With 30 June fast approaching and some uncertainty about the future of the Australian Charities and Not-for-profits Commission (ACNC), now is the time to establish your public or private ancillary fund.
Why Act Now?
Private and public ancillary funds are efficient, low cost and tax effective structures for charitable giving. A key advantage of the structures is that funds are able to be endorsed as income tax exempt and as a deductible gift recipient.
Time is Running Out: Establishing an Ancillary Fund before 30 June 2014
With 30 June fast approaching and some uncertainty about the future of the Australian Charities and Not-for-profits Commission (ACNC), now is the time to establish your public or private ancillary fund.
Why Act Now?
Private and public ancillary funds are efficient, low cost and tax effective structures for charitable giving. A key advantage of the structures is that funds are able to be endorsed as income tax exempt and as a deductible gift recipient.
Currently, in order to establish a fund as a charitable private or public ancillary fund, an application needs to be made to the ACNC for endorsement as a registered charity before any application for income tax exemption or deductible gift recipient status can be processed by the ATO.
Establishing an ancillary fund can take time depending on how easy it is to collect information, prepare and execute the relevant documentation and how long it takes for an ancillary fund to be endorsed by the ACNC and/or the ATO.
The closer we get to 30 June 2014 the more pressure there is on
the ACNC and the ATO to process endorsement applications and the
longer it may take for foundations to actually get endorsed.
In addition, the Federal Government has released draft legislation
to abolish the ACNC. The Federal Government has advised that it
intends to terminate the ACNC at some point in 2014, however, it
has provided little guidance on the process for registering and
endorsing ancillary funds and charities if and when the ACNC ceases
to operate.
What Should You do?
If you or your clients are wanting to establish an ancillary
fund and include deductible donations to that fund in your or your
client's 2013-2014 income tax return, we recommend taking steps
to establish the fund now to allow sufficient time for the ACNC and
the ATO to consider and approve the application.
More generally, for anyone wishing to establish a charity it may
also be worth seeking endorsements now given the uncertainty
regarding the role of the ACNC and the processes for endorsements
in the future.
If you require any help establishing your organisation and preparing endorsement applications, please get in contact with us.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.