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A charitable trust is a trust established specifically for charitable purposes. The main differences charitable trusts have with other types of trusts are:
- Generally the “rule against perpetuities” does not apply to them so they may exist forever;
- They are trusts for charitable purposes only (e.g., to relieve poverty) and therefore there are no specifically named beneficiaries;
- Because of their public nature they are heavily controlled by the courts and legislation; and
- There are significant tax concessions.
- Charitable trusts have significant taxation benefits. There are two key endorsements from the Australian Taxation Office (ATO) that are relevant to tax exemptions.
- A ‘charitable’ entity is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997);
- Division 30 allows for tax deductions for gifts made to certain entities endorsed by the Commissioner of Taxation as ‘deductible gift recipients’ (DGR).
- Charitable trusts are also given tax concessions under fringe benefits legislation. The Fringe Benefits Tax Assessment Act 1986 (FBTAA) allows for a benefit provided to an employee of a public benevolent institution to be exempt from the fringe benefits tax (FBT).
- A charitable discretionary trust does not have to file tax returns.
- Charitable discretionary trusts do not have to be wound up after 80 years.
- The objects are limited to charitable purposes in the charitable discretionary trust
- The beneficiaries cannot be limited to the claimant group only in a charitable discretionary trust. They can however be limited to Aboriginal people living in a particular area, and may be able to give preference to the claimant group.
- Charitable discretionary trusts are subject to supervision
If you would like more information on trust structures and want to learn more about the most appropriate type of trust or trusts for your situation, please click here to submit an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.
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The Quinn Group operates Quinn Consultants, Quinn Lawyers, Quinn Financial Planning and Quinn Financial Solutions. The Quinn Group provides related information in regard to legal, accounting and financial planning issues. Liability limited by a scheme approved under Professional Standards Legislation* *other than for the acts or omissions of financial services licensees.