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13th May 2020 - Private Wealth
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.
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.
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.
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
This material has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this material is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice. Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a Product Disclosure Statement (“PDS”) relating to the product and consider the PDS before making any decision about whether to acquire the product. You will find further details of the service we provide and any cost to you within the Financial Services Guide. Any references to past investment performance are not an indication of future investment returns. Prepared by EP Financial Service Pty Ltd ABN 52 130 772 495 AFSL 325 252 (“Elston”). Although every effort has been made to verify the accuracy of the information contained in this material, Elston, its officers, representatives, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information.
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