Private ancillary funds
During each financial year, a private AF must distribute at least 5% of the market value of the fund's net assets as valued at the end of the previous financial year.
If the fund provides property or benefits, the market value of the property or benefit is to be used in determining whether the fund has complied with the requirement to distribute.
While net assets are used to determine the fund’s minimum distribution, the amount of the distribution itself is not the net of any amount – for example, expenses of the fund.
The fund must distribute at least $11,000 – or the remainder of the fund if that is worth less than $11,000 – during that financial year if:
- the 5% is less than $11,000, and
- any of the expenses of the fund for that financial year are paid directly or indirectly from the fund’s assets or income.
This means that if a fund’s expenses are met from outside the fund, its minimum annual distribution is 5% of the market value of the fund’s net assets. If a fund’s expenses are paid out of the fund’s assets or income, its minimum distribution is $11,000, or 5%, whichever is greater.
No distribution is required during the financial year in which the fund is established if it was not formerly a PPF.
For more information, refer to private AF guideline 19.
Public ancillary funds
During each financial year, a public AF must distribute at least 4% of the market value of the fund's net assets as valued at the end of the previous financial year.
If the fund provides property or benefits, the market value of the property or benefit is to be used in determining whether the fund has complied with the requirement to distribute.
While net assets are used to determine the fund’s minimum distribution, the amount of the distribution itself is not net of any amount – for example, expenses of the fund.
The fund must distribute at least $8,800 or the remainder of the fund if that is worth less than $8,800, during that financial year if:
- the 4% is less than $8,800, and
- any of the expenses of the fund for that financial year are paid directly or indirectly from the fund’s assets or income.
This means that if a fund’s expenses are met from outside the fund, its minimum annual distribution is 4% of the market value of the fund’s net assets. If a fund’s expenses are paid out of the fund’s assets or income, its minimum distribution is $8,800, or 4%, whichever is greater.
No distribution is required during the financial year in which the fund is established or during the next four financial years.
While these guidelines do not set a minimum annual distribution for the first four financial years, the trustee should consider making an appropriate distribution each year in accordance with the purpose of the fund.
For more information, refer to public AF guideline 19.