While everyone is looking for answers to one of the biggest crises the world has ever seen, the Australian Government is turning to ancillary funds.

Ancillary Fund distributions incentivised by Government

A new policy that was announced last week is designed to incentivise Private and Public Ancillary Funds to give more. Any PAF that distributes four percentage points above their minimum distribution during the 2020 and 2021 financial years will be entitled to a credit. This credit allows the PAF to reduce its distribution by up to 1% each year from Financial Year 2022 onwards. The credit equals half of the additional distribution provided.

For example, if a PAF distributed 7% and then 7% in both the FY 2020 and FY 2021 (equal to 4% above the annual minimum of 5%), they will then be able to reduce their distribution to 4% in the FY 2022 and 2023.

This is a timely stimulus measure to help encourage more giving by ancillary funds, which are usually established in perpetuity. For those who support regular charities, this is great way to bring funding forward to help counter current challenges in the community.

If you’d like to read the full media release by the Assistant Minister for Finance, charities and Electoral Matters, just click the link below.


Investment income and asset values are under pressure

While the Government’s announcement is welcome news, it is also clear that investment income and asset values for many Ancillary Funds are under pressure to meet their minimum distribution. Fortunately, Ancillary funds are still able to apply for a reduction to their minimum reduction, where unusual circumstances apply.

Would you like to know more?

If you would like to learn more about any of these measures, or if you have PAF clients considering these options, please don’t hesitate to get in touch with our Philanthropy Specialist Amanda Sartor on 1300ELSTON or email amanda.sartor@elston.com.au