Document ID: chunk:federal_register_of_legislation:F2022L00184:clause:1_15:p2
Version: federal_register_of_legislation:F2022L00184
Segment Type: clause
Provision Reference: sch 1 cl 15 (pt 2/4)
Character Range: 15121–17773

of which is used in calculating how much it has distributed. The fund may determine the market value as an amount equal to the discount.
Example 3: Where a public ancillary fund invests in a social impact bond that is issued by an eligible deductible gift recipient and has a return that is less than the market rate of return on a similar corporate bond issue, the fund is providing a benefit the market value of which is used in calculating how much it has distributed. The fund may determine the market value as an amount 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: Where a public ancillary fund lends money to an eligible 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 the borrower with a benefit equal to the market value of the interest forgone in the financial year by the lender because the borrower was not charged an arm's length rate of interest.
Example 5: Where a public ancillary fund guarantees a loan provided by a financial institution to an eligible deductible gift recipient, the fund is providing a benefit the market value of which is used in calculating how much it has distributed. The fund may determine market value as an amount equal to the discount to the interest rate which would otherwise 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 also a distribution (being the provision of money, property or benefits).
Note: 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.
 (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.
Penalty:  10 per cent of the shortfall as at the end of the 60 days reduced, but not below nil, by any penalty under subsection (1).
 (6) A distribution made to rectify a contravention of subsection (1) does not count towards compliance with that subsection for a later year in which the rectification occurs.

Accessing a lower minimum distribution rate for a financial year
 (7)