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PAFs

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PAFs
Essential features of a PAF
Advantages of a PAF
Establishing your PAF
How they work - a PAF case study
A Donor's Gift
Adam Scott Foundation
Australian Children's Trust
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Private Ancillary Funds (PAFs), formally known as Prescribed Private Funds (PPFs), are a flexible, tax-effective way for individuals, families, and corporations to establish a foundation and manage their long-term charitable giving. They are a relatively new form of charitable trust introduced by the government in 2001 to encourage greater corporate and personal philanthropy in Australia.

Since 2001, over 800 PAFs have been established. The Royal Children’s Hospital Foundation has been delighted to receive support from a number of donors who have established PAFs to manage their philanthropic giving.

Click on the links on the right to find out more about PAFs, or contact one of our Relationship Managers on (07) 3852 1199.


  • PAFs can be established by an individual, family or corporate entity
  • A PAF is a tax-free investment vehicle for charitable giving that must be individually approved by the Australian Taxation Office
  • Gifts to a PAF are tax deductible and the Fund is exempt from income and capital gains tax. Deductions can be spread over a five-year period
  • It is possible to give property, including shares, as well as cash, to a PAF. A gift of property can attract capital gains tax, although any taxable gain is more than offset by the tax deduction into the PAF. Rental return is invested in the PPF and the property is owned by the PAF
  • Can be in perpetuity (typical) or time limited (for example 20 years)
  • PAFs have considerable control and flexibility to determine the PAF’s philanthropic objectives and timing of distributions. Children can be involved in the process.
  • The beneficiaries of the Fund can only be qualifying charities with a DGR (deductible gift recipient) status
  • Current initial investment is from around $500,000 – but there is no formal minimum requirement.

  • Flexible for tax purposes
  • You can spread your tax deduction over 5 years
  • Donations can be made of property, shares or cash
  • Corpus built for sustainable giving
  • Controlled by a family or group and thus have total control over your own giving
  • Can remain totally anonymous if you choose

All PAFs are established as trusts, with a trust deed that sets out the objectives, purposes, power and operational processes of the trust. Its activities are limited by this trust deed. Once established, the trust can apply to the ATO for PAF status. We suggest you seek professional advice from your financial or legal advisors to assist in setting up your PAF.


An individual sells an investment with a large capital gain, and also wants to support a charity

Situation

  • Selling investment for cash
  • Triggers large capital gains tax liability
  • Pledges $1M to a charity, on the basis of $100,000 each year, for the next 10 years

Action

  • Set up a Private Ancillary Fund
  • Make a larger donation to the PAF in year one to offset capital gains tax liability
  • The PAF will generate a growing annual contribution which can support the charity

Result

  • Donor will gain relief for the large capital gains tax liability
  • Capital will begin to compound in a tax exempt environment
  • Charity receives a growing income stream that keeps growing after the end of the 10 years
  • Donor achieves maximum tax benefit (that may not have occurred in years 7, 8, 9 and 10 if the donor hadn’t had the taxable income to offset his annual gift).

Cerebral palsy is the most common form of disability in children and is a permanent physical condition that affects movement – CP is a lifelong condition. A personal interest in cerebral palsy provided the impetus for an anonymous donor to give $1.82M over three years to seed the establishment of the Queensland Cerebral Palsy Research & Rehabilitation Centre (QCPRRC). The Centre has now been approved as an official research centre in the School of Medicine at the University of Queensland. The QCPRRC is the research arm of three established clinical services: the Queensland Paediatric Rehabilitation Service (QPRS), the Queensland Cerebral Palsy Health Service, and the Queensland Children’s Gait Laboratory. The broad research goal for the program is to understand the neurodevelopment of children with CP and pre-term infants at risk of CP.


Private Ancillary Funds (PAFs) are private philanthropic funds and are unable to solicit or accept funds from the public - that is the role of Public Ancillary Funds.

Adam Scott Foundation

The Adam Scott Foundation is an example of one such Public Ancillary Fund. Established by Adam Scott, one of Australia's leading international golfers, the Foundation is able to accept donations from Adam's many sponsors.

The Adam Scott Foundation aims to support disadvantaged and underprivileged youth by providing opportunities to fulfil potential or overcome difficulties throughout life's journey. To this end, The Adam Scott Foundation kindly donated 20 new laptop computers to be used by sick kids at the Royal Children’s Hospital. Young patients confined to their beds or hospital rooms will be able to readily access computer technology to continue their school studies.

The CEO of the Royal Children’s Hospital Foundation, Karenlee Spillane, said that the laptop computers are a welcome addition to the school’s resources to work wonders for sick kids. “Our young patients come from all over Queensland and may be away from family and friends for long periods of time,” she said. “It’s important to bring a sense of a normal routine into the lives of young patients, even if it means not missing out on a school day. However, I am sure the students will equally welcome the wonderful added entertainment features which will keep them distracted from the hospital routine.”

Adam ScottAs a professional golfer, Adam Scott understands what it means to be away from home and a normal routine. “Once I had heard about his project I was keen to be involved,” he said. “It’s rewarding to be able to support kids in their education but I suspect they will be more excited about keeping in touch with family and friends using Skype.” The computers are loaded with education software generously provided by Scholastic in addition to entertainment programs, music and games.


The Australian Children's Trust was established by Nicola and Andrew Forrest (CEO Fortescue Metals) in 2001 with the aim of assisting underprivileged children and with a particular focus on addressing the needs of youth. The Forrests and their fellow Trust board members understand the enormous potential of children and in particular indigenous children. Their primary concern is ensuring future generations maximise this potential by providing people with a means to help themselves - to provide the fishing rod, not the fish.

With such an interest in indigenous health and social welfare issues, the Australian Children’s Trust decided to support the Health-e-Screen4Kids indigenous mobile health screening program. This three year pilot program concentrates on screening indigenous children from a study area at Cherbourg, some 300 kms NW of Brisbane. Chronic hearing conditions are a serious issue within rural and remote indigenous communities with up to 85-90% of children having hearing problems. ­Health-e-Screen4Kids aims to reach up to 90% of indigenous children on a regular basis, and screening them for hearing and sight issues. Data is fed to the Centre for Online Health at the Royal Children’s Hospital in Brisbane and consulting specialists can decide on the best medical intervention treatment required for each child. It is hoped that this cost-effective, highly efficient health-screening program, conducted by train indigenous healthcare workers, will be rolled out throughout Queensland in the future – and perhaps nationwide, where these health issues are prevalent.

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