It is common for families and businesses to consider establishing their own charitable foundation at this time of year, particularly private and public ancillary funds.

Ancillary funds are charitable trusts that are income tax exempt and provide donors with a tax deduction.

The income of an ancillary fund must be distributed to charitable entities that also have tax concessions, and there are rules around how much must be distributed each year.

There are many benefits to these types of charitable structures, including that they allow people with philanthropic desires to manage their donations to charities while still receiving a tax deduction upon donating to the ancillary fund. For example, a large donation can be made to an ancillary fund in this financial year, providing the capital to produce income, which is distributed to charities in later years.

With 30 June just around the corner and the requirement for ancillary funds to be registered before donations are tax deductible, you should act now if you would like to establish an ancillary fund this financial year.

Download the attachments below for more information about the ATO's requirements for both private and public ancillary funds.

Outline of ATO requirements – private ancillary funds

Outline of ATO requirements – public ancillary funds

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.