These amendments ensure that the requirements under the AML/CTF Rules are consistent with the Public Ancillary Fund Guidelines issued under the Taxation Administration Act 1953.
A broker that sell shares as an agent of a Public Ancillary Fund (“PuAF”) is a Reporting Entity as they provide a designated service under Item 33 of Table 6 of subsection 6(2) of the AML/CTF Act.
Chapter 38 of the AML/CTF Rules provides these brokers with an exemption from Division 4 of Part 2 of the AML/CTF Act where they perform this service as an agent of a PuAF, subject to a number of conditions.
One condition is that the proceeds of the sale of any security must be given to a PuAF that provides an undertaking to distribute proceeds of the disposal of the security to a deductible gift recipient before the end of the financial year in which it receives the proceeds.
This condition is inconsistent, but not incompatible with, the PuAF Guidelines issued under the Taxation Administration Act 1953, which require PuAF’s to make distributions of a minimum percentage of the fund’s net assets annually.
This condition is having unintended administrative consequences as it affects a PuAF’s ability to adopt a structured and planned approach to donating to charity. The month of June is the peak giving period for donations to charity, and the requirement to dispose of the proceeds of the sale of any security prior to June 30 can generate a more ad hoc approach to donating.
The proposed amendment will remove this condition under subparagraph 38.2(4)(a) of the AML/CTF Rules. However, PuAF’s will still be required to comply with obligations for distributing its net assets under the PuAF Guidelines, and maintain registration with the Australian Charities and Not-for-profit Commission.
The consultation period has closed.
The Consultation Paper is available at: