Commonwealth Consolidated Acts Commonwealth Consolidated ActsPart 1 -- Amendments commencing on 1 October 2009
A New Tax System (Australian Business Number) Act 1999
1 Paragraph 26(3)(ga)
After "section 426 - 65", insert "or 426 - 115".
Income Tax Assessment Act 1936
2 Subsection 6(1)
Insert:
"private ancillary fund" has the meaning given by section 426 - 105 in Schedule 1 to the Taxation Administration Act 1953 .
3 At the end of subsection 16(4)
Add:
; or (n) if the information relates to the non - compliance of a private ancillary fund or charity (or a trustee of a private ancillary fund or charity) with a law of the Commonwealth, a State or a Territory--the Attorney - General of a State or Territory for the purposes of the administration of a law of the State or Territory governing trusts or charities.
Income Tax Assessment Act 1997
4 Subsection 30 - 15(2) (table item 2, column headed "Recipient")
Omit " * prescribed private fund", substitute " * private ancillary fund".
5 Subsection 30 - 15(2) (paragraph (c) of the cell at table item 2, column headed "Special conditions")
Omit ", unless the fund is a prescribed private fund".
6 Paragraph 30 - 17(1)(b)
Repeal the paragraph.
7 Subsection 30 - 125(1)
Repeal the subsection, substitute:
Endorsement of an entity that is a fund, authority or institution
(1) An entity is entitled to be endorsed as a * deductible gift recipient if:
(a) the entity has an * ABN; and
(b) the entity is a fund, authority or institution that:
(i) is described (but not by name) in item 1, 2 or 4 of the table in section 30 - 15; and
(ii) is not described by name in Subdivision 30 - B if it is described in item 1 of that table; and
(iii) meets the relevant conditions (if any) identified in the column headed "Special conditions" of the item of that table in which it is described; and
(c) the entity meets the requirements of subsection (6), unless:
(i) the entity is established by an Act; and
(ii) the Act (or another Act) does not provide for the winding up or termination of the entity; and
(d) in the case of a * private ancillary fund:
(i) the fund complies with the rules in the * private ancillary fund guidelines; and
(ii) all of the trustees of the fund comply with those rules.
8 Subparagraph 30 - 227(2)(a)(iii)
Repeal the subparagraph.
9 After subsection 30 - 229(2)
Insert:
(2A) If:
(a) the * deductible gift recipient is:
(i) a fund, authority or institution; or
(ii) a deductible gift recipient only because it is endorsed under Subdivision 30 - BA as a deductible gift recipient for the operation of a fund, authority or institution; and
(b) the fund, authority or institution is covered by item 1, 2 or 4 of the table in section 30 - 15;
the statement may specify that the fund, authority or institution is covered by that item.
10 Paragraph 31 - 10(1)(b)
Omit " * prescribed private fund", substitute " * private ancillary fund".
11 Paragraph 31 - 10(2)(b)
Omit "or be a * prescribed private fund".
12 Subsection 995 - 1(1)
Insert:
"constitutional corporation" means:
(a) a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) a body corporate that is incorporated in a Territory.
13 Subsection 995 - 1(1) (definition of prescribed private fund )
Repeal the definition.
14 Subsection 995 - 1(1)
Insert:
"private ancillary fund" has the meaning given by section 426 - 105 in Schedule 1 to the Taxation Administration Act 1953 .
15 Subsection 995 - 1(1)
Insert:
"private ancillary fund guidelines" has the meaning given by section 426 - 110 in Schedule 1 to the Taxation Administration Act 1953 .
Taxation Administration Act 1953
16 Subsection 2(1)
Insert:
"private ancillary fund" has the meaning given by section 426 - 105 in Schedule 1.
17 Subsection 3C(4)
Repeal the subsection, substitute:
(4) Nothing in subsection (2) prohibits the Commissioner, a Second Commissioner, a Deputy Commissioner or a person authorised by the Commissioner, a Second Commissioner or a Deputy Commissioner from communicating any information to:
(a) a person performing, as an officer, duties in relation to a taxation law, for the purpose of enabling the person to perform those duties; or
(b) if the information relates to the non - compliance of a private ancillary fund or charity (or a trustee of a private ancillary fund or charity) with a law of the Commonwealth, a State or a Territory--the Attorney - General of a State or Territory for the purposes of the administration of a law of the State or Territory governing trusts and charities.
18 Subsection 250 - 10(2) in Schedule 1 (table item 140, column headed "Provision")
Omit "Divisions 284, 286 and 288", substitute "298 - 15"
19 Paragraph 298 - 5(c) in Schedule 1
Omit "or Division 16", substitute ", Division 16 or section 426 - 120".
20 Subsection 353 - 20(3) in Schedule 1
Repeal the subsection, substitute:
(3) The Minister may only disclose information provided under subsection (2) for a purpose relating to the removal of the name of the * deductible gift recipient from Division 30 of the Income Tax Assessment Act 1997 .
21 At the end of section 426 - 1 in Schedule 1
Add:
Subdivision 426 - D deals with a type of private philanthropic trust fund known as a private ancillary fund .
22 At the end of Division 426 in Schedule 1
Add:
Subdivision 426 - D -- Private ancillary funds
426 - 100 What this Subdivision is about
This Subdivision deals with a type of private philanthropic trust fund known as a private ancillary fund .
The Minister may make guidelines determining when private ancillary funds are entitled to be endorsed as deductible gift recipients.
This Subdivision also provides for:
(a) penalties for trustees who fail to comply with the private ancillary fund guidelines, and the liability of directors of trustees to pay those penalties in certain circumstances; and
(b) powers for the Commissioner to suspend or remove trustees who breach their obligations.
Table of sections
Private ancillary funds
426 - 105 Private ancillary funds
426 - 110 Private ancillary fund guidelines
426 - 115 Australian Business Register must show private ancillary fund status
Administrative penalties
426 - 120 Administrative penalties for trustees of private ancillary funds
Suspension and removal of trustees
426 - 125 Suspension or removal of trustees
426 - 130 Commissioner to appoint acting trustee in cases of suspension or removal
426 - 135 Terms and conditions of appointment of acting trustee
426 - 140 Termination of appointment of acting trustee
426 - 145 Resignation of acting trustee
426 - 150 Property vesting orders
426 - 155 Powers of acting trustee
426 - 160 Commissioner may give directions to acting trustee
426 - 105 Private ancillary funds
(1) A trust is a private ancillary fund if:
(a) each trustee of the trust is a * constitutional corporation; and
(b) each trustee has agreed, in the * approved form given to the Commissioner, to comply with the rules in the * private ancillary fund guidelines, as in force from time to time; and
(c) none of the trustees has revoked that agreement in accordance with subsection (2).
(2) A trustee may revoke an agreement mentioned in paragraph (1)(b) only by giving the revocation to the Commissioner in the * approved form.
426 - 110 Private ancillary fund guidelines
The Minister must, by legislative instrument, formulate guidelines (the private ancillary fund guidelines ) setting out:
(a) rules that * private ancillary funds and their trustees must comply with if the funds are to be, or are to remain, endorsed as * deductible gift recipients; and
(b) the amount of the administrative penalty, or how to work out the amount of the administrative penalty, under subsection 426 - 120(1).
426 - 115 Australian Business Register must show private ancillary fund status
(1) If a * private ancillary fund has an * ABN, the * Australian Business Registrar may enter in the * Australian Business Register in relation to the fund a statement that it is a private ancillary fund.
Note 1: An entry (or lack of entry) of a statement required by this section does not affect whether a trust is a private ancillary fund.
Note 2: The Australian Business Register will also show if a private ancillary fund is endorsed as a deductible gift recipient: see section 30 - 229 of the Income Tax Assessment Act 1997 .
(2) The * Australian Business Registrar must take reasonable steps to ensure that a statement appearing in the * Australian Business Register under this section is true. For this purpose, the Registrar may:
(a) change the statement; or
(b) remove the statement from the Register if the statement is not true.
426 - 120 Administrative penalties for trustees of private ancillary funds
Administrative penalty
(1) The persons mentioned in subsection (2) are jointly and severally liable to an administrative penalty if:
(a) a trustee of a * private ancillary fund holds the fund out as being endorsed, entitled to be endorsed, or entitled to remain endorsed, as a * deductible gift recipient; and
(b) the fund is not so endorsed or entitled.
(2) The persons are:
(a) each person who is a trustee of the fund; and
(b) each director of each * constitutional corporation that is a trustee of the fund, if:
(i) any of the penalty cannot reasonably be recovered from the constitutional corporation; and
(ii) the constitutional corporation is not a registered trustee company.
Note: A person mentioned in paragraph (2)(a) may, in certain circumstances, not be a constitutional corporation: see item 28 of Schedule 2 to the Tax Laws Amendment (2009 Measures No. 4) Act 2009 (former prescribed private funds).
(3) The amount of the penalty is:
(a) the amount specified in the * private ancillary fund guidelines under paragraph 426 - 110(b); or
(b) the amount worked out in accordance with the method specified under that paragraph.
The private ancillary fund guidelines may specify different penalties or methods for different circumstances.
(4) The penalty must not be reimbursed from the fund.
Note: Division 298 in this Schedule contains machinery provisions for administrative penalties.
Defences for directors
(5) Paragraph (2)(b) does not apply to a director if:
(a) the director was not aware of the holding out mentioned in paragraph (1)(a) and it would not have been reasonable to expect the director to have been aware of that holding out; or
(b) the director took all reasonable steps to ensure that the holding out mentioned in that paragraph did not occur; or
(c) there were no such steps that the director could have taken.
(6) In determining what is reasonable for the purposes of paragraph (5)(a), (b) or (c), have regard to all relevant circumstances.
(7) A person who wishes to rely on subsection (5) bears an evidential burden in relation to the matters in that subsection.
Power of courts to grant relief
(8) Section 1318 of the Corporations Act 2001 (power of Court to grant relief in case of breach of director's duty) does not apply to a liability of a director under this section.
Suspension and removal of trustees
426 - 125 Suspension or removal of trustees
Suspension
(1) The Commissioner may suspend all of the trustees of a * private ancillary fund if the Commissioner is satisfied that the fund, or any of the trustees of the fund, have breached:
(a) the * private ancillary fund guidelines; or
(b) any other * Australian law.
(2) The suspension of a trustee:
(a) starts when the Commissioner gives the trustee notice of the suspension under subsection (3); and
(b) ends at the time specified in the notice.
(3) If the Commissioner decides to suspend a trustee under this section, the Commissioner must give to the trustee a written notice:
(a) setting out the decision; and
(b) giving the reasons for the decision; and
(c) setting out the time the suspension ends.
Extension of suspensions
(4) The Commissioner may change the time the suspension of a trustee ends.
(5) If the Commissioner decides to change the time the suspension of a trustee ends under this section, the Commissioner must give to the trustee a written notice:
(a) setting out the decision; and
(b) giving the reasons for the decision; and
(c) setting out the new time the suspension ends.
Removal
(6) The Commissioner may remove all of the trustees of a * private ancillary fund if the Commissioner is satisfied that the fund, or any of the trustees of the fund, have breached:
(a) the * private ancillary fund guidelines; or
(b) any other * Australian law.
(7) If the Commissioner decides to remove a trustee under this section, the Commissioner must give to the trustee a written notice:
(a) setting out the decision; and
(b) giving the reasons for the decision.
Review of decisions under this section
(8) A trustee who is dissatisfied with any of the following decisions under this section may object in the manner set out in Part IVC of this Act:
(a) a decision to suspend the trustee;
(b) a decision to change the time a suspension of the trustee ends;
(c) a decision to remove the trustee.
426 - 130 Commissioner to appoint acting trustee in cases of suspension or removal
Appointment of acting trustee
(1) If the Commissioner suspends all of the trustees of a * private ancillary fund under section 426 - 125, the Commissioner must appoint a single entity to act as the trustee (the acting trustee ) of the fund during the period of the suspension.
(2) If the Commissioner removes all of the trustees of a * private ancillary fund under section 426 - 125, the Commissioner must appoint a single entity to act as the trustee (the acting trustee ) of the fund until all of the vacancies in the position of trustee are filled.
Acting trustee need not be constitutional corporation
(3) An acting trustee need not be a * constitutional corporation, and may be the Commissioner. Paragraph 426 - 105(1)(a) does not apply in relation to an acting trustee.
(4) An entity that is not a * constitutional corporation may not act as trustee under this section for longer than 6 months.
Acting trustee must have agreed to comply with guidelines
(5) An entity may only be appointed as acting trustee if the entity has, in accordance with paragraph 426 - 105(1)(b), agreed to comply with the rules in the * private ancillary fund guidelines, as in force from time to time.
426 - 135 Terms and conditions of appointment of acting trustee
(1) The Commissioner may determine the terms and conditions of the appointment of the acting trustee, including fees. The determination has effect despite anything in:
(a) any * Australian law other than this section; or
(b) the * private ancillary fund's governing rules.
(2) Without limiting subsection (1), the Commissioner may make a determination under that subsection to the effect that the acting trustee's fees are to be paid out of the corpus of the * private ancillary fund.
426 - 140 Termination of appointment of acting trustee
The Commissioner may terminate the appointment of the acting trustee at any time.
426 - 145 Resignation of acting trustee
(1) The acting trustee may resign by writing given to the Commissioner.
(2) The resignation does not take effect until the end of the seventh day after the day on which it was given to the Commissioner.
426 - 150 Property vesting orders
(1) If the Commissioner appoints an acting trustee, the Commissioner must make a written order vesting the property of the * private ancillary fund in the acting trustee.
(2) If the appointment ends, the Commissioner must make a written order vesting the property of the fund in the new acting trustee, the previously suspended trustee or trustees or the new actual trustee or trustees (whichever is applicable).
(3) If the Commissioner makes an order under this section vesting property of a * private ancillary fund in an entity or entities, then, subject to subsection (4), the property immediately vests in the entity or entities by force of this section.
(4) If:
(a) the property is of a kind whose transfer or transmission may be registered under an * Australian law; and
(b) that law enables the registration of such an order, or enables the entity or entities to be registered as the owner of that property;
the property does not vest in the entity or entities until the requirements of the law referred to in paragraph (a) have been complied with.
426 - 155 Powers of acting trustee
Subject to section 426 - 150:
(a) the acting trustee has and may exercise all the rights, title and powers, and must perform all the functions and duties, of the original trustee or trustees; and
(b) the * private ancillary fund's governing rules and every * Australian law apply in relation to the acting trustee as if the acting trustee were the trustee of the fund.
426 - 160 Commissioner may give directions to acting trustee
(1) The Commissioner may give the acting trustee a written notice directing the acting trustee to do, or not to do, one or more specified acts or things in relation to the * private ancillary fund.
(2) The acting trustee commits an offence if:
(a) the acting trustee engages in conduct (within the meaning of subsection 2(1) of this Act); and
(b) that engagement in conduct contravenes a notice given to the acting trustee under subsection (1).
Penalty: 100 penalty units.
(3) This section does not affect the validity of a transaction entered into in contravention of a notice given under subsection (1).
Books
(1) An entity commits an offence if:
(a) the Commissioner makes an order under subsection 426 - 150(1) or (2) vesting the property of a * private ancillary fund in an acting trustee; and
(b) just before the Commissioner made the order, the property was vested in:
(a) the entity (the former trustee ); or
(b) 2 or more entities (the former trustees ), including the entity; and
(c) the former trustee or former trustees do not, within 14 days of the Commissioner making the order, give the acting trustee all books (within the meaning of the Corporations Act 2001 ) relating to the fund's affairs that are in the former trustee's or former trustees' possession, custody or control.
Penalty: 50 penalty units.
Identification of property and transfer of property
(2) Subsections (3) to (5) apply if:
(a) the property of a * private ancillary fund is vested in an entity (the former trustee ) or entities (the former trustees ); and
(b) the Commissioner makes an order under subsection 426 - 150(1) or (2) vesting the property in an acting trustee.
(3) The acting trustee may, by notice in writing to the former trustee or former trustees, require the former trustee or former trustees, so far as the former trustee or former trustees can do so:
(a) to identify property of the fund; and
(b) to explain how the former trustee or former trustees have kept account of that property.
(4) The acting trustee may, by notice in writing to the former trustee or former trustees, require the former trustee or former trustees to take specified action that is necessary to bring about a transfer of specified property of the fund to the acting trustee.
(5) The former trustee, or each of the former trustees, commits an offence if:
(a) the acting trustee gives the former trustee or former trustees a notice under subsection (3) or (4); and
(b) the former trustee or former trustees do not, within 28 days of the notice being given, comply with the requirement in the notice.
Penalty: 50 penalty units.
Strict liability
(6) Subsections (1) and (5) are offences of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code .
Part 2 -- Amendments commencing on 1 January 2010
Income Tax Assessment Act 1997
23 Subsection 30 - 229(2A)
Omit "may", substitute "must".
Taxation Administration Act 1953
24 Subsection 426 - 115(1) in Schedule 1
Omit "may", substitute "must".
Part 3 -- Transitional provisions
25 Definitions
In this Part:
commencement time means the time at which this item commences.
constitutional corporation has the meaning given by the Income Tax Assessment Act 1997 .
deductible gift recipient has the meaning given by the Income Tax Assessment Act 1997 .
prescribed private fund has the meaning given by the Income Tax Assessment Act 1997 (as in force just before the commencement time).
private ancillary fund has the meaning given by section 426 - 105 in Schedule 1 to the Taxation Administration Act 1953 .
private ancillary fund guidelines has the meaning given by section 426 - 110 in Schedule 1 to the Taxation Administration Act 1953 .
Division 2--Declared prescribed private funds
26 Transitional--prescribed private fund declarations
(1) The Minister may, by legislative instrument, declare a trust to be a prescribed private fund.
(2) Despite subsection 12(2) of the Legislative Instruments Act 2003 , the declaration has effect during the period:
(a) starting at the time specified in the declaration, which must be before the commencement time; and
(b) ending just before the commencement time.
Division 3--Transitional private ancillary funds
27 Application of Division
This Division applies to a trust if, just before the commencement time, the trust was a prescribed private fund (whether or not because of a declaration made under item 26).
28 Transitional--trustees need not be constitutional corporations
Paragraph 426 - 105(1)(a) (trustees of private ancillary funds must be constitutional corporations) and sections 426 - 125 to 426 - 165 (Suspension and removal of trustees) in Schedule 1 to the Taxation Administration Act 1953 do not apply to the trust during the period:
(a) starting at the commencement time; and
(b) ending at the earlier of the following:
(i) the time (at or after the commencement time) the trust first satisfies the requirements of that paragraph (disregarding this item);
(ii) the first time any of the trustees of the trust revoke the agreement mentioned in item 29 in accordance with subsection 426 - 105(2) in that Schedule.
29 Transitional--agreement to comply with private ancillary fund guidelines
(1) For the purposes of Subdivision 426 - D in Schedule 1 to the Taxation Administration Act 1953 , each of the trustees of the trust is taken to have agreed, at the commencement time and in accordance with paragraph 426 - 105(1)(b) in that Schedule, to comply with the rules in the private ancillary fund guidelines, as in force from time to time.
(2) To avoid doubt, subitem (1) does not prevent a trustee from revoking that agreement at a later time as mentioned in paragraph 426 - 105(1)(c) in that Schedule.
30 Transitional--endorsement as a deductible gift recipient
(1) The trust is taken to have been endorsed as a deductible gift recipient under section 30 - 120 of the Income Tax Assessment Act 1997 at the commencement time.
(2) To avoid doubt, subitem (1) does not prevent the Commissioner from revoking that endorsement at a later time under section 426 - 55 in Schedule 1 to the Taxation Administration Act 1953 .
31 Transitional--transfer of property
For the purposes of item 2 of the column headed "Recipient" of the table in subsection 30 - 15(2) of the Income Tax Assessment Act 1997 , disregard a transfer of all of the property of the trust to another private ancillary fund if:
(a) the other fund is a deductible gift recipient; and
(b) every trustee of the other fund is a constitutional corporation; and
(c) the transfer happens during the period mentioned in item 28.