EXPOSURE DRAFT

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  Schedule 1, Part 1, Division 1	1 January 2012.	1 January 2012	
2.  Schedule 1, Part 1, Division 2	1 July 2012.	1 July 2012	
2.  Schedule 1, Part 1, Division 3	1 January 2012.	1 January 2012	
4.  Schedule 1, Part 2	The day this Act receives the Royal Assent.		

Schedule 1—Ancillary funds
Part 1—Public ancillary funds
Division 1—Main amendments
A New Tax System (Australian Business Number) Act 1999
1  Paragraph 26(3)(ga)
After “section 426‑65”, insert “, 426‑104”.
Income Tax Assessment Act 1997
2  Subsection 30‑15(2) (cell at table item 2, column headed “Recipient”)
Omit “A public fund, or a *private ancillary fund,”, substitute “An *ancillary fund”.
3  Subsection 30‑15(2) (cell at table item 2, column headed “Special conditions”)
Before “fund” (wherever occurring), insert “ancillary”.
4  Paragraph 30‑125(1)(d)
Omit “a *private ancillary fund”, substitute “an *ancillary fund”.
5  Subparagraph 30‑125(1)(d)(i)
Omit “*private ancillary fund guidelines”, substitute “*public ancillary fund guidelines or the *private ancillary fund guidelines (whichever are applicable)”.
6  Paragraph 31‑10(1)(b)
Omit “a public fund, or a *private ancillary fund,”, substitute “an *ancillary fund”.
7  Subsection 995‑1(1)
Insert:
ancillary fund means:
	(a)	a *public ancillary fund; or
	(b)	a *private ancillary fund.
8  Subsection 995‑1(1)
Insert:
public ancillary fund has the meaning given by section 426‑102 in Schedule 1 to the Taxation Administration Act 1953.
9  Subsection 995‑1(1)
Insert:
public ancillary fund guidelines has the meaning given by section 426‑103 in Schedule 1 to the Taxation Administration Act 1953.
Taxation Administration Act 1953
10  Subsection 355‑65(8) in Schedule 1 (table item 6, column headed “and the record or disclosure …”)
Omit “private ancillary fund”, substitute “*ancillary fund”.
11  Section 426‑1 in Schedule 1
Omit:
Subdivision 426‑D deals with a type of private philanthropic trust fund known as a private ancillary fund.
substitute:
Subdivision 426‑D deals with types of philanthropic trust funds known as public ancillary funds and private ancillary funds.
12  Subdivision 426‑D in Schedule 1 (heading)
Repeal the heading, substitute:
Subdivision 426‑D—Public and private ancillary funds
13  Section 426‑100 in Schedule 1
Omit:
This Subdivision deals with a type of private philanthropic trust fund known as a private ancillary fund.
substitute:
This Subdivision deals with types of philanthropic trust funds known as public ancillary funds and private ancillary funds.
14  Section 426‑100 in Schedule 1
Omit “when private”, substitute “when”.
15  Section 426‑100 in Schedule 1
Omit “private ancillary fund guidelines”, substitute “public ancillary fund guidelines or private ancillary fund guidelines (whichever are applicable)”.
16  Before the group heading before section 426‑105 in Schedule 1
Insert:
Public ancillary funds
426‑102  Public ancillary funds
	(1)	A trust is a public ancillary fund if:
	(a)	at least one of the following subparagraphs applies:
	(i)	each trustee of the trust is a *constitutional corporation;
	(ii)	the only trustee of the trust is the Public Trustee of a State or Territory; and
	(b)	each trustee of the trust has agreed, in the *approved form given to the Commissioner, to comply with the rules in the *public 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.
	(3)	Sections 426‑125 to 426‑165 do not apply to a *public ancillary fund if subparagraph (1)(a)(ii) of this section applies to the fund.
426‑103  Public ancillary fund guidelines
		The Minister must, by legislative instrument, formulate guidelines (the public ancillary fund guidelines) setting out:
	(a)	rules that *public 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) in relation to public ancillary funds.
426‑104  Australian Business Register must show public ancillary fund status
	(1)	If a *public 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 public 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 public ancillary fund.
Note 2:	The Australian Business Register will also show if a public 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.
17  At the end of paragraph 426‑110(b) in Schedule 1
Add “in relation to private ancillary funds”.
18  Section 426‑120 in Schedule 1 (heading)
Repeal the heading, substitute:
426‑120  Administrative penalties for trustees of ancillary funds
19  Paragraph 426‑120(1)(a) in Schedule 1
Omit “a *private ancillary fund”, substitute “an *ancillary fund”.
20  Subparagraph 426‑120(2)(b)(ii) in Schedule 1
Omit “not a registered trustee company”, substitute “neither a registered trustee company nor the Public Trustee of a State or Territory”.
21  Paragraph 426‑120(3)(a) in Schedule 1
Repeal the paragraph, substitute:
	(a)	the amount specified in the *public ancillary fund guidelines under paragraph 426‑103(b), or the *private ancillary fund guidelines under paragraph 426‑110(b), whichever are applicable; or
22  Subsection 426‑120(3) in Schedule 1
Omit “private ancillary fund guidelines may”, substitute “guidelines may”.
23  Subsection 426‑125(1) in Schedule 1
Omit “a *private ancillary fund”, substitute “an *ancillary fund”.
24  Paragraph 426‑125(1)(a) in Schedule 1
Repeal the paragraph, substitute:
	(a)	the *public ancillary fund guidelines or the *private ancillary fund guidelines (whichever are applicable); or
25  Subsection 426‑125(6) in Schedule 1
Omit “a *private ancillary fund”, substitute “an *ancillary fund”.
26  Paragraph 426‑125(6)(a) in Schedule 1
Repeal the paragraph, substitute:
	(a)	the *public ancillary fund guidelines or the *private ancillary fund guidelines (whichever are applicable); or
27  Subsections 426‑130(1) and (2) in Schedule 1
Omit “a *private ancillary fund”, substitute “an *ancillary fund”.
28  Subsection 426‑130(5) in Schedule 1
Omit “paragraph 426‑105(1)(b), agreed to comply with the rules in the *private ancillary fund guidelines,”, substitute “paragraph 426‑102(1)(b) or 426‑105(1)(b), agreed to comply with the rules in the *public ancillary fund guidelines or the *private ancillary fund guidelines (whichever are applicable)”.
29  Paragraph 426‑135(1)(b) in Schedule 1
Omit “*private ancillary fund’s”, substitute “*ancillary fund’s”.
30  Subsections 426‑135(2) and 426‑150(1) in Schedule 1
Omit “*private ancillary fund”, substitute “*ancillary fund”.
31  Subsection 426‑150(3) in Schedule 1
Omit “a *private ancillary fund”, substitute “an *ancillary fund”.
32  Paragraph 426‑155(b) in Schedule 1
Omit “*private ancillary fund’s”, substitute “*ancillary fund’s”.
33  Subsection 426‑160(1) in Schedule 1
Omit “*private ancillary fund”, substitute “*ancillary fund”.
34  Paragraphs 426‑165(1)(a) and (2)(a) in Schedule 1
Omit “a *private ancillary fund”, substitute “an *ancillary fund”.
Division 2—Amendment commencing on 1 July 2012
Taxation Administration Act 1953
35  Subsection 426‑104(1) in Schedule 1
Omit “may”, substitute “must”.
Division 3—Transitional provisions
36  Definitions
In this Division:
commencement time means the time at which this item commences.
constitutional corporation has the meaning given by the Income Tax Assessment Act 1997.
private ancillary fund has the meaning given by section 426‑105 in Schedule 1 to the Taxation Administration Act 1953.
public ancillary fund has the meaning given by section 426‑102 in Schedule 1 to the Taxation Administration Act 1953.
public ancillary fund guidelines has the meaning given by section 426‑103 in Schedule 1 to the Taxation Administration Act 1953.
37  Application of Division
This Division applies to a trust if, just before the commencement time, the trust was:
	(a)	a public fund covered by item 2 of the table in subsection 30‑15(2) of the Income Tax Assessment Act 1997; and
	(b)	endorsed as a deductible gift recipient under section 30‑120 of that Act; and
	(c)	not a private ancillary fund.
38  Transitional—trustees need not be constitutional corporations
Paragraph 426‑102(1)(a) (trustees of public ancillary funds must be constitutional corporations or Public Trustees) 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 39 in accordance with subsection 426‑102(2) in that Schedule.
39  Transitional—agreement to comply with public 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 426‑102(1)(b) in that Schedule, to comply with the rules in the public 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 426‑102(1)(c) in that Schedule.
40  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 public ancillary fund if:
	(a)	the other fund is a deductible gift recipient; and
	(b)	at least one of the following subparagraphs applies:
	(i)	every trustee of the other fund is a *constitutional corporation;
	(ii)	the only trustee of the other fund is the Public Trustee of a State or Territory; and
	(c)	the transfer happens during the period mentioned in item 38.

Part 2—Minor amendments
Income Tax Assessment Act 1936
41  Subsection 6(1) (definition of private ancillary fund)
Repeal the definition.
Note:	This item repeals a redundant definition.
Taxation Administration Act 1953
42  Subsection 2(1) (definition of private ancillary fund)
Repeal the definition.
Note:	This item repeals a redundant definition.