On 10 September 2009, Tax Laws Amendment (2009 Measures No 4) Bill 2009 was passed by the Senate and is now awaiting royal assent.

The Bill amends the tax law to improve the integrity of prescribed private funds (PPFs). The amendments among other things:

• rename PPFs as private ancillary funds (PAFs)
• move the full administration of those funds under the authority of the Commissioner of Taxation (the Commissioner)
• allow the Commissioner to endorse PAFs as deductible gift recipients (DGRs)
• give the Treasurer the power to make legislative guidelines about the establishment and maintenance of PAFs
• give the Commissioner the power to impose administrative penalties on trustees that fail to comply with the guidelines and to remove or suspend trustees of non-complying funds.

Under the new law, The Commissioner will be responsible for determining whether a trust fund is a PAF (according to a legislative definition) and determining whether that fund is entitled to be endorsed as a DGR. The Commissioner’s decision is reviewable by the Administrative Appeals Tribunal and the Courts. The Treasurer will have the power to make binding guidelines about the establishment and maintenance of PAFs. The guidelines are a legislative instrument and are subject to review by the parliament. The guidelines are enforced through the imposition of administrative penalties.

For constitutional reasons, all of the trustees of PAFs must be corporate trustees.

The Commissioner will be able to disclose information to state and territory Attorneys-General where he or she identifies a breach by a charity or PAF of a state or territory law relating to trusts or charities.

The Australian Business Register will expressly identify whether an entity is a PAF and will expressly identify under what provision an entity is entitled to be endorsed as a DGR.