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									                                                 GUIDELINES FOR
                                          PRESCRIBED PRIVATE FUNDS (PPFs)

  ______________________________________________________________________________
Extract from the Prime Minister's Press Release of 30 March 2001


COMMUNITY-BUSINESS PARTNERSHIP DEVELOPS NEW TAX INITIATIVES
TO PROMOTE PHILANTHROPY


" The Government has also taken a further significant step to encourage private philanthropy, with
the release today of guidelines for Prescribed Private Funds, which will become a new form of
charitable trust enjoying tax deductibility for donations made to it. These guidelines will be
followed up with a model trust deed, to be released early next week. The establishment of
Prescribed Private Funds was part of the package announced in March 1999.

These new trusts will provide businesses, families and individuals with greater flexibility to start
their own trust funds for philanthropic purposes. Funds that comply with the guidelines and the
model trust deed will be prescribed in Regulations as gift deductible entities under the I ncome Tax
Assessment Act 1997. This means that donations made to the funds will attract tax deductions.

This measure will open up a new vehicle for private philanthropy, similar to that existing in the
United States, so that families and individuals can donate to a trust of their own, which then
disburses funds to a range of other gift-deductible recipients. By creating opportunities for private
philanthropy, the Government is building up the social coalition, in which government, business,
community organisations and individuals work together on social issues.

The guidelines released today specify the criteria by which private funds will be prescribed in the
regulations as gift deductible. They also prohibit any payments from the funds that directly or
indirectly benefit the donor to the fund.

Limits will apply to the accumulation of money within the fund, such that investment income can
only be accumulated at a rate equivalent to the CPI, with the rest disbursed to public philanthropic
funds. In addition, funds will be required to provide a simple annual return to the Tax Office
outlining the source of funds, and the payment of funds to various gift-deductible public funds as
well as the extent and recipients of management fees.

These guidelines will ensure that tax deductibility will only be given where private charitable funds
are used for the purposes for which they are intended – providing money for philanthropic purposes.
The guidelines and model trust deed strike the right balance between mainta ining the integrity of
the tax system, at the same time as providing tax incentives for private giving. "

30 March 2001
____________________________________________________________________________
History of PPF Guidelines
 Original guidelines issued by the Prime Minister in his press release of 30 March 2001 (extract above)
 Version 2 of the guidelines issued March 2002
 Version 3 of the guidelines issued May 2004 (current)
                                                                                         PPF Guidelines v3



                                     GUIDELINES FOR
                              PRESCRIBED PRIVATE FUNDS (PPFs)
                                          Version 3
                                      Issued May 2004


1. These guidelines are intended to provide assistance in relation to:
       -   the philanthropy measures relating to prescribed private funds;
       -   the application process and how an application to be a prescribed private fund should be
           made; and
       -   what requirements need to be met for establishing a prescribed private fund for
           philanthropic purposes?

Background
2. To implement the Government’s response to the report on philanthropy in Australia by the
Business and Community Partnerships Working Group on Taxation Reform dated 26 March 1999,
the Government announced income tax measures to encourage greater corporate and personal
philanthropy in Australia.

3. Those measures included, amongst other things, amendments to the Income Tax Assessment Act
1997 (ITAA 1997) and the Income Tax Assessment Act 1936 (ITAA 1936) to:
       -   allow concessional taxation treatment for prescribed private funds. They will not be
           required to seek donations from the public or be controlled by a committee, a majority of
           whom have a degree of responsibility to the general community, but otherwise will be
           subject to the same requirements applying to public funds(see the guidance on this
           below); and
       -   allow deductions to taxpayers for gifts to prescribed private funds made on or after
           1 July 1999.
4. The result is that individuals and corporations are able to establish privately controlled funds for
philanthropic purposes without seeking and receiving public contributions. It is envisaged that this
measure will encourage greater philanthropy.

What is a prescribed private fund?
5. The term prescribed private fund is defined in subsection 995-1(1) of the ITAA 1997 to be a
fund that is prescribed by the Income Tax Assessment Regulations 1997 ( Regulations) but does not
include a fund that is declared in writing by the Treasurer no t to be a prescribed private fund.

6. Where a prescribed private fund no longer complies with the necessary requirements, the
Treasurer may declare in writing that the fund is not a prescribed private fund. From the date of
declaration, donations to that fund will no longer be tax deductible.

7. With the exception that they need not seek and receive contributions from the public, and
control requirements, prescribed private funds have the same characteristics of public (or ancillary)
funds described in item 2 of the table to section 30-15 of ITAA 1997. They will have to comply
with all the other requirements of a public fund. Particularly, it is important for a prescribed private
fund to ensure that any benefit bestowed is bestowed only on other funds, authorit ies or institutions
covered by Subdivision 30-B of the ITAA 1997, and not provided to other charitable, community


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service or similar organisations or individuals or to other prescribed private funds or to public (or
ancillary) funds described in item 2.

8. The legal requirement that a prescribed private fund be 'maintained' does not require the fund to
be continually operative or established for an indefinite period, but rather that the fund must, not
only at its establishment but throughout its existence, comply with the terms of the law.
Consequently, prescribed private funds can include those which have the object of channelling
funds to public funds established in relation to isolated acts of relief, including public funds for the
relief of one individual or family or a community adversely affected by a natural disaster. That is, a
prescribed private fund can be established to provide money, property or benefits to or for a fund,
authority or institution which is established for a limited time, provided that recipient has deductible
gift recipient (DGR) status.

How are applications made and dealt with?
9. An application for prescribed private fund status is an administrative process. All applications
are made to Government - but must in the first instance be lodged with the Australian Taxation
Office (ATO). All applications are to be in writing.

10. Applications by, or on behalf of, funds seeking to be prescribed should be posted to the
following address:

                                      Australian Taxation Office
                                           Small Business
                                            PO Box 1130
                                       PENRITH NSW 2740

11. If the ATO considers that the fund satisfies the legislative requirements in item 2 of
section 30-15 of the ITAA 1997, and the fund has safeguards present to ensure its sole purpose and
the maintenance of that sole purpose are pursued, the application will be forwarded to Government
for consideration. Applications that are fatally flawed will not be referred for Government
consideration but will be rejected by the ATO.

12. A full and complete application including all relevant information and documentation should be
provided in the first instance to avoid delays. Information required includes a copy of the private
fund’s establishing will or declaration of trust, any application forms for assistance, policies,
financial statements and details of day to day activities (if applicable). An application that does not
provide all the necessary information may be considered to be an application without sufficient
claims to being prescribed, and cannot be progressed by the ATO.

13. The checklist at Attachment A should be completed and accompany the application.

14. The Government's decision will be made by the Minister responsible for tax law administration
matters. The date from which donations to a fund are tax deductible will be the date on which the
Minister approves it as a prescribed private fund. Retrospective dates of effect will not generally be
contemplated. The Tax Office shall, as soon as possible, notify the applicant in writing of the
Minister's decision.

What are the require ments to be met?
15. There are broadly three sets of requirements which must be met. They are:



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        -   the specific legislative requirements in item 2 of section 30-15 of the ITAA 1997. That
            is, the fund must be established and maintained under a will or instrument of trust solely
            for the required purpose, etc.;
        -   the public fund requirements as set out in Taxation Ruling TR 95/27 (the references in
            that ruling to section 78(5) of the ITAA 1936 should now be read as referring to item 2
            of section 30-15 of the ITAA 1997), with the exception that the public need not be
            invited to contribute to the fund, and the requirement for control by a committee, a
            majority of whom have a degree of responsibility to the general community, need not be
            met. A gift fund must be maintained; and
        -   the integrity assurance measures outlined below. These measures recognise the
            particular circumstances of prescribed private funds.
16. These requirements ensure that there are administrative and legal frameworks in place which
will safeguard property and moneys donated to the fund and, as far as possible, ensure that tax
deductible donations are used for an appropriate approved purpose.

17. An outline of a model trust deed which meets the requirements is at Attachment B. The first
version of Attachment B became available on 18 April 2001 and version 2 was issued in March
2002. The latter has been reviewed as a result of consultation with applicants and the ATO. Version
3 is now issued. This revision does not have any effect on applicants who have relied on an earlier
version to draft their trust deeds.

Integrity assurance measures
18. The purpose of the following measures is to ensure that funds which have been subject to
concessional tax treatment are directed to the achievement of philanthropic ends.

19. For the purposes of these guidelines the term 'associate' has the same meaning as it is given in
subsection 78A(1) of the ITAA 1936. It should be noted that the term has an extended meaning and
where a gift is made by will, it includes beneficiaries of the estate, associates and relatives of such
beneficiaries.

Control of the prescribed private fund
20. The controlling body of the fund must include at least one person who is a 'responsible person',
as defined in clause 2.1 of the Model Trust Deed. That is, a person who has a general respo nsibility
to the community.

21. The responsible person must not be associated with the founder or a major donor in anything
other than a professional capacity. An employee (including a director) of a company that is: the
founder; is to be a major donor; or is controlled by the founder or a major donor, is considered to be
an associate of the founder or major donor and thus not eligible to be the responsible person even
though the person may otherwise qualify. This does not of itself prevent an acquaintance of t he
founder or a major donor from acting as the responsible person.

22. The founding documents of the fund must reflect this requirement.

Audit
23. The fund must be audited in accordance with clause 11.3 of the Model Trust Deed.




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  Benefit to donor/founder
  24. The founding documents of the fund must prohibit the making of any benefit, direct or indirect,
  to the trustee (including any of its members or directors), the donor/founder or to any associate. No
  part of the trust fund or the income may be paid, transferred or distributed directly or indirectly, by
  way of bonus, fee or otherwise, to the founder, the trustee, a donor or their associates by way of an
  Uncommercial Transaction as described in clause 5 of the Model Trust Deed.

  25. This will include Uncommercial Transactions by way of:

          -   conferring a benefit, direct or indirect, on the donor/founder or any associate (for
              example sale and purchase arrangements for property, and arrangements covering access
              to, use, maintenance and disposal of property);
          -   the making of loans or similar arrangements back to the donor/founder or any associate;
          -   the making of an investment structured in a way so as to benefit directly or indirectly the
              donor/founder, or any associate (for example a loan back to, or purchase of shares in, a
              donor, associate, etc.); and
          -   the making of an investment structured in a way so as to benefit directly or indirectly the
              trustee (including a director or shareholder in the trustee company), or any associate.
   Accumulation of money in the prescribed private fund
26.    An amount of money originally settled on the fund may be retained indefinitely but this amount
will not be deductible to the founder as the fund will not be prescribed as from a date earlier than the
date of its approval by the government. The Model Trust Deed accordingly has a nominal settled sum,
for example $100.

27.    Other receipts of the fund comprising donations, gifts, government grants and other voluntar y
transfers of property may be accumulated, but not indefinitely. Indefinite accumulation of funds does
not involve an application of funds for the intended philanthropic purpose. However, it is also
recognised that accumulation of funds can, in some circumstances, be desirable and appropriate.
Where accumulation of funds beyond a portion of income, discussed below, is intended, a plan and
rationale must be provided to the ATO at the time of making an application. That information must be
updated whenever such plans change. A discussion of accumulation and examples of accumulation
plans are contained in Attachment C.

28.    The founding documents of the fund may allow accumulation of other income (that is, income
not including donations, gifts, government grants and other voluntary transfers of property referred to
above) to an extent which maintains the real value of the capital of the fund, based on the Consumer
Price Index figure for the previous financial year. In other words, the amount of other income retained
must be limited to an amount which maintains the capital value on hand at the start of the fina ncial
year in line with the All Groups Consumer Price Index for the previous financial year.

  Accumulation of capital gains in the prescribed private fund
29. Realised capital gains are to be treated as normal income of a PPF. However, such gains do not
need to be distributed provided the approved capital base (including adjustments for CPI movements
as discussed in Para 28) has not been reached and then:

              a. in a typical year, income from earnings of investments would, first, be accumulated
                 to the extent necessary to maintain the real value of the capital of the PPF at the end
                 of the previous year and the balance distributed;


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              b. realised capital gains could be accumulated in full provided the capital of the PPF
                 after the accumulation was less than the approved ATO capital base, adjusted for
                 CPI movements; and

              c. only to the extent the realised capital gains exceeded that adjusted capital base,
                 would they need to be distributed

30. Unrealised capital gains do not need to be distributed and do not need to be taken into account
when determining whether the approved capital base (including adjustments for CPI movements) has
been reached. However, once this approved capital base has been reached the trustee must continue to
monitor the fund's investments. If the capital base continues to appreciate beyond the approved level,
adjusted each year in accordance with the CPI formula, then the trustee must give consideration to
selling that portion of the current capital base which exceeds the approved capital base and
distributing the proceeds as income in accordance with Para 29.

31.    As a guide, if unrealised gains in excess of the approved capital base, adjusted each year in
accordance with the CPI formula, have occurred over any two consecutive financial years the excess
should be sold and the proceeds distributed in accordance with Para 29.

32.    Alternatively, the trustee may consider applying to the Commissioner to increase the approved
capital base of the fund (see Para 27). Such an application must include sound fiduciary reasons as to
why the capital base should be increased. Long term or unfettered accrual of capital gains within a
PPF would be construed as being contrary to the fund's sole intended philanthropic purpose.

  Exceptional circumstances
33. In sufficiently exceptional circumstances the Government may consider prescription of funds that
do not strictly meet the integrity assurance requirements outlined above.

  Does a prescribed private fund need to be endorsed as a deductible gift recipient? (Division
  30-BA, ITAA 1997)
34. No. Unlike most other DGRs a PPF is not required to be endorsed. PPFs are specifically excluded
from this requirement by subsection 30-17(2) of the ITAA 1997.

35. However, a PPF should still obtain an ABN to enable it to be exempt from income tax (see Para
36). To assist transparency a PPF should agree to be placed on the Australian Business Register
(ABR) with an indication that it is a deductible gift recipient (DGR).

  Does a prescribed private fund need to be endorsed under Division 50-B of the ITAA 1997 as
  an income tax exempt charity (ITEC)?
36. Yes, if it is desired the income of the fund is to be exempt from income tax. A PPF which is
permitted by the will or instrument of trust to provide money, property or benefits only to DGRs
which are also charities is considered to be the type of fund described in item 1.5B of subsection 50-5
of the ITAA 1997. The Model Trust Deed contains acceptable provisions in this regard. Such funds
are exempt from income tax provided they satisfy the special conditions set out in subsections 50-52
and 50-60. Subsection 50-52 requires endorsement by the Commissioner of Taxation as set out in
Division 50-B.

37. PPFs should apply for an ABN and indicate on the ABN application form that they are also
seeking endorsement as an ITEC (pursuant to subsection 50-115). The ‘type of applicant’ for a PPF in
Question 1 of the ABN application form is “discretionary trust-investment". The code applicable for
PPFs in question 4 of the ITEC application form is ‘ABF’.

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  Is a prescribed private fund eligible to receive a refund of imputation credits attached to
  franked dividends
38. Yes, but only if the PPF is endorsed as an income tax exempt charity (ITEC) as discussed in
Para 36.

  Can a prescribed private fund solicit and receive donations from the public?
39. Yes, but this cannot be the primary source of donations. If this is the case then the proposed fund
would be a public fund and not a PPF. (see Para 15).

40. The purpose of a PPF as stated by the Prime Minister in his press release of 30 March 2001 is to
provide businesses, families and individuals with greater flexibility to start (and donate into) their own
trust funds for philanthropic purposes. Whilst donations on occasions may be solicited from the
public, the primary source of donations must be from the businesses, families and individuals who
established the fund. (see Para 4)

  Can a prescribed private fund be accepted as a public benevolent institution (PBI) which
  would entitle it to limited fringe benefits tax (FBT) exemption?
41. No. A PBI is a charitable institution whose dominant purpose is the direct relief of poverty,
sickness, destitution, suffering or misfortune. A PPF is merely an ancillary fund to provide money,
property or benefits to certain deductible gift recipients, as discussed in Para 7. It cannot directly
support afflicted individuals. It may be likened to a conduit or temporary repository for moneys or
property which is to be channelled to other deductible gift recipients. A PPF can of course channel
moneys and property to a PBI that is endorsed as a DGR.

  Is the donation of shares to a prescribed private fund an allowable income tax deduction?
42. Yes. A donor is entitled to a deduction for a donation of shares to a PPF if the donation satisfies
the gift provisions of section 30-15 of the ITAA 1997. This requires the shares (being property) to
have been purchased by the donor within 12 months of the date of the gift or be valued by the
Commissioner and the value must be more than $5,000. A donor cannot just use the price of shares as
listed daily on the Stock Exchange. For further information on valuation refer to the Philanthropy
Program Guide contained on the Australian Valuation Office website at [www.avo.gov.au].

  Can a prescribed private fund carry on a business?
43. No. A PPF is an ancillary fund as discussed in Paras 7 and 8. Its sole purpose is to distribute both
donations received and income derived from investing donations to DGRs. The holding of investments
such as shares or rental properties for the purpose of deriving income that can be distributed to DGRs
is not considered to be carrying on a business.

  What are the fiduciary responsibilities of the trustee of a prescribed private fund?
44. Special condition (b) of item 2 of the table in section 30-15 of the ITAA 1997 states that "the
terms of the will or trust must allow the trustee to invest money that the fund receives because of the
gift only in a way that an Australian law allows trustees to invest trust money."

45. The trustee of a PPF is subject to both the common law principles of trust law and the Trustee
Act of the state or territory in which the PPF operates. These Acts state that a trustee may invest trust
funds in any form of investment. However they also require a trustee to exercise appropriate care,
diligence and skill that a prudent person would exercise in managing the affairs of other persons. They
also impose certain duties such as a duty to review investments at least annually.


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46. These Trustee Acts generally, expressly require a trustee, when exercising a power of investment,
to take into account the following:

                 the purpose of the trust;
                 the desirability of diversifying trust investments;
                 the nature of, and the risk associated with, existing trust investments and other
                  trust property;
                 the need to maintain the real value of the capital or income of the trust;
                 the risk of capital or income depreciation;
                 the likely income return and the timing of income return;
                 the length of the term of a proposed investment;
                 the liquidity and marketability of the proposed investment during, and on the
                  determination of, the term of the proposed investment;
                 the aggregate value of the trust estate;
                 the likelihood of inflation affecting the value of the proposed investment; and
                 the costs (including commissions, fees, charges and duties payable) of making an
                  investment.
  Annual information return
47.    Funds are required to provide a simple annual information return to the ATO. Funds may also
be the subject of specific reviews or audit by the ATO.

48.     Those funds that have been either prescribed in the Regulations or have been approved by the
Government but are still awaiting prescription in the Regulations as at 30 June of the relevant year, are
required to submit returns. Each of these funds will be written to and provided with an information
return for completion. The date the return is to be submitted will also be notified but generally it will
be six to eight months after the end of the relevant financial year.


  Date: May 2004.




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                                                                         PPF Guidelines v3



                                                                        Attachme nt A
                                          CHECKLIST

                              Application for prescribed private fund

Name of Fund
Date of establishment of Fund
ABN (if known)
Founde r(s)*
* Please include with the PPF application a
brief resume or CV of the founder(s) and/or
major donors. This is not necessary if the
founder is merely a settlor who will not be
involved with the fund.
Name and ACN of Trustee (if corporate)

Names of Directors of corporate trustee




Name(s) of trustee(s) (if individuals)




Name of the Responsible Pe rson who is a
trustee or a member of a controlling
committee and who is not associated with or
employed by the founder or donor(s) in any
manner other than in a professional
capacity.
How does the person above qualify as the
Responsible Person?

The provision of a brief resume or CV can
generally satisfy this require ment.




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                                                        PPF Guidelines v3



                                                               $
Name(s) of and anticipated first year            Name
donations of major* donor(s) where known.

      -   It is not necessary to provide names
          of individuals or entities whose
          donations would be the result of
          public fund-raising activities.




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                                                                                           Attachme nt A

The following questions (except for the last) must all be answered YES for a fund to be eligible to
qualify as a prescribed private fund. Explanations of these requirements are found in the guidelines.
Place a tick in each box if the requirement is met.


 Does the fund have all the characteristics of a public fund except for the requirement to seek and
   receive donations from the public and does the fund's trustee include a 'responsible person' as
   described in paragraphs 20 and 21 of the guidelines?

 Does the will or instrument of trust impose the requirements for control of the fund set out in the
   guidelines?

 Was the fund established under a will or instrument of trust?
 Does the will or instrument of trust prohibit the conferring of a benefit including distributions of
   corpus or any other trust property on the donor, any associate, etc., as outlined in the guidelines?

 Does the will or instrument of trust prohibit the fund entering into Uncommercial Transactions as
   outlined in the guidelines?

 Does   the will or instrument of trust prohibit investing in anything but authorised trustee
   investments?

 Does the will or instrument of trust require the fund to be audited?
 Except for the original sum settled, does the will or instrument of trust prohibit the accumulation
   of gifts and income of the fund in each financial year beyond the amount calculated in
   accordance with the guidelines or as agreed by the Commissioner?

 Does the will or instrument of trust require the fund to only provide money, property or benefits to
   DGRs or to establish DGRs?

 If the will or instrument of trust allows the fund to provide money, property or benefits to DGRs or
   to establish DGRs which have gift conditions, can it only do so for purposes allowed by the gift
   conditions?

 The fund will not be carrying on a business as discussed in paragraph 43 of the Guidelines
 The fund will not be relying on receiving donations from the general public as its primary
   source of donations, as discussed in paragraphs 39 and 40 of the Guidelines.

 Does the fund agree to be placed on the Australian Business Register with an in indication it is a
   DGR?




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                                                                       Attachme nt B

                     PRESCRIBED PRIVATE FUNDS
                          Model Trust Deed


(The model trust deed is contained as a separate document for ease of access)




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                                                                                              Attachme nt C
                                        GUIDELINES FOR
                                   PRESCRIBED PRIVATE FUNDS
                                         (issued May 2004)


                  Accumulation of donations and income derived from investments


The published guidelines at paragraph 27 state that:

      "Other receipts of the fund comprising donations, gifts, government grants and other
      voluntary transfers of property may be accumulated, but not indefinitely. Indefinite
      accumulation of funds does not involve an application of funds for the intended
      philanthropic purpose. However, it is also recognised that accumula tion of funds can,
      in some circumstances, be desirable and appropriate. Where accumulation of funds
      beyond a portion of income, discussed below, is intended, a plan and rationale must be
      provided to the ATO at the time of making an application. That infor mation must be
      updated whenever such plans change."

The Government accepts that a founder's intention for a fund may be to accumulate
sufficient capital over an extended donation period in order for the fund ultimately to
be self sustaining. That is, once a target amount is achieved, the fund will be capable
of making significant on- going donations without serious erosion of its capital base.
However, against this it must be noted that the purpose of the fund is to apply its
moneys for philanthropic purposes. Unfettered accumulation of donations does not
achieve this.
Accumulation of both realised and unrealised capital gains in prescribed private
funds also needs to be considered and this is specifically discussed in paragraphs
29-32 of the guidelines.
It is self evident that requiring a percentage of donations to be distributed during the
years the fund is building up to its target capital base will take longer for the target to
be achieved. However such a plan does confirm and clearly demonstrates that the
fund is, at an early stage, applying donations for the required purpose. This
overcomes any suggestion that unfettered accumulation may arise.


To indicate the proposed intentions for a fund, a clause addressing the accumulation
proposal may be included in the trust deed of the fund. Alternatively, it may be more
practical to include the following general provision in the trust deed which is now
included in the sample model trust deed contained at sub clause 4.4 in Attachment B
to these Guidelines.


      "The Trustee may, in any Accounting Period accumulate and retain so much of all
      other income, (being income comprising donations, gifts, government grants and other
      voluntary transfers of property), as is from time to time approved by the Commissioner
      of Taxation."



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                              Examples of Accumulation
The following examples provide an indication of accumulation plans that would be
acceptable to the Government. Applicants are encouraged to consult with the ATO
where accumulation of donations is contemplated.
___________________________________________________________________


Example 1: The Black Foundation

   In consultation with the donor, the trustee proposes that Black will establish a capital base of
    $10 million.

   This $10 million capital base is to be achieved over a 10 to 12 year accumulation period with
    annual donations of $1 million, subject to the donor's financial capacity.

   It is intended that Black will operate indefinitely.

   If the $10 million target is achieved before ten years the accumulation period will end.

   Ten percent of the amount donated each year to Black during the accumulation period will be
    distributed in the following year. For example, if $1 million is given in year 1, $100,000 will be
    distributed in year 2. This is in addition to the required d istribution of the investment income.

   All investment income must be distributed each year except for an amount that may be retained
    so as to maintain the real capital value of the fund based on the CPI figure for the previous
    financial year.

   Once the target amount of $10 million is reached, Black will continue to distribute all
    investment income except for an amount that may be retained so as to maintain the real capital
    value of the $10 million fund based on the CPI figure for the previous financial year. Any
    subsequent donations received by Black after the $10m target is achieved will be distributed
    within 12 months of receipt unless otherwise approved by the Commissioner

   Subject to the approval of the Commissioner, if Black makes a distribution which reduces the
    value of the fund below the CPI-adjusted $10 million, Black may accumulate any subsequent
    investment income only for as long as to bring the capital base back to the CPI-adjusted $10
    million. An example of such a transaction would be where a deductible gift recipient in a
    particular year has an identified specific need requiring an outlay greater than the investment
    income derived by Black in that year.




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Example 2: The White Foundation


   In consultation with the donor, the trustee proposes that White will initially establish a capital
    base of $600,000. This amount is considered sufficient to enable White to make annual
    distributions of the order of $40,000 to $50,000.

   The $600,000 capital base is to be achieved over a period of five to seven years.

   It is intended that White will operate indefinitely.

   During the accumulation period, White may accumulate 95% of all contributions of capital
    during an accounting period with 5% of such contributions being distributed at least annually.

   The founder intends to contribute $200,000 in White's first year of operation. In subsequent
    years, subject to the founder's financial capacity, it is intended that annual donations of
    $100,000 will be made towards achieving the capital base of $600,000.

   Based on the above, in the 2nd year the fund is required to distribute $10,000 (5% of the prior
    year donation), plus all investment income derived by the fund from investing the $200,000
    except for an amount that may be retained so as to maintain the real capital value of the fund at
    $190,000 based on the CPI figure for the previous financial year.

   Having attained the target amount of $600,000, all investment income derived by White must be
    distributed each year, except for an amount that may be retained so as to maintain the real
    capital value of the fund at $600,000 based on the CPI figure for the previous financial year.




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                                                                                       PPF Guidelines v3




Example 3: The Green Foundation

   In consultation with the donor, the trustee proposes that Green will establish a capital base of
    $40 million. It is intended that Green will operate indefinitely

   The forecast accumulation period to achieve this capital sum is 5 years, with annual donations
    of $8 million.

   During the accumulation period a minimum of 10% of the annual donations is to be distributed
    in the following year until the $40m target is achieved.

   All investment income derived by Green for each year in the accumulation period must be
    distributed except for an amount that may be retained so as to maintain the real value of the
    capital of the fund, based on the CPI figure for the previous financial year.

   At the end of the 6th year any amount in excess of the capital target of $40 million is to be
    distributed.

   Having reached the capital target of $40 million, all investment income derived by Green for
    each subsequent year must be distributed except for an amount that may be retained so as to
    maintain the real value of the $40 million based on the CPI figure for the previous financial
    year.




Example 4: The Blue Foundation

   The Founder intends to make one single donation of $5 million to Blue. It is intended that Blue will
    operate indefinitely with no further donations contemplated.

   Blue will distribute all investment income derived each year except for an amount that may be retained
    so as to maintain the real value of the capital of $5 million, based on the CPI figure for the previous
    financial year.




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