In 2001, the Howard Government announced the creation of a new form of philanthropic structure, the Prescribed Private Fund (PPF). The then Prime Minister stated that “This measure will open up a new vehicle for private philanthropy ……. , so that families and individuals can donate to a trust of their own, which then disburses funds to a range of other gift-deductible recipients.” (Prime Minister’s Press Release 30 March 2001.)
Key features of PPFs included:
# tax deduction for donations;
# exemption from ongoing income tax; and
# no public fundraising requirement.
Between 2001 & 2008, almost eight hundred PPFs were established.
The Treasurer of the incoming Rudd Government announced in the 2008 Budget that the Government would legislate guidelines “to improve the integrity of PPFs and to provide trustees of PPFs with greater certainty as to their philanthropic obligations.” Subsequently, new legislation was introduced in October 2009 for what are now called Private Ancillary Funds (PAFs).
The major changes for PAFs (from PPFs) are:
# trustees must be corporations (existing individual trustees of PPFs can continue);
# the Accumulation Plan is replaced by a 5% minimum distribution requirement;
# PAFs must have a formal Investment Plan;
# the annual audit must be of compliance with the Guidelines as well as the Financial Statements; and
# the Commissioner of Taxation has increased powers to tighten the compliance regime