If you believe we are too slow in notifying you if your fund is endorsed, you can have your application treated as if it had been refused. The deemed refusal will trigger formal review rights.
The earliest you can notify us that you want your application to be treated as if it had been refused is the later of the following:
To have your application treated as if it had been refused, you must give us written notice that you want it treated in that way. Your application will be deemed to be refused on the day you give such notice.
Can your endorsement be revoked?
We can revoke a DGR's endorsement if any of the following apply:
- it is not entitled to be endorsed
- it has not provided information or documents within the specified time after a request from us
- it has not included the specified information on its receipts.
We will provide written notice of the revocation of endorsement. The revocation has effect from a date specified by us and the date may be retrospective. If you are dissatisfied with a revocation of endorsement, you can lodge an objection against the revocation. You do this in writing to us, giving the grounds for the objection.
Does DGR endorsement affect income tax exemption?
DGR endorsement is separate from income tax exemption. Endorsement as a DGR does not allow an organisation to be income tax exempt.
Only certain types of non-profit organisations are exempt from income tax under the income tax law. If a non-profit organisation does not fall within one of the types of exempt entity, it cannot be exempt.
What happens if you fail to comply with the guidelines?
Failure to comply with the rules in the guidelines means that:
- the trustee and directors of trustees may incur administrative penalties
- the private AF will no longer be entitled to endorsement.
The guidelines also set out the amount of an administrative penalty, or how to work out the amount of an administrative penalty.
Trustees and directors of trustees of a private AF are jointly and severally liable to any administrative penalty associated with the guidelines, and the penalty cannot be paid or reimbursed from the trust fund.
How do you revoke an agreement to comply with the guidelines?
A trustee may revoke an agreement to comply with the rules in the guidelines by giving the revocation to us in the approved form.
Can trustees be suspended or removed?
We can suspend or remove a trustee that breaches the guidelines or any other Australian law.
We will give the trustee written notice advising them of our decision, explaining the reasons why the decision was taken and, in the case of suspension, setting out the period of suspension.
When a trustee is suspended or removed, we will appoint an acting trustee to undertake the duties of trustee until the suspension period has ended or a replacement trustee is appointed. We may give directions to the acting trustee. Any conduct by an acting trustee that contravenes a notice from us is an offence.
When we appoint an acting trustee, we must make a written order vesting the property of the private AF with the acting trustee. Non-compliance with a written order from us or the acting trustee is an offence.
The decision to suspend or remove a trustee is reviewable by the Administrative Appeals Tribunal and the Federal Court of Australia.
Can we disclose your information?
We are authorised to disclose information to state and territory Attorney Generals as part of the administration of state or territory law governing trusts or charities. We can only disclose information that relates to the non-compliance of a private AF, or a trustee of a private AF, with a law of:
- the Australian Government
- a state
- a territory.
What happened to existing PPFs?
On 1 October 2009, existing PPFs became private AFs. All existing PPFs:
- are taken to have been endorsed as a private AF by us
- are taken to have agreed to comply with the guidelines
- do not need to replace their non-corporate trustees with corporate trustees
- are not subject to our powers to suspend or remove trustees if they continue to have non-corporate trustees.
The Guidelines for prescribed private funds, which included a model trust deed, have been replaced by the Private Ancillary Fund Guidelines 2009 (the guidelines) and the private AF model trust deed.
The private ancillary fund guidelines set out the transitional rules, and include:
- distribution rules
- where the fund's governing rules prevent compliance with a requirement of the guidelines.
Where your fund's governing rules prevent compliance with a requirement of the guidelines, your fund is exempt from that requirement until 1 October 2012. The exemption does not include rules and provisions in other tax laws, particularly relating to accounts, the use of the trust fund and the requirement to distribute.
If a private AF does not comply with the guidelines, apart from the transitional exemptions mentioned above, we have the power to revoke the DGR endorsement of the private AF and can take further legal action where there are breaches of tax law.
Generally, private AFs and public AFs are prevented by tax law from distributing to one another. However, to help PPFs move fully into the new system, private AFs with non-corporate trustees can, under tax law, transfer all of their property to another private AF with trustees that are only corporate trustees. This transitional arrangement will give transitional private AFs the option of restructuring their trustee arrangements by establishing a new private AF to hold the assets of the old fund.
If your fund does not have a corporate trustee, at least one individual who is the trustee of your fund must have a degree of responsibility to the community.
Transitional private AFs that want to restructure need to check the state and territory laws about replacing trustees or transferring assets between trusts.
How do you wind up the trust?
If the trustee chooses to wind up the trust, we will need to receive a final audit report with financial statements indicating a zero balance in the fund.
If you need more information about transferring between trusts, conversion to a private AF or winding-up the trust, you can:
- refer to the following documents
- phone us on 1300 130 248.
If you do not speak English well and need help from the ATO, phone the Translating and Interpreting Service on 13 14 50.
If you are deaf, or have a hearing or speech impairment, phone the ATO through the National Relay Service (NRS) on the numbers listed below:
- TTY users, phone 13 36 77 and ask for the ATO number you need
- Speak and Listen (speech-to-speech relay) users, phone 1300 555 727 and ask for the ATO number you need
- internet relay users, connect to the NRS on www.relayservice.com.au and ask for the ATO number you need.
Last Modified: Thursday, 29 March 2012