Amongst the likely changes to PAF Guidelines in 2016 is the change in minimum distribution requirement. The 5% minimum distribution will be replaced by a formula which is related to the RBA’s cash rate. This probably won’t make much difference, except putting an end to 30 June donations of $11,000 which have been a minimum distribution requirement in cases where 5% of capital was less than $11,000.
Under current rules, PAFs winding up need to distribute all capital to an entity eligible to receive PAF distributions. However, under the likely changes to the guidelines, a PAF, with the agreement of the ATO, will be able to transfer assets to another PAF (Public Ancillary Funds already have a similar provision). This might be a loss of a windfall gain to some charities that might have been the beneficiary of a PAF closing.
So the likely changes (submissions on the proposed changes close 12 February) will make little difference to fundraising strategy. The difference we are seeing is that charities are not seeking just distributions from PAFs but are seeking investment of PAF capital in their social ventures or as loans.
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To find out how Daniel can help your organisation, contact d.mcdiarmid@AskRIGHT.com.
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