Update on Ancillary Fund Changes

Earlier this year the Federal Government announced upcoming changes for Private Ancillary Funds and Public Ancillary Funds as part of its goal to double giving in Australia by 2030. Whilst the details of these changes are still being worked through, we wanted to give you an overview of what is coming up.

Key changes:

• Private and Public ‘Ancillary Funds’ will now be called ‘Giving Funds’ 
• The minimum annual distribution rate for Private Giving Funds (PAFs) will be increased from 5% to 6% per year
• The minimum annual distribution rate for Public Giving Funds (PuAFs) will also be increased from 4% to  6% per year.
• In certain circumstances there will be a chance to smooth minimum distributions over a three-year period. The details of how this will function are still being reviewed by Government, with more information to be provided at a later date.

We want to stress that the changes to distribution amounts are not yet in effect, and there will be a two-year transition period for existing Giving Funds once Government pass the amendments. As such there will be no changes to your minimum distribution for at least the next two years.

It is important to note that in many cases, Giving Funds are already giving more than the required 5%, and so this change may not have any impact on your day-to-day activities. 

However, over the next few years it may be useful to consider your current investment and distribution strategy to ensure a sustainable 6% grant payout into the future.

Our team are available to help prepare you for this transition and will keep you updated as more information and clearer timelines are available.

Please feel free to reach out to us if you have any questions.