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The Public Ancillary Fund Guidelines 2011 were introduced to establish a minimum standard of operations for public ancillary funds and their trustees. The guidelines cover a broad range of areas including:

  • the duties and obligations of the trustee and key decision makers;
  • minimum annual asset distribution requirements;
  • account keeping; and
  • the wind up of a public ancillary fund.

Pre-2012 funds have until only 1 July 2015 to meet the minimum operating standards. If these standards are not met the funds face the harsh possibility of losing their DGR status. This would mean gifts to the fund would no longer be income tax deductible.

To comply with the guidelines, a fund must not only act in a way consistent with the guidelines but also be empowered by its trust deed to do so. Many funds have had to vary their trust deeds to ensure compliance.

Varying a trust deed can be quite complex and particular care must be taken to ensure that there is no resettlement of the trust. Resettlement can have substantial tax consequences depending on the investments of the fund and so it is best avoided.

Any fund found to be non compliant may be liable to financial penalties. These penalties may be imposed on individual trustees or directors of funds personally and cannot be reimbursed from the fund. It is therefore extremely important that those involved in the management of these funds ensure compliance with the guidelines.

Here at Kells our commercial team is experienced in DGR advice and reviewing and advising on trust deeds. Please contact us should you require assistance in ensuring that your fund complies with the guidelines.