Australian Philanthropic Services (APS) welcomes the greater clarity from the Australian Taxation Office (ATO) regarding ancillary funds and “benefits”.  

Judith Fiander, CEO at APS, says clear and updated guidance will support both charitable trustees and donors to act confidently and compliantly, which ultimately strengthens the entire philanthropic sector. 

“Private and public ancillary funds have supported Australians on their philanthropic journey for around 25 years, and additional guidance is welcome as they continue to build and evolve as important instruments of philanthropy,” Ms Fiander says. 

“The ATO has a right and responsibility to audit, data-match, and where necessary impose penalties on anyone who misuses the system. 

“Such oversight is essential, and we are committed to working with regulators to ensure that the framework for ancillary funds remains transparent and trusted.” 

 Since its establishment 13 years ago, APS clients have given away more than $1.3 billion to charities and now have over $2.4 billion in funds irrevocably donated into ancillary funds for future charitable use.  

APS typically establishes about a third of all new private ancillary funds (PAFs) each year, and the APS Foundation – Australia’s fastest growing and most generous public ancillary fund (PuAF) amongst its peers – saw the creation of 123 new Giving Funds (or sub-funds) in FY2025. 

Ms Fiander says that ancillary funds are delivering meaningful philanthropic capital to communities across a broad spectrum of needs. 

“Private and public ancillary funds are among the most effective mechanisms for Australians to deliver long-term charitable impact in a tax-efficient way,” Ms Fiander says. 

“A donation to a public or private ancillary fund is fully tax-deductible in the year of contribution, or the deduction can be spread over up to five years. The PAF or PuAF itself is typically income-tax exempt and can claim franking credits, allowing givers to commit to their philanthropic intent today, while retaining the flexibility to invest the capital and distribute it over time.” 

Ms Fiander says that trustees must be legally accountable for governance and compliance, and anyone with concerns about potential wrongdoing in any ancillary fund can report their concerns to the ATO. 

“Private and public ancillary funds provide an ideal balance of flexibility, control and accountability. They allow donors to manage investments according to their philanthropic goals, involve future generations while ensuring that donated assets remain irrevocable and ultimately directed to public good.  

“We believe cases of misuse among more than 2,400 PAFs are extremely rare. In our experience as administrators of the largest pool of PAFs in the country, our clients are diligent, compliant and motivated by genuine philanthropic intent.” 

Ms Fiander says a proposal currently being considered by the Albanese Government to increase minimum distribution requirements to between 5 per cent and 8 per cent might have unintended negative consequences. 

“A higher mandatory minimum distribution rate will discourage individuals and families from establishing a giving fund or encourage existing donors to leave philanthropic capital in less structured, and less transparent, vehicles such as family trusts or private companies.  

“That could reduce the overall pool of capital available to charities in the long run. Exactly the opposite of what the community needs.” 

Published 15 December 2025