• Compliance

    Question number

    Frequently asked question

    3.1

    What administrative penalties can be applied for non-compliance with the private AF guidelines?

    3.2

    Are other penalties applicable to a private AF including former PPFs?

    3.3

    Does a private AF have to keep more accounts than other DGRs?

    3.4

    Is it only the financial statements that must be audited?

    3.5

    Do the private AF guidelines have any requirements regarding specific information on the timing and the availability of information to the Commissioner?

    3.1 What administrative penalties can be applied for non-compliance with the private AF guidelines?

    Administrative penalties specified in the private AF guidelines applicable where a private AF has not complied with the private AF guidelines are:

    • an amount equal to the amount or value of any benefit (except as set out in private AF guideline 43) provided directly or indirectly to the trustee or a member, director or employee of the trustee, to a donor or founder, or to an associate of any of these entities
    • an amount equal to 25% of the net profits of the business for each financial year during all or part of which the trust carries on a business
    • five penalty units for not notifying the Commissioner in the approved form within 21 days of any change to the fund's will or deed of trust
    • 10 penalty units in relation to: accounts, financial statements, audit, the investment strategy
    • 15 penalty units in relation to implementation of the investment strategy
    • 10 penalty units for accepting in a financial year donations greater than 20% of the market value of the fund's assets from entities other than a founder or an associate or employee of the founder, or the deceased estate of any of these entities
    • 30 penalty units in relation to the distribution if the shortfall is greater than $1,000, and 10% of the shortfall (reduced by the 30 penalty units but not below nil) in relation to not rectifying the shortfall
    • 30 penalty units in relation to investment limitations, uncommercial transactions and soliciting from the public.

    3.2 Are other penalties applicable to a private AF including former PPFs?

    Yes. The note to private AF guideline 23 says that a private AF will be required to lodge a return whether or not it is exempt from income tax, and that we will approve an appropriate return form for private AFs.

    3.3 Does a private AF have to keep more accounts than other DGRs?

    Yes, because a private AF is a DGR it must keep records that record and explain all transactions and other acts the DGR engages in that are relevant to their status as a DGR.

    Private AF guideline 24 requires more in that it requires the trust to keep proper accounts in respect of all receipts and payments of the fund and all financial dealings connected with the fund.

    3.4 Is it only the financial statements that must be audited?

    No. Private AF guideline 28 requires that the trustee arrange for an auditor to audit the financial statements of the trust, and compliance with the private AF guidelines by the trust and the trustee.

    3.5 Do the private AF guidelines have any requirements regarding specific information on the timing and the availability of information to us?

    Yes. A private AF will be required to lodge an annual return (return) whether or not it is exempt from income tax, and we will approve an appropriate return form for private AFs. That form will be available when we require it.

      Last modified: 12 Oct 2016QC 24109