UPDATE 6 May 2020: COVID-19 - Ancillary Funds, Disaster Relief Funds and AGM for companies
May 2020 | News | Jae Yang and Posy McGrane
6 May 2020 Update: In response to the COVID-19 crisis, the Australian Government has announced several measures designed to help charities and other non-profits manage the economic impact of COVID-19 and to make it easier to operate during this period.
These measures include:
• Amendments to ancillary fund guidelines to incentivise increased charitable giving in 2019-20 and 2020-21;
• A declaration that the COVID-19 pandemic is a disaster for the purpose of allowing disaster relief funds to receive tax-deductible donations; and
• Temporary amendments to the Corporations Act 2001 (Cth) to allow companies to convene annual general meetings (AGMs) and other meetings, entirely online.
Amendments to ancillary fund guidelines to incentivise giving
On 6 May 2020, Senator The Hon. Zed Seselja announced that the Federal Government would create an incentive for philanthropic funds to increase their distributions to charities during 2019-20 and 2020-21. The incentive will be achieved by way of amendments to the ministerial guidelines for public and private ancillary funds to provide them with a credit where their total distributions in 2019-20 and 2020-21 are at least four percentage points above the minimum required distributions (4% of the value of net assets for public ancillary funds and 5% for private ancillary funds). The credit available will be equal to half the percentage points by which their total distributions exceed the minimum and may be used to reduce the minimum distribution by up to one percentage point in 2021-22 and future financial years until the credit is exhausted.
The proposed amendments and guidance are to be made available on ato.gov.au in due course.
COVID-19 pandemic declared a disaster
In the same announcement, Senator Seselja declared the COVID-19 pandemic as a disaster for the purpose of allowing disaster relief funds to receive tax deductible donations. Funds that are established for the relief of people affected by the COVID-19 pandemic (COVID-19 Disaster Funds) will be eligible to apply for endorsement as Deductible Gift Recipient (DGR) with the Australian Taxation Office (ATO), subject to registration with the Australian Charities and Not-for-profits Commission (ACNC). Donations to COVID-19 Disaster Funds will be tax-deductible when made within 2 years of 18 March 2020, being the date declared as the first day of the disaster.
Annual General Meetings (AGMs) and other meetings permitted to be held entirely online
On 5 May 2020, The Hon. Josh Frydenberg MP announced that temporary changes have been implemented to enable companies to convene AGMs and other meetings entirely online. These and other recent changes will mean that for a period of 6 months:
- Companies are now able to convene AGMs and other prescribed meetings online;
- Company boards are now able to provide notice of AGMs to shareholders and members using email; and
- Company boards may now achieve a quorum with shareholders and members attending online.
Meetings must continue to provide shareholders and members with a reasonable opportunity to participate. As a result, we expect that shareholders and members will be able to put questions to board members online and vote online.
These changes will apply until 5 November 2020 and follow legislative changes by Federal and State governments to modify certain requirements that apply to the preparation, signing and witnessing of documents during the COVID-19 pandemic.