Document ID: chunk:federal_register_of_legislation:F2025L00184:reg:13:p1
Version: federal_register_of_legislation:F2025L00184
Segment Type: reg
Provision Reference: reg 13 (pt 1/4)
Character Range: 9210–11998

13  Minimum annual distribution

 (1) During each *financial year, a community charity must make distributions of amounts that are in total equal to at least 4 per cent (the minimum annual distribution rate) of the *market value of the charity's net assets (as at the end of the previous financial year) in accordance with this section.
Note 1: While net assets are used to determine the charity's minimum distribution, the total distribution that must be made is not net of any amount (for example, the amount of expenses of the charity).
Note 2: The minimum annual distribution rate, for a financial year, may be lowered under subsections (2) and (7).
Penalty: 30 penalty units if the shortfall is greater than $1,000.

 (2) However, no distribution is required during the *financial year in which a community charity is established or during the 4 financial years following the financial year in which the community charity is established.
Note: While this instrument does not require a minimum annual distribution for newly established community charities, the trustee or corporate director should still have regard to the purpose of the community charity when deciding on an appropriate annual distribution during those early years.

 (3) A distribution by a community charity is:
 (a) the provision of money, property or benefits to an eligible *deductible gift recipient in the direct course or furtherance of a purpose of the charity as covered by subsection 30-110(3) of the ITAA 1997; or
 (b) expenditure incurred by the charity in the direct course or furtherance of a purpose of the charity as covered by subsection 30‑110(4) or (5) of the ITAA 1997.
Note: Expenditure incurred by a community charity under paragraph (3)(b) includes providing money to entities that are not deductible gift recipients, where expenditure of that money by the other entity will further a purpose of the community charity.
Example 1: A community charity that has a purpose of providing benevolent relief (consistent with item 4.1.1 of the table in subsection 30-45(1) of the ITAA 1997) makes a distribution by funding an entity, that is not a deductible gift recipient, to provide transport services to people with disabilities.
Example 2: A community charity that has a purpose of relieving the necessitous circumstances of one or more individuals in Australia (consistent with item 4.1.3 of the table in subsection 30-45(1) of the ITAA 1997) makes a distribution by providing new clothes, furniture and food to families who are in necessitous circumstances following destruction of, or damage to, their homes in a bushfire.

 (4) If a community charity makes a distribution of property or benefits, the *market value of the property or benefits provided is to be used in determining whether the