It’s tax reporting season and timely to take note of tax deductions for donations to your private ancillary fund (PAF) or giving fund.

Any person or entity that has donated to your fund can claim a tax deduction for their contribution. Please remember that a tax deduction can only be claimed for donations to your fund. A tax deduction cannot be claimed for gifts paid to charity from your fund.

The tax deduction can be claimed in full immediately or spread over a period of up to five years. You can claim the tax deduction via your annual return lodged with the Australian Taxation Office (ATO).

You need to keep records that support your tax return for up to five years, so ensure that you keep the tax receipts for your donations to your fund and furnish your accountant with copies. A giving fund’s annual statement also serves as your tax receipt for your donations to the fund. Donation receipts and annual statements are accessible via your online portal.

If you are spreading your tax deduction, you are also required to complete the ATO’s election to spread form and keep it with your tax records. The form helps you keep track of how much of the deduction you have claimed each year so that you know how much you have left to claim, and when the deduction has been exhausted. You can access the form here: https://www.ato.gov.au/Forms/Election-to-spread-gift-deduction/

We recommend seeking advice from your accountant or tax advisor for further information.