House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon Wayne Swan MP)

Chapter 2 Prescribed private funds

Outline of chapter

2.1 Schedule 2 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997), the Taxation Administration Act 1953 (TAA 1953) and the A New Tax System (Australian Business Number) Act 1999 to improve the integrity of prescribed private funds (PPFs). The amendments among other things:

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rename PPFs as private ancillary funds;

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move the full administration of those funds under the authority of the Commissioner of Taxation (Commissioner);

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give the Treasurer the power to make legislative guidelines about the establishment and maintenance of private ancillary funds; and

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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.

Context of amendments

History

2.2 PPFs came about as a response to a report on philanthropy in Australia by the Business and Community Partnerships Working Group on Taxation Reform dated 26 March 1999.

2.3 PPFs are a form of ancillary trust fund designed to encourage private philanthropy by providing private groups, such as businesses, families and individuals, with greater flexibility to start their own trust funds for philanthropic purposes.

2.4 Donations to PPFs are tax deductible. PPFs are limited to making distributions to other deductible gift recipients (DGRs) that either have been endorsed by the Commissioner, or are listed by name in the income tax law as a DGR.

2.5 A PPF may also be entitled to an income tax exemption if it is also endorsed as a charity or as an income tax exempt fund.

2.6 A PPF is one of two types of ancillary trust fund that can qualify for DGR status and income tax exempt status. The other type is a public ancillary fund, which is distinct from a PPF in that it must establish a public fund. Public ancillary funds are a common structure for community and fundraising foundations. Both types of ancillary fund act only as intermediaries between donors and organisations that can receive tax deductible donations.

2.7 The current PPF guidelines outline the process to be followed, and requirements to be met, in order to establish a PPF, including the requirement to establish a trust in accordance with a model trust deed. The current guidelines are unlegislated and therefore have no legal status in their own right.

Areas for improvement in the current arrangements for PPFs

2.8 The current PPF guidelines outline the requirements for PPFs in some detail, but not necessarily the objectives of those requirements. Furthermore, in cases of PPFs misusing their funds (for example, providing benefits to the donor) there is currently an 'all or nothing' penalty system. The Commissioner is generally limited to advising the Treasurer to declare that a particular organisation is no longer a PPF. De-listing of a PPF does not affect the deductions that have already been claimed, nor enable the protection of the PPF's philanthropic funds into the future.

2.9 The Government announced in the 2008-09 Budget a measure to improve PPF integrity which will be achieved by:

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amending the PPF guidelines to, among other things, ensure regular valuation of assets at market rates and increase the size of compulsory distributions;

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legislating the PPF guidelines; and

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giving the Australian Taxation Office (ATO) greater regulatory powers.

2.10 At present, the Governor-General is responsible for prescribing funds as PPFs and the Treasurer is responsible for declaring a fund to no longer be a PPF.

2.11 The amendments included in Schedule 2 to this Bill implement the Government's Budget announcement to give legislative force to the PPF guidelines and to give the ATO greater regulatory powers.

2.12 The remaining elements of the Government's Budget announcement will be implemented by way of amendments to the PPF guidelines which will be made by way of a legislative instrument.

2.13 The Government released a discussion paper in November 2008 seeking public input into the implementation of the new integrity arrangements. One hundred and thirty eight submissions were received in response to the paper.

2.14 Many respondents to the discussion paper were encouraged by the Government's interest in the philanthropic sector, and in particular the proposals to simplify arrangements for PPFs, and give the ATO greater regulatory powers. However, the majority of respondents also cautioned against increasing the minimum distribution rate for PPFs to a point where PPFs are unable to exist in perpetuity. The matter of a minimum distribution rate will be considered by the Government along with other matters before the new guidelines are finalised.

2.15 An exposure draft of Schedule 2 to this Bill was released on 14 May 2009. Fourteen submissions were received. There was general support for the changes proposed in this Schedule. However, a number of refinements were made as a result of minor concerns about transitional arrangements and the scope of the administrative penalty regime.

Summary of new law

2.16 The amendments bring the full administration of the PPF regime under the authority of the Commissioner. This means that PPFs would no longer be 'prescribed' in the relevant legal sense but instead be endorsed by the Commissioner. This would have the effect of giving the ATO full regulatory control over PPFs and allow the ATO to take more timely action to protect the capital of a PPF.

2.17 As PPFs will no longer be prescribed, they have been renamed private ancillary funds.

2.18 The amendments give the Treasurer the power to make guidelines about the establishment and maintenance of private ancillary funds. Those guidelines are enforced through the imposition of administrative penalties.

2.19 The Commissioner will also have the power to suspend or remove trustees of private ancillary funds that breach the guidelines or other relevant Australian laws. The Commissioner's decisions are reviewable by the Administrative Appeals Tribunal and the Federal Court of Australia.

2.20 In order to provide the Commissioner with the necessary regulatory powers to protect the charitable funds of private ancillary funds it is necessary to require that all of the trustees of private ancillary funds are corporate trustees.

2.21 The amendments also facilitate changes to the Australian Business Register (ABR) so that the register can expressly identify private ancillary funds and the provision in the ITAA 1997 under which a DGR is entitled to be endorsed.

2.22 The amendments also introduce new secrecy disclosure rules. The Commissioner will be able to disclose to State and Territory Attorneys-General breaches by charities of state laws relating to trusts and charities.

Comparison of key features of new law and current law

Detailed explanation of new law

Full administration by the Commissioner

2.23 The Commissioner will have full administration of private ancillary funds. The Governor-General and Treasurer will no longer have a role in determining whether a particular trust fund is entitled to be a PPF. [ Schedule 2, items 4 and 22, item 2 in the table in subsection 30-15(2 ) of the ITAA 1997 and Subdivision 426-D in Schedule 1 to the TAA 1953 ]

2.24 A definition of 'private ancillary fund' (new term for PPF) is being included in the ITAA 1997 and TAA 1953. A trust fund that meets the definition will be entitled to be endorsed as a DGR (subject to the general requirements that apply to all entities seeking endorsement as a DGR). [ Schedule 2, items 4 and 22, item 2 in the table in subsection 30-15(2 ) of the ITAA 1997 and section 426-105 in Schedule 1 to the TAA 1953 ]

2.25 The Commissioner will be responsible for considering whether a trust fund meets the definition of a 'private ancillary fund' and whether that fund is then entitled to be endorsed as a DGR. [ Schedule 2, items 5, 6 and 7, paragraph ( c ) of the cell in item 2 in the table in subsection 30-15(2 ), paragraph 30-17(1 )( b ) and subsection 30-125(1 ) of the ITAA 1997 ]

2.26 The Commissioner will maintain his or her current role in assessing a trust fund's entitlement for endorsement as an income tax exempt entity.

2.27 A trust is a private ancillary fund if:

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all the trustees of the trust are constitutional corporations; and

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all the trustees have agreed to comply with the guidelines made by the Treasurer.

2.28 PPFs were not previously required to have corporate trustees. However, for Constitutional reasons, it has been necessary to impose this new requirement on private ancillary funds in order to provide the Commissioner with additional regulatory powers.

2.29 A constitutional corporation is a corporation covered by section 51(xx) of the Constitution . A corporation established and operated solely as a trustee of a private ancillary fund would be considered a constitutional corporation. Professional trustee corporations would also be considered constitutional corporations.

2.30 Imposing a requirement for private ancillary funds to have a corporate trustee also ensures that directors meet a minimum standard of behaviour. The Corporations Act 2001 details the circumstances under which an individual will be automatically disqualified from managing corporations. These include where the person has:

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a conviction on indictment of an offence in relation to decisions that affect the business of a corporation or its financial standing;

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an offence involving a contravention of the Corporations Act 2001 punishable by imprisonment for 12 months or more;

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an offence involving dishonesty punishable by more than three months imprisonment;

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conviction for an offence against the law of a foreign country punishable by more than 12 months imprisonment; or

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is an undischarged bankrupt.

[ Schedule 2, item 22, section 426-105 in Schedule 1 to the TAA 1953 ]

2.31 In order for a trust fund to become a private ancillary fund, the trustee(s) will need to agree to be bound by the guidelines. The trustee(s) will indicate their agreement to be bound in a form approved by the Commissioner. [ Schedule 2, item 22, section 426-105 in Schedule 1 to the TAA 1953 ]

2.32 A private ancillary fund will be entitled to be endorsed as a DGR provided they have an Australian Business Number, meet the existing conditions applying to both types of ancillary funds and comply with the guidelines. [ Schedule 2, item 7, subsection 30-125(1 ) of the ITAA 1997 ]

2.33 If the Commissioner refuses to endorse a prospective private ancillary fund as a DGR, the fund can request a review of the decision by the Commissioner, Administrative Appeals Tribunal or appeal the decision to a Court under section 426-35 in Schedule 1 to the TAA 1953.

Private ancillary fund guidelines

2.34 The Treasurer will be able to make binding guidelines about the establishment and maintenance of a private ancillary fund. [ Schedule 2, items 15 and 22, subsection 995-1(1 ) of the ITAA 1997 and section 426-110 in Schedule 1 to the TAA 1953 ]

2.35 Compliance with the guidelines is a requirement for a private ancillary fund's continued endorsement as a DGR. [ Schedule 2, item 7, subsection 30-125(1 ) of the ITAA 1997 ]

2.36 The guidelines are a legislative instrument and are therefore subject to disallowance by either House of Parliament.

2.37 The guidelines may specify requirements about the purpose, structure and governing rules of a private ancillary fund. The guidelines may also specify matters about the ongoing governance and permitted and prohibited activities of the fund.

2.38 It is envisaged that the guidelines will specify matters such as the role and purpose of private ancillary funds; the class of entities that the fund may donate to; that the fund be not-for-profit in character; the individuals that may be directors of the fund's trustee; the minimum distribution requirements of the fund; the permitted investment strategies of the fund; and any ongoing audit requirements.

2.39 The guidelines will ensure that private ancillary funds have appropriate governance arrangements, are properly accountable and act in a manner consistent with an entity holding philanthropic funds for a broad public benefit.

Income tax returns

2.40 Under the existing non-binding guidelines, PPFs agree to provide the ATO with an annual information statement. There is currently no consequence for failing to comply with this requirement.

2.41 The Government does not intend to introduce new reporting laws for private ancillary funds. Instead, commencing from the 2009-10 income year, private ancillary funds will be required to lodge an annual income tax return. The income tax return for private ancillary funds will be similar to the current annual information statement.

2.42 Private ancillary funds that fail to lodge their income tax return by the relevant due date will be subject to the general penalty regime that applies to all taxpayers who do provide their income tax return to the Commissioner by the due date.

Administrative penalties

2.43 Administrative penalties will be imposed on trustees and the directors of trustees that hold a private ancillary fund out as being endorsed; entitled to be endorsed; or entitled to remain endorsed; as a DGR. [ Schedule 2, item 22, subsections 426-120(1 ) and ( 2 ) in Schedule 1 to the TAA 1953 ]

2.44 The administrative penalties will largely result from a private ancillary fund failing to comply with the guidelines. This is because a condition of a private ancillary fund's endorsement as a DGR is that it must comply with the guidelines.

2.45 While the TAA 1953 imposes the penalty, the guidelines will determine the amount of the penalty. The amount of the penalty has been left to be determined by the guidelines so that any administrative penalty can be appropriately tailored to the nature and size of the breach taking account of the trustee's level of culpability and the particular requirement that the private ancillary fund has not complied with. [ Schedule 2, item 22, subsection 426-120(3 ) in Schedule 1 to the TAA 1953 ]

2.46 The trustees of a private ancillary fund are jointly and severally liable to any administrative penalty.

2.47 As corporate trustees of private ancillary funds usually have little capital, it is necessary to also impose the penalty on the directors (where any of the penalty cannot reasonably be recovered from a trustee) to effectively ensure that a private ancillary fund complies with the guidelines. Exposure to this liability promotes a minimum level of accountability amongst directors for decisions that affect the private ancillary fund.

2.48 In determining whether a penalty can reasonably be recovered from a trustee regard should be had to the administrative practicality of recovering the penalty from the trustee, the amount of time the penalty has remained unpaid and the likelihood of successfully recovering the penalty from the trustee. The Commissioner must take reasonable steps to recover the penalty from the trustee before concluding that the penalty can not reasonably be recovered.

2.49 A director that did not take part in the management of the trustee at the time the private ancillary fund breached its obligations may in certain circumstances avoid an administrative penalty.

2.50 The circumstances that the director must demonstrate are that the director was not aware of the breach and it would not have been reasonable to expect them to have been aware of the breach; or the director took all reasonable steps to ensure that the breach did not occur; or there were no such steps that the director could have taken. [ Schedule 2, item 22, subsections 426-120(5 ) to ( 8 ) in Schedule 1 to the TAA 1953 ]

2.51 Directors of trustees that are registered trustee companies are not liable to these administrative penalties, as registered trustee companies have an appropriate level of prudential supervision and regulation to cover their liabilities. Registered trustee companies are those companies that are governed by the relevant state trustee companies Acts.

2.52 The administrative penalty must not be reimbursed from the fund. [ Schedule 2, item 22, subsection 426-120(4 ) in Schedule 1 to the TAA 1953 ]

2.53 Directors should be aware of the process for making decisions, as governed by the Corporations Act 2001 .

2.54 Further, the Commissioner has the discretion to remit all or a part of the penalty under the normal machinery provisions for penalties.

Suspension or removal of trustees

The Commissioner's powers

2.55 The Commissioner will have the power to remove or suspend a trustee of a private ancillary fund that breaches the guidelines or any other Australian law. [ Schedule 2, item 22, section 426-125 in Schedule 1 to the TAA 1953 ]

2.56 It is expected that the Commissioner would only take such action in situations that involve serious non-compliance by a private ancillary fund.

2.57 Whether the Commissioner decides to merely suspend a trustee or to remove them permanently will depend upon the nature of a breach, the circumstances of the trustee and the history of compliance.

2.58 The Commissioner is being provided with these powers in order to protect the assets of the private ancillary fund and the ongoing integrity of the tax law.

2.59 If the Commissioner chooses to suspend a trustee, it will be for a period that the Commissioner determines by reference to the circumstances. The Commissioner may also modify the suspension period as he or she considers necessary. [ Schedule 2, item 22, subsections 426-125(2 ), ( 4 ) and ( 6 ) in Schedule 1 to the TAA 1953 ]

2.60 If the Commissioner suspends or removes a trustee, he or she must give the trustee a written notice advising them of the decision, explaining the reasons why the decision was taken and in the cases of suspension, setting out the period of suspension. The trustee may seek a review of the decision by the Administrative Appeals Tribunal or a court following the process outlined in Part IVC of the TAA 1953 (taxation objections, reviews and appeals). [ Schedule 2, item 22, subsections 426-125(3 ), ( 5 ), ( 7 ) and ( 8 ) in Schedule 1 to the TAA 1953 ]

If a trustee is suspended or removed

2.61 When a trustee is suspended or removed, the Commissioner must appoint an acting trustee to undertake the duties of trustee until the suspension period has ended or a replacement trustee is appointed (as the case may be). [ Schedule 2, item 22, subsections 426-130(1 ) and ( 2 ) in Schedule 1 to the TAA 1953 ]

2.62 An acting trustee may be an individual, body corporate or a Government authority. The Commissioner may also appoint him or herself as acting trustee. The acting trustee must have agreed to comply with the private ancillary fund guidelines. The Commissioner cannot appoint an acting trustee who is not a constitutional corporation for a period exceeding 6 months. [ Schedule 2, item 22, subsection 426-130(3 ) to ( 5 ) in Schedule 1 to the TAA 1953 ]

2.63 The Commissioner may determine the terms and conditions upon which an acting trustee is appointed. The terms and conditions determined by the Commissioner are valid despite any limitation in an Australian law or the governing rules of the private ancillary fund. [ Schedule 2, item 22, section 426-135 in Schedule 1 to the TAA 1953 ]

2.64 The Commissioner may also give directions to an acting trustee to do or not to do certain things. The acting trustee commits an offence if they contravene a direction. [ Schedule 2, item 22, section 426-160 in Schedule 1 to the TAA 1953 ]

2.65 The Commissioner may terminate the appointment of an acting trustee at any time. If the Commissioner were to do so, he or she would be required to appoint a new acting trustee. [ Schedule 2, item 22, section 426-140 in Schedule 1 to the TAA 1953 ]

2.66 An acting trustee may resign as acting trustee. However, the acting trustee must do so in writing given to the Commissioner. The resignation is not effective until seven days after the Commissioner receives the written resignation. [ Schedule 2, item 22, section 426-145 in Schedule 1 to the TAA 1953 ]

2.67 When the Commissioner appoints an acting trustee, the Commissioner must make an order transferring the property of the private ancillary fund from the former or suspended trustee to the acting trustee. The order has the legal effect of immediately transferring that property subject to certain limitations. [ Schedule 2, item 22, subsections 426-150(1 ) and ( 3 ) in Schedule 1 to the TAA 1953 ]

2.68 The property covered by the order is both legal and equitable property.

2.69 The Commissioner must also make a subsequent order transferring the property when the appointment of an acting trustee ends. The subsequent property transfer order may be to a new acting trustee, to the previously suspended trustee or to a newly appointed trustee as appropriate. [ Schedule 2, item 22, subsection 426-150(2 ) in Schedule 1 to the TAA 1953 ]

2.70 The Commissioner's order to transfer property does not immediately transfer property if the property is of a kind whose transfer is registrable under an Australian law. Instead, the property is transferred only after the registration process has been completed. [ Schedule 2, item 22, subsection 426-150(4 ) in Schedule 1 to the TAA 1953 ]

2.71 A former trustee has a number of obligations to comply with following their suspension, removal or the ending of their appointment. A former trustee must:

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provide the acting or new trustee with all books relating to the fund's affairs that is in their custody, possession or control;

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provide notice to the acting or new trustee identifying all the property of the fund (as much as they possibly can); and

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provide notice to the acting or new trustee explaining how that property was accounted for.

[ Schedule 2, item 22, subsections 426-165(1 ) to ( 3 ) in Schedule 1 to the TAA 1953 ]

2.72 The acting or new trustee may also require the former trustee to assist with the transfer of the property of the private ancillary fund. The acting or new trustee must do so by mandating that the former trustee take certain actions necessary for the transfer of a specific item of property to the acting or new trustee. [ Schedule 2, item 22, subsection 426-165(4 ) in Schedule 1 to the TAA 1953 ]

2.73 A former trustee will commit an offence if they do not comply with these obligations. [ Schedule 2, item 22, subsection 426-165(5 ) in Schedule 1 to the TAA 1953 ]

2.74 Former trustees are strictly liable for their actions relating to books, identification of property and transfer of property (that is, liable regardless of fault). This liability has been established to compel former trustees which have already been removed on the grounds of misconduct to deal fairly with the trust's property during the handover period. [ Schedule 2, item 22, subsection 426-165(6 ) in Schedule 1 to the TAA 1953 ]

Changes to the Australian Business Register

2.75 For each private ancillary fund, the ABR must include a statement on the ABR indicating that the fund is a private ancillary fund. [ Schedule 2, items 1 and 22, paragraph 26(3 )( ga ) of the A New Tax System ( Australian Business Number ) Act 1999 and section 426-115 in Schedule 1 to the TAA 1953 ]

2.76 These additional requirements will improve the integrity and transparency of private ancillary funds.

2.77 For each DGR, the ABR must identify the item in the table in subsection 30-15(2) of the ITAA 1997 under which an entity qualifies as a DGR. Consistent with the endorsement requirements, this requirement is limited to DGRs covered by items 1, 2 and 4 in the table in subsection 30-15(2). [ Schedule 2, item 9, subsection 30-229(2 ) of the ITAA 1997 ]

2.78 These changes to the ABR will assist ancillary funds determine which DGRs they can donate monies to. By way of background, for tax integrity reasons, ancillary funds are forbidden from donating to one another. However, the ABR currently does not distinguish between different types of DGRs so it can often be difficult for an ancillary fund to confirm the eligibility of a DGR to receive donations from them. These changes to the ABR seek to reduce these difficulties by distinguishing DGRs on the ABR by type.

Disclosure of information to the states and territories

2.79 The Commissioner will be authorised to disclose information to State and Territory Attorneys-General that relates to the non-compliance of a charity or a private ancillary fund with an Australian law.

2.80 The disclosure must be for the purposes of relevant State and Territory Attorneys-General administering a state or territory law governing trusts or charities. [ Schedule 2, items 3 and 17, subsection 16(4 ) of the ITAA 1936 and subsection 3C(4 ) of the TAA 1953 ]

2.81 The States and Territories have the primary responsibility for trust law and charities law. State and Territory Attorneys-General are the 'protectors' of charities. Traditionally, they have had the sole responsibility for ensuring that trustees of charitable trusts act in accordance with a trust's governing rules and relevant state law. The Attorneys-General are also the only authority with standing to take legal action in protection of a charitable trust.

2.82 In order to assist the State and Territory Attorneys-General perform their role, it is appropriate that the Commissioner be able to provide them with information concerning non-compliance that the ATO has identified as part of its compliance activities. Collaboration between ATO and State and Territory Attorneys-General should improve the integrity of charities and the protection of philanthropic funds.

Application and transitional provisions

General application

2.83 The amendments generally apply from 1 October 2009. [ Clause 2 ]

Transitional rules for existing PPFs

2.84 Existing PPFs will become private ancillary funds on 1 October 2009. The Commissioner will be taken to have endorsed all those PPFs that become private ancillary funds as DGRs on 1 October 2009. In order to comply with the new definition of private ancillary fund, all existing PPFs will also be taken to have agreed to comply with the guidelines from 1 October 2009. This mechanism will ensure a smooth transition of existing PPFs into the new regime. [ Schedule 2, items 27, 29 and 30 ]

PPFs with non-corporate trustees

2.85 Private ancillary funds (that were PPFs before 1 October 2009) will not be required to replace their non-corporate trustees with corporate trustees. Mandating the replacement of trustees will create unnecessary compliance costs for existing trustees. [ Schedule 2, item 28 ]

2.86 Those private ancillary funds that continue to have non-corporate trustees will not be subject to the Commissioner's new powers to suspend or remove trustees. It is for constitutional reasons that the new powers cannot be extended to these existing PPFs.

2.87 In cases of serious non-compliance by private ancillary funds with non-corporate trustees, the Commissioner will have the ability to refer the matter to the relevant State or Territory Attorney-General for action.

2.88 If at any point after 1 October 2009, a private ancillary fund with non-corporate trustees replaces all its non-corporate trustees with corporate trustees, the private ancillary fund will become subject to the Commissioner's new powers.

2.89 Under the existing integrity arrangements, PPFs and other ancillary funds are prevented from distributing to one another. However, in order to assist PPFs move fully into the new regime, private ancillary funds with non-corporate trustees will be permitted to transfer all of their property to another private ancillary fund with trustees that have only corporate trustees. This transitional arrangement will give transitional private ancillary funds the option of restructuring their trustee arrangements by establishing a new private ancillary fund to hold the assets of the old fund. [ Schedule 2, item 31 ]

2.90 Transitional private ancillary funds that wish to restructure (either by establishing a new private ancillary fund, or replacing their existing trustees) should make themselves familiar with the state and territory laws on replacing trustees or transferring assets between trusts.

PPFs that have been approved by the Treasurer but not prescribed by 1 October 2009

2.91 Under existing arrangements, there is often a delay between the time the Treasurer agrees to recommend to the Governor-General that a trust fund be prescribed as a PPF and date the fund is prescribed. The date a fund is prescribed is usually backdated to the day the Treasurer agrees to recommend prescription. Both the prospective funds and the Commissioner would usually act on the advice of the Treasurer until the procedural formalities for prescription are completed.

2.92 With the transfer of responsibility for these funds to the Commissioner, there is likely to be a number of funds that are yet to be prescribed. For reasons of certainty and simplicity, the Treasurer will be given the power to make a declaration after 1 October 2009 listing those funds that have been approved but not yet prescribed. The declaration will have the effect of deeming those listed funds to have been prescribed from the date set out in the determination. [ Schedule 2, item 26 ]

Progressive changes to the ABR

2.93 The Australian Business Registrar will be given until 1 January 2010 to update the ABR with the additional DGR endorsement category details. The changes to the ABR are commencing at a later time to give the Registrar sufficient time to make the necessary systems changes in support the new requirements. [ Schedule 2, items 23 and 24, subsection 30-229(2A ) of the ITAA 1997 and subsection 426-115(1 ) in Schedule 1 to the TAA 1953 ]

Consequential amendments

2.94 Use of the term 'prescribed private fund' is amended to now refer to 'private ancillary fund'. [ Schedule 2, items 4 and 10, section 30-15 and paragraph 31-10(1 )( b ) of the ITAA 1997 ]

2.95 References to 'prescribed private fund' are being repealed and replaced with a reference to the definition of private ancillary fund. [ Schedule 2, items 2, 11, 13 to 16, subsection 6(1 ) of the ITAA 1936, paragraph 31-10(2 )( b ) and subsection 995-1(1 ) of the ITAA 1997, and subsection 2(1 ) of the TAA 1953 ]

2.96 Table of tax related liabilities in other legislation in the TAA 1953 is amended to refer to the new penalties. [ Schedule 2, item 18, item 140 in the table in subsection 250-10(2 ) in Schedule 1 to the TAA 1953 ]