Australian Capital Territory
The Australian Capital Territory has not passed laws to enable trustees of ancillary funds to distribute money or property to DGRs that are not charitable.
An ancillary fund established using the model trust deed that is governed by the laws of the Australian Capital Territory:
- can only distribute funds to DGRs that are charitable
- cannot distribute funds to DGRs which are not charitable, without changing the model trust deed.
If the trustee of an ancillary fund that is governed by the laws of the Australian Capital Territory changes the model trust deed to allow for funds to be distributed to DGRs which are not charitable, the ancillary fund will not be charitable. This will impact its entitlement to an income tax exemption and other tax concessions.
New South Wales
Under Part 4A of the Charitable Trust Act 1993 (New South Wales), New South Wales has passed laws that allow ancillary funds to make distributions to DGRs that are not charitable.
Section 22B of the Charitable Trust Act 1993 (New South Wales) states that the trust deed of an ancillary fund (that is charitable), can include an express power that enables the trustee to distribute funds to DGRs, irrespective of their charitable status.
Where a deed of trust includes such a power section, 22B will operate to treat the trust as charitable for the purposes of New South Wales law, even though the trustee can provide money or property to objects that are not charitable.
For section 22B to apply, the model trust deed will need to be amended.
Amending the model trust deed in New South Wales
The model trust deed can be amended with the following example to comply with the requirements of Section 22B of the Charitable Trust Act 1993 (New South Wales).
Example definition of eligible entity
Eligible entity – a fund, authority or institution:
- which is charitable or would be a 'charity' within the meaning of the Charities Act 2013 (Commonwealth) if it were not a 'government entity' as defined in that Act; and
- gifts to which are deductible under item 1 of the table in section 30-15 of the ITAA 1997.
Alternatively, section 22C of the Charitable Trust Act 1993 (New South Wales) provides that where a trust deed does not contain an express power to enable the trustee to distribute to non-charitable DGRs, the trustee can make a declaration allowing the trustee to distribute funds to DGRs irrespective of their charitable status.
Where a trustee makes such a declaration, no amendment of the model trust deed is required. The declaration must be retained with the records of the trust.
Funds distributed to non-charitable DGRs in accordance with a declaration can only be distributed to DGRs that would be a charity within the meaning of the Charities Act 2013 (Commonwealth) if it were not a ‘government entity’ as defined in that Act.
Northern Territory
The Northern Territory has not passed laws to enable trustees of ancillary funds to distribute money or property to DGRs that are not charitable.
An ancillary fund established using the model trust deed that is governed by the laws of the Northern Territory:
- can only distribute funds to DGRs that are charitable
- cannot distribute funds to DGRs which are not charitable, without changing the model trust deed.
If the trustee of an ancillary fund established using the model trust deed that is governed by the laws of the Northern Territory changes the model trust deed to allow for funds to be distributed to DGRs which are not charitable, the ancillary fund will not be charitable. This will impact its entitlement to an income tax exemption and other tax concessions.
Queensland
Under Part 9 of the Trusts Act 1973 (Queensland), Queensland has passed laws that enable ancillary funds to make distributions to DGRs that are not charitable.
Section 108 of the Trusts Act 1973 (Queensland) states that the trust deed of an ancillary fund (that is charitable), can include an express power that enables the trustee to distribute funds to DGRs, irrespective of their charitable status.
Where a deed of trust includes such a power, section 108 will operate to treat the trust as charitable for the purposes of Queensland law even though the trustee can provide money or property to objects that are not charitable.
For section 108 to apply, the model trust deed will need to be amended.
Amending the model trust deed in Queensland
The model trust deed can be amended with this example to comply with the requirements of Section 108 of the Trusts Act 1973 (Queensland).
Example definition of Eligible entity
Eligible entity – a fund, authority or institution:
- which is charitable or would be a 'charity' within the meaning of the Charities Act 2013 (Commonwealth) if it were not a 'government entity' as defined in that Act; and
- gifts to which are deductible under item 1 of the table in section 30-15 of the ITAA 1997.
Alternatively, section 109 of the Trusts Act 1973(Queensland) provides that where a trust deed does not contain an express power to enable the trustee to distribute to non-charitable DGRs, the trustee can make a declaration allowing the trustee to distribute funds to DGRs irrespective of their charitable status.
Where a trustee makes such a declaration no amendment of the model trust deed is required. The declaration must be retained with the records of the trust.
Funds distributed to non-charitable DGRs in accordance with a declaration can only be distributed to DGRs that would be a ‘charity’ within the meaning of the Charities Act 2013 (Commonwealth) if it were not a ‘government entity’ as defined in that Act.
South Australia
Under Part 4 of the Trustee Act 1936 (South Australia), South Australia has passed laws that enable ancillary funds to make distributions to DGRs that are not charitable.
Section 69D of the Trustee Act 1936 (South Australia) states that a trust to provide money or property to or for an entity that would (but for its connection to government) be a charity, is charitable. Section 69D operates to treat such a trust as charitable for the purposes of South Australian law, even though the trustee can provide money or property to objects that are not charitable.
For section 69D to apply the model trust deed will need to be amended.
Amending the model trust deed in South Australia
The model trust deed can be amended with this example to comply with the requirements of Section 69D of the Trustee Act 1936 (South Australia).
Example definition of Eligible entity
Eligible entity – a fund, authority or institution:
- which is charitable or would be a 'charity' within the meaning of the Charities Act 2013 (Commonwealth) if it were not a 'government entity' as defined in that Act; and
- gifts to which are deductible under item 1 of the table in section 30-15 of the ITAA 1997.
Tasmania
Tasmania has not passed laws to enable trustees of ancillary funds to distribute money or property to DGRs that are not charitable.
An ancillary fund established using the model trust deed that is governed by the laws of Tasmania:
- can only distribute funds to DGRs that are charitable
- cannot distribute funds to DGRs which are not charitable, without changing the model trust deed.
If the trustee of an ancillary fund that is governed by the laws of Tasmania changes the model trust deed to allow for funds to be distributed to DGRs which are not charitable, the ancillary fund will not be charitable. This will impact its entitlement to an income tax exemption and other tax concessions.
Victoria
Under section 7K of the Charities Act 1978 (Victoria), Victoria has passed laws that enable ancillary funds to make distributions to DGRs that are not charitable.
Section 7K of the Charities Act 1978 (Victoria) provides that the trustee of a charitable trust has the power to make distributions to DGRs that, but for a connection to government, would be charities. A trustee cannot exercise the power in section 7K without making a declaration.
Where a trustee makes such a declaration, the declaration must be retained with the records of the trust.
Where an ancillary fund established in Victoria using the model trust deed makes a declaration under with Section 7K of the Charities Act 1978 (Victoria), the ancillary fund can distribute funds to a DGR that is governmental. If not governmental, it would need to be listed as a charity within the Charities Act 2013 (Commonwealth).
Western Australia
Under Part VA of the Charitable Trusts Act 1962 (Western Australia), Western Australia has passed laws that enable ancillary funds to make distributions to DGRs that are not charitable.
Section 22B of the Charitable Trusts Act 1962 (Western Australia) states that the trust deed of a charitable ancillary fund can include an express power that enables the trustee to distribute funds to DGRs, irrespective of their charitable status.
Where a deed of trust includes such a power, section 22B will operate to treat the trust as charitable for the purposes of Western Australian law, even though the trustee can provide money or property to objects that are not charitable.
For section 22B to apply, the model trust deed will need to be amended.
Amending the model trust deed in Western Australia
The model trust deed can be amended with the this example to comply with the requirements of Section 22B of the Charitable Trusts Act 1962 (Western Australia).
Example definition of Eligible entity
Eligible entity – a fund, authority or institution:
- which is charitable or would be a 'charity' within the meaning of the Charities Act 2013 (Commonwealth) if it were not a 'government entity' as defined in that Act; and
- gifts to which are deductible under item 1 of the table in section 30-15 of the ITAA 1997.
Alternatively Section 22C of the Charitable Trusts Act 1962 (Western Australia) provides that where a trust deed does not contain an express power to enable the trustee to distribute to non-charitable DGRs, the trustee can make a declaration allowing the trustee to distribute funds to DGRs, irrespective of their charitable status.
Where a trustee makes such a declaration, no amendment to the model trust deed is required. The declaration must be retained with the records of the trust.
Funds distributed to non-charitable DGRs in accordance with a declaration can only be distributed to DGRs that would be a charity within the meaning of the Charities Act 2013 (Commonwealth) if it were not a ‘government entity’ as defined in that Act.
If your private ancillary fund (private AF) intends to distribute to deductible gift recipients (DGRs) that are not considered as charitable (such as government run libraries, museums and art galleries), there are specific requirements for each state and territory.