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  • Amended guidelines for ancillary funds during COVID-19

    The Federal Government recently announced amendments to ancillary fund guidelines that will change the way they are administered during the COVID-19 pandemic.

    This change helps charities by creating an incentive for philanthropic funds to increase distributions to deductible gift recipients (DGRs) at a time when they need it most.

    The announced amendments will provide a credit for ancillary funds that make a distribution to DGRs of at least four percentage points above the minimum distribution in 2019–20 and 2020–21.

    Private ancillary funds (PAFs) and public ancillary funds (PuAFs) are required to distribute at least 5% and 4% of the market value of the fund’s net assets, respectively.

    Ancillary funds will receive a credit of half of the total percentage points that exceed their minimum distributions for both financial years.

    Ancillary funds may use this credit to reduce their minimum annual distribution by up to one percentage point in 2021–22 and for each financial year until the credit is exhausted, without applying to the Commissioner.

    For example, a private ancillary fund makes an annual distribution of 8% in 2019–20 and 7% in 2020–21. This is 5% above the minimum over the two financial years. The fund will be entitled to a 2.5% credit. The fund is now able to reduce their annual distributions by up to 1% from 2021–22, until their credits are exhausted.

    For questions about the minimum annual distributions, please:

    • contact our NFP premium phone service on 1300 130 248 between 8.00am and 6.00pm
    • email ATOendorsements@ato.gov.au outside of these times.

    See also:

    Last modified: 07 May 2020QC 62538