EXPLANATORY STATEMENT Issued by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing Taxation Administration Act 1953 Taxation Administration (Public Ancillary Fund) Guidelines 2022 The Taxation Administration Act 1953 (the Act) contains the administrative framework for the taxation and superannuation law in Australia. Section 426-103 in Schedule 1 to the Act provides that the Minister must formulate guidelines setting out rules for public ancillary funds and their trustees if the funds are to be, or are to remain, endorsed as deductible gift recipients under the taxation law. A deductible gift recipient is an entity or fund that can receive tax deductible gifts. The Taxation Administration (Public Ancillary Fund) Guidelines 2022 (the 2022 Guidelines) remakes and updates the Public Ancillary Fund Guidelines 2011 (2011 Guidelines) which sunset on 1 April 2022. Section 50 of the Legislation Act 2003 provides that all legislative instruments, other than exempt instruments, progressively sunset according to a prescribed timetable. Legislative instruments generally cease to have effect after 10 years unless their operation is extended such as by remaking the instrument. The 2011 Guidelines automatically repeal on 1 April 2022. The 2022 Guidelines remake the 2011 Guidelines with minimal changes to substantive requirements. Further explanation of the minor changes in the 2022 Guidelines from the 2011 Guidelines are set out at Attachment A. The 2022 Guidelines broadly follow the same structure of the 2011 Guidelines. Detailed information on the establishment, operation, and compliance requirements of public ancillary funds as set out in the 2011 Guidelines can be found on the Australian Taxation Office (ATO) website. One substantive change included in the 2022 Guidelines is the availability of merits review of the Commissioner of Taxation’s (the Commissioner) decisions on applications for a lower minimum annual distribution rate. This is consistent with the Government’s intention to have administrative decisions subject to independent review to ensure that decisions are made correctly under the law and to ensure that there is accountability for decisions made by public officials. The instrument also amends the Taxation Administration (Private Ancillary Fund) Guidelines 2019 to also allow merits review for private funds seeking a reduced annual distribution rate. The 2022 Guidelines are a legislative instrument for the purposes of the Legislation Act 2003. 1 of 11 Further details of the 2022 Guidelines are in Attachment A. Finding tables have been included at Attachment B to assist in identifying the corresponding provisions in the 2022 Guidelines to the 2011 Guidelines. The 2022 Guidelines commenced and applied from the day after their registration. The 2022 Guidelines also repealed the 2011 Guidelines from the commencement of the 2022 Guidelines. The Act does not specify any conditions that need to be met before the power to make the instrument may be exercised. [consultation statement] A Statement of Compatibility with Human Rights is at Attachment C. 2 of 11 ATTACHMENT A Details of the Taxation Administration (Public Ancillary Fund) Guidelines 2022 This Attachment sets out further details of the Taxation Administration (Public Ancillary Fund) Guidelines 2022 (the 2022 Guidelines). All references are to the 2022 Guidelines unless otherwise stated. All sections in the 2022 Guidelines replicate (and in some cases consolidate) the corresponding provisions in the Public Ancillary Fund Guidelines 2011 (2011 Guidelines) but have been updated in accordance with current drafting practice. This Attachment does not catalogue changes of a minor or machinery nature, such as references to ‘section’ rather than ‘guideline’. Where changes are made that require further explanation, these are identified and explained in this Attachment. Section 1 – Name This section provides that the name of the instrument is the Taxation Administration (Public Ancillary Fund) Guidelines 2022. Section 2 – Commencement This section prescribes that the instrument commences the day after it is registered on the Federal Register of Legislation. Section 3 – Authority The instrument is made under section 426-103 in Schedule 1 to the Taxation Administration Act 1953 (the Act). Section 4 – Schedules This section provides that existing instruments set out in a Schedule are amended or repealed