A Private Ancillary Fund (PAF) is a type of charitable trust that allows individuals, families, or businesses to manage their philanthropic giving in a structured and tax-effective way. It acts as a vehicle for making grants to eligible charities over time.

PAFs are typically established by individuals, families, or businesses who want to create a long-term giving strategy. They are ideal for those looking to make significant charitable contributions and maintain control over how funds are distributed. They also can be passed on to your children to allow for generational giving.

Contributions by you to a PAF are tax-deductible in the year they are made. Additionally, the fund’s investment income is generally tax-exempt, allowing the capital to grow and support charitable causes over the long term.

While there is no legislated minimum, PAFs are generally suited for those contributing at least $500,000 or more, as they involve ongoing compliance and administrative costs.

PAFs must distribute a minimum of 5% of their net assets to eligible charities each financial year, ensuring that funds are actively supporting charitable purposes. Eligible charities are those that are endorsed as a Deductible Gift Recipient (DGR) by the ATO.

Yes. The trustee of the PAF decides which eligible charities receive grants, giving you flexibility to support causes that align with your values. You can give just to one charity or as many as you like. You also have the ability to change the recipients each year, giving you flexibility.

PAFs must comply with Australian Taxation Office (ATO) guidelines, including annual reporting, maintaining governance standards, and meeting minimum distribution requirements. A PAF must be audited and lodge a report with the Australian Charities and Not-for-profits Commission (ACNC) each year to maintain its tax exempt status.

Setting up a PAF involves creating a trust deed, appointing trustees, and registering with the ATO. We are able to walk you through this process to get a PAF up and running for you.

No. Once funds are donated to a PAF, they cannot be withdrawn for personal use. All contributions are irrevocable and must be used exclusively for charitable purposes in accordance with ATO guidelines.

A PAF can invest in a wide range of assets, including shares, managed funds, term deposits, and property, as long as the investments are prudent, comply with the trust deed, and align with ATO requirements. The goal is to grow the fund to support charitable giving over time.

Yes, a PAF can invest in property as part of its investment strategy, provided the property is held solely for investment purposes and not for private use. All investments must comply with the PAF’s governing rules and ATO guidelines. Note that a PAF must still distribute at least 5% of its net assets, so it will need some liquid cash to distribute.