EXPLANATORY STATEMENT
Tax Laws Amendment (2009 Measures No. 4) Act 2009
Prescribed Private Fund Declaration 2009
Authority
Item 26 in Schedule 2 to the Tax Laws Amendment (2009 Measures No. 4) Act 2009 gives the Minister the power to make a declaration, by way of legislative instrument, after 1 October 2009 that those funds that have been approved by a Treasury minister, but have not yet been prescribed, are taken to be prescribed private funds (PPFs).
Commencement
The Declaration commences the day after it is registered on the Federal Register of Legislative Instruments.
Purpose
PPFs are private philanthropic trust funds. This declaration deals with ten funds that: were approved by a Treasury minister for recommendation to the Governor-General that the trust fund be prescribed as a PPF; but had not been prescribed in the Income Tax Assessment Regulations 1997 as a PPF before reforms to the PPF approval process commenced on 1 October 2009. This declaration is machinery in nature.
Context
Up to 1 October 2009, the Governor-General was responsible for prescribing trust funds as PPFs. The date a fund is prescribed was usually backdated to the day that a Treasury minister agreed to recommend prescription to the Governor-General. The Governor-General’s prescription was subject to disallowance by either House of Parliament.
However, responsibility for the administration of PPFs has been moved to the Commissioner of Taxation. From 1 October 2009, PPFs (now called private ancillary funds, or PAFs) are no longer be prescribed by regulation in the Income Tax Assessment Regulations 1997. Rather, the Commissioner is responsible for determining whether a trust fund is a PAF (according to a legislative definition) and determining whether that fund is entitled to be endorsed as a deductible gift recipient (DGR). This brings the treatment of PAFs into line with other DGRs.
On 1 October 2009 there was a limited number of funds that: were approved by a Treasury minister for recommendation to the Governor-General that the trust fund be prescribed as a PPF; but had not been prescribed in the Income Tax Assessment Regulations 1997 as a PPF.
The transitional arrangements in Tax Laws Amendment (2009 Measures No. 4) Act 2009 (the reform act) included a method of dealing with this group of funds. The Treasurer was given the power to make a declaration, by way of legislative instrument, that those funds that have been approved by a Treasury minister, but have not yet been prescribed, are taken to be PPFs.
This treatment is consistent with the movement of responsibility for the administration of PPFs to the Commissioner of Taxation.
The declaration is disallowable by either house of Parliament.
Consultation
Treasury has consulted with the organisations concerned, in conjunction with the Australian Taxation Office. Further consultation was not required as the declaration is minor and machinery in nature.