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.