THE federal government plans to introduce a new regulatory framework that will improve the integrity of public ancillary funds and improve transparency in the philanthropic sector.
Announcement of the proposed regulatory framework, which would come into effect from July 2011, came after the Australian Taxation Office this year found an undisclosed number of the 1,600 PAFs endorsed in Australia as deductible gift recipients (DGRs) breached their trust deed.
Assistant Treasurer Nick Sherry said changes to the new legislative guidelines would be similar to those introduced for private ancillary funds in October 2009.
He stressed the importance of accountability in the NFP sector, particularly with regards to organisations benefitting from taxpayer-funded incentives.
“The new framework will provide trustees with greater certainty as to their obligations and provide donors and the charitable sector with greater confidence that donations are being used effectively,” Senator Sherry said.
Following the review, the ATO found a number of common errors in PAFs, including: a number of entities had remitted funds directly offshore to entities that were not DGRs; benefits provided to non-DGR entities located in Australia; and distributions made to other ancillary funds.
The ATO said these disburse-ments were inconsistent with the trust obligations of a fund “claiming to meet the character of a public ancillary fund and endorsed as a DGR”.