Does your fund fall within the DGR category for private AFs?
To fall within the DGR category for private AFs, your fund must have the following characteristics:
- It is a 'fund'.
- It is established and maintained under a will or an instrument of trust.
- It is established and operated on a not-for-profit basis.
- It is allowed, by the terms of the will or instrument of trust, to invest money in ways that an Australian law allows trustees to invest trust money.
- It is established and maintained solely for the purpose of providing money, property or benefits to DGRs (except other private AFs or public AFs) or the establishment of such DGRs.
- Each of its trustees is a constitutional corporation.
- Each trustee has agreed, in the approved form, to comply with the rules in the Private Ancillary Fund Guidelines 2009 and none of the trustees have revoked that agreement.
On this page:
What is a 'fund'?
A fund is a pool of money or property that is managed or held to make distributions to other entities. A fund does not deliver services.
What is an instrument of trust?
Trust deeds and wills are instruments of trust.
The model deed must be edited according to your individual circumstances - for example, to include the details of the trust.
As the model deed may be updated, you should use the current version available on our website. Copies you have previously downloaded may be out-of-date.
Applications for endorsement as a DGR using previous or non-conforming deeds will not be accepted.
If the governing rules of the private AF change, the trustee must notify us in the approved form within 21 days of the change being made.
What must the governing rules for the fund contain?
On this page:
Objects of the fund
The governing rules contained in your trust instrument must reflect the objects of your fund.
Receipts must be issued in the name of your fund.
A not-for-profit entity is one that is not operating for the profit or gain of its individual members. This applies both while the fund is operating and when it winds up.
Your fund must not provide any benefit directly or indirectly to any of the following:
- the trustee
- a member, director, employee, agent or officer of the trustee
- the donor or founder
- an associate of any of these entities.
The governing rules contained in your trust instrument must clearly set out and reflect this.
Prohibit from indemnity
The governing rules in your trust instrument must prohibit your fund from indemnifying the trustee, or an employee, officer or agent of the trustee for a loss attributable to their:
- gross negligence
- deliberate act
At least one of the people involved in the decision making of the fund has a degree of responsibility to the community. This person is generally called a 'responsible person'.
A responsible person must be an active director and a member of any other controlling body of the fund but cannot be any of the following:
- a founder
- a donor to the fund who has contributed more than $10,000
- an associate of a founder or a donor who has contributed more than $10,000.
Winding-up, ceasing to be a private AF or revocation of DGR endorsement
The trustee is required to transfer the following surplus to an eligible DGR, on the winding-up of the trust, it ceasing to be a private AF, or revocation of its DGR endorsement:
- gifts and deductible contributions made to the fund for its principal purpose
- any money received by the fund because of such gifts and contributions.
What is a constitutional corporation?
A constitutional corporation is either:
- a corporation to which paragraph 51(xx) of the Australian Constitution applies
- a body corporate that is incorporated in a territory. A constitutional corporation would usually be registered with the Australian Securities & Investments Commission and have an Australian Company Number.
Less frequently, it may be incorporated under Associations Incorporation legislation in a state or territory and have an association or incorporation number.
Applying for DGR endorsement
On this page:
When lodging these documents, you will be required to provide a photocopy of their executed will or instrument of trust.
When does DGR endorsement start?
The application form will ask you for the date you want your fund to be endorsed from.
What are the consequences of DGR endorsement?
Your fund will be entitled to receive income tax deductible gifts from the date its DGR endorsement starts and while it is endorsed. Deductions for gifts to a DGR are claimed by the person or organisation that makes the gift (the donor).
Australian Business Register
The Australian Business Register (ABR) records if an organisation has DGR status and if that DGR is a private AF.
When your fund issues a receipt for a tax deductible gift, it must include certain information on the receipt. If your fund does not include this information on its receipts, your endorsement may be revoked.
You must notify us in writing if your fund's circumstances change and it stops being entitled to DGR endorsement. This obligation means you will need to carry out regular reviews of your fund's status. The law does not require any particular intervals between reviews, but we recommend a yearly review.
Trustees and directors of trustees of private AFs may be liable for administrative penalties if they represent a private AF as being entitled to remain endorsed as a DGR and the fund is not entitled.
As a DGR, your fund must keep adequate accounting and other records that detail and explain all transactions that are relevant to its status as a DGR. You must maintain these records for at least five years after the completion of the transactions or acts they relate to. The penalty for not keeping proper records is 10 penalty units.
The trustee may be asked to provide us with a return form for each financial year.
What notification will you receive?
We will send you written notification of the outcome of your application, to tell you if your fund has been endorsed or refused endorsement as a DGR.
What if your application is refused?
If your fund's application for endorsement is refused, you can have the decision reviewed by us. You will need to put your full reasons for seeking a review in writing. If endorsement is refused after the review, you will be advised of further appeal rights.
What if there are delays in notification?
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:
- the end of the 60th day after you made the application
- the end of the 28th day after the last day on which you gave us information or documentation that we had requested.
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.
This fact sheet explains the deductible gift recipient (DGR) category for private ancillary funds (private AFs) that came into effect on 1 October 2009, if a fund can be endorsed under the DGR category for private AFs.