FINANCIAL PLANNING SERVICES

Private Ancillary Funds

Creating a lasting impact through strategic philanthropy is a goal for many individuals and families. Private Ancillary Funds (PAFs) offer a powerful way to structure your giving, allowing you to support charitable causes you care about in a tax-effective and enduring manner. By taking a long-term approach, a PAF can help ensure your philanthropic efforts continue to make a difference for generations to come.

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What are private ancillary funds?

Private Ancillary Funds (PAFs) are charitable trusts designed to encourage private giving. They allow individuals, families, or businesses to establish their own foundation and support eligible charities over time. PAFs must be endorsed as a Deductible Gift Recipient (DGR) and are regulated by the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office (ATO).
Donations made to a PAF are tax-deductible, and the fund invests these contributions to generate income. Each year, a PAF must distribute at least five per cent of its net assets to eligible charities, ensuring ongoing and structured support.

Why set up a private ancillary fund?

A PAF provides a structured and strategic way to give. Rather than making one-off donations, a PAF allows you to plan your giving, involve family members, and create a legacy that extends beyond your lifetime.
They can be particularly valuable if you experience a significant financial event such as the sale of a business, inheritance, or capital gain. Establishing a PAF in the same year can provide immediate tax benefits while setting up a lasting framework for charitable giving.

Benefits of private ancillary funds

Setting up a PAF offers a range of advantages. Contributions are fully tax-deductible, giving while allowing you to control how and when funds are distributed. This makes charitable giving more strategic and impactful.
A PAF also creates a legacy that reflects your values. It formalises your philanthropic goals, ensures donations are made in line with your intentions, and provides a structure that can involve family members across generations. This fosters a shared commitment to giving and strengthens the long-term impact of your philanthropy.

How Financial Spectrum can help you leave a legacy

At Financial Spectrum, we understand the importance that leaving a meaningful legacy can have for families. Our team of experienced financial advisors is dedicated to helping you establish and manage a PAF that aligns with your values and philanthropic vision, as well as maximises the benefits for you and your beneficiaries.

How Financial Spectrum works with you

Our process begins with understanding your philanthropic objectives. We then craft a tailored strategy aligned with your values and vision, assist with legal documentation, and ensure regulatory compliance. Our ongoing management and support provide effective fund distribution and regular reviews to keep your PAF aligned with your evolving goals.

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Frequently asked questions

What are the tax benefits of a Private Ancillary Fund?

Contributions to a PAF are tax-deductible, offering immediate tax relief. Additionally, income generated within the PAF is exempt from tax, allowing more funds to be distributed to charitable causes.

How much do I need to establish a Private Ancillary Fund?

There is no fixed amount required to establish a PAF, but it is generally recommended to start with a minimum of $500,000 to ensure the fund is sustainable and can cover administrative costs effectively.

Can I involve my family in managing the PAF?

Yes, one of the benefits of a PAF is the ability to involve family members in philanthropic activities. This can promote shared values and ensure that the family’s philanthropic legacy continues across generations.

What types of charities can my PAF support?

PAFs can distribute funds to a wide range of eligible charities, including those focused on education, health, social services, the environment, and the arts. The key requirement is that the recipient organisations must be endorsed as Deductible Gift Recipients (DGRs) by the Australian Taxation Office.

How do I select the charities my PAF will support?

You have the flexibility to choose which charities your PAF will support. Our team can assist you in identifying organisations that align with your philanthropic goals and values. We also ensure that the chosen charities meet the necessary regulatory requirements.

Can my PAF make international donations?

Generally, PAFs are restricted to making donations to Australian charities that are endorsed as Deductible Gift Recipients (DGRs). However, some Australian charities with DGR status can use funds to support international projects. Our advisors can guide you through the specifics.

What are the reporting requirements for a PAF?

PAFs are required to meet specific reporting and compliance obligations, including submitting an annual information statement and financial report to the Australian Charities and Not-for-profits Commission (ACNC). Financial Spectrum can manage these requirements on your behalf, ensuring full compliance.