA 1953 Sch 1 426-105(1) | TAA 1953 Sch 1 426-110 | TAA 1953 Sch 1 426-110(b) | TAA 1953 Sch 1 426-120 | TAA 1953 Sch 1 426-120(1) | TAA 1953 Sch 1 426-120(1)(a) | TAA 1953 Sch 1 426-120(2)(b)(ii) | TAA 1953 Sch 1 426-120(4) | TAA 1953 Sch 1 426-120(5)(a) | TAA 1953 Sch 1 426-120(5)(b) | TAA 1953 Sch 1 426-120(5)(c) | TAA 1953 Sch 1 426-120(6) | TAA 1953 Sch 1 426-120(7) | TAA 1953 Sch 1 426-120(8) | TAA 1953 Sch 1 426-125 | ITAA 1997 | ITAA 1997 30-15 | ITAA 1997 30-15(2) | ITAA 1997 30-227 | ITAA 1997 995-1(1) | Corporations Act 2001 | Corporations Act 2001 324BE | Corporations Act 2001 1318 | Corporations Act 2001 Pt 9.2 | Tax Laws Amendment (2009 Measures No. 4) Act 2009 Sch 2 | Tax Laws Amendment (2011 Measures No. 7) Act 2011 Sch 8 | Taxation Administration Regulations 1976 | Crimes Act 1914 4AA(1)
Other references: Private Ancillary Fund Guidelines 2009 Private Ancillary Fund Guidelines 2009 8 Private Ancillary Fund Guidelines 2009 9 Private Ancillary Fund Guidelines 2009 10 Private Ancillary Fund Guidelines 2009 11 Private Ancillary Fund Guidelines 2009 12 Private Ancillary Fund Guidelines 2009 17 Private Ancillary Fund Guidelines 2009 19 Private Ancillary Fund Guidelines 2009 24 Private Ancillary Fund Guidelines 2009 25 Private Ancillary Fund Guidelines 2009 26 Private Ancillary Fund Guidelines 2009 27 Private Ancillary Fund Guidelines 2009 28 Private Ancillary Fund Guidelines 2009 29 Private Ancillary Fund Guidelines 2009 30 Private Ancillary Fund Guidelines 2009 31 Private Ancillary Fund Guidelines 2009 32 Private Ancillary Fund Guidelines 2009 33 Private Ancillary Fund Guidelines 2009 34 Private Ancillary Fund Guidelines 2009 35 Private Ancillary Fund Guidelines 2009 36 Private Ancillary Fund Guidelines 2009 37 Private Ancillary Fund Guidelines 2009 38 Private Ancillary Fund Guidelines 2009 40 Private Ancillary Fund Guidelines 2009 41 Private Ancillary Fund Guidelines 2009 42 Private Ancillary Fund Guidelines 2009 45 Private Ancillary Fund Guidelines 2009 46 Public Ancillary Fund Guidelines 2011 Public Ancillary Fund Guidelines 2011 8 Public Ancillary Fund Guidelines 2011 9 Public Ancillary Fund Guidelines 2011 10 Public Ancillary Fund Guidelines 2011 11 Public Ancillary Fund Guidelines 2011 12 Public Ancillary Fund Guidelines 2011 17 Public Ancillary Fund Guidelines 2011 18 Public Ancillary Fund Guidelines 2011 19 Public Ancillary Fund Guidelines 2011 24 Public Ancillary Fund Guidelines 2011 25 Public Ancillary Fund Guidelines 2011 26 Public Ancillary Fund Guidelines 2011 27 Public Ancillary Fund Guidelines 2011 28 Public Ancillary Fund Guidelines 2011 29 Public Ancillary Fund Guidelines 2011 30 Public Ancillary Fund Guidelines 2011 31 Public Ancillary Fund Guidelines 2011 32 Public Ancillary Fund Guidelines 2011 33 Public Ancillary Fund Guidelines 2011 34 Public Ancillary Fund Guidelines 2011 35 Public Ancillary Fund Guidelines 2011 36 Public Ancillary Fund Guidelines 2011 37 Public Ancillary Fund Guidelines 2011 38 Public Ancillary Fund Guidelines 2011 40 Public Ancillary Fund Guidelines 2011 41 Public Ancillary Fund Guidelines 2011 42 Public Ancillary Fund Guidelines 2011 43

Additional content:
Appendix 1: Private Ancillary Fund Guidelines and Penalty Units | Appendix 2: Public Ancillary Fund Guidelines and Penalty Units | Appendix 3: Transitional Rulings for Ancillary Funds | Updated in accordance with Private Ancillary Fund and Public Ancillary Fund Amendment Guidelines 2016. | Updated to new LAPS format and style. | 'Tax Office' updated to ATO as per Style Guide recommendations. | Replaced publication with new publication | Dates updated to current income year | [1] For guidance on the transitional rules which were in place for the period when the Guidelines were introduced, refer to prior versions of this practice statement. | [2] Provided the constitutional corporation is not a licensed trustee company (under Chapter 5D of the Corporations Act 2001) nor the Public Trustee of a State or Territory. | [3] Paragraph 426-120(5). | [4] In paragraph 426-120(5)(a). | [5] Under section 298-20 of Schedule 1 to the TAA.