A Private Ancillary Fund (PAF) is a popular vehicle for structured giving in Australia, offering individuals, families, and businesses a way to support charities while enjoying tax benefits. But many people wonder: does a PAF have an expiry date, or can it last forever?
In this blog, we explore how long a PAF can operate, what influences its lifespan, and what happens if the fund is wound up.
Is There a Minimum or Maximum Lifespan for a PAF?
The good news is that a Private Ancillary Fund doesn’t have a set expiry date. A PAF can operate indefinitely as long as it complies with regulatory requirements and continues to meet its obligations.
This flexibility allows families or organisations to create a philanthropic legacy that spans generations. There’s no legal rule forcing a PAF to close after a certain number of years—it can keep running for as long as trustees wish and as long as it remains viable.
What Determines How Long a PAF Lasts?
Several factors influence how long a PAF continues operating:
- Compliance with regulations: A PAF must meet ongoing requirements, such as minimum annual distributions (currently 5% of assets), audited financial statements, and annual reporting to the Australian Taxation Office (ATO) and the Australian Charities and Not-for-profits Commission (ACNC).
- Trustee commitment: The willingness of trustees (and their successors) to manage the fund over time plays a key role in its longevity.
- Financial sustainability: The fund needs sufficient investment returns to cover grants and administration costs.
Ultimately, the combination of compliance, trustee engagement, and financial health determines whether a PAF continues or is wound up. Understanding the rules and responsibilities of a private ancillary fund is essential for anyone planning its long-term management.
Can a PAF Be Wound Up?
Yes—a PAF can be wound up at any time if the trustees decide to close the fund. There’s no minimum required lifespan.
When a PAF is wound up, all remaining assets must be distributed to eligible Deductible Gift Recipient (DGR) Item 1 charities in accordance with the trust deed and regulatory guidelines. Trustees may choose to wind up a PAF for various reasons, such as:
- Administrative burden becoming too great
- Lack of successor trustees
- The fund’s assets falling below a sustainable level
It’s essential that the winding-up process follows legal requirements to ensure compliance and preserve the charitable purpose of the fund.
What Happens to the Assets When a PAF Is Wound Up?
Any remaining assets in the PAF must be granted to eligible DGR Item 1 charities before the fund can be closed. Trustees cannot use these assets for personal benefit or non-charitable purposes.
In addition to making the final distributions, trustees must complete any outstanding reporting obligations and ensure the fund is properly deregistered with the ACNC and other relevant authorities.
Succession Planning for a PAF
If you’d like a PAF to continue beyond your own involvement, it’s important to plan for succession. Trustees can appoint family members, professional advisers, or other qualified individuals to take over management of the fund.
At least one trustee must continue to meet the “responsible person” requirement—a person with a degree of responsibility to the community, such as a lawyer, accountant, or doctor. Succession planning helps ensure continuity and compliance as trustees change over time.
Advantages of Keeping a PAF Long-Term
Choosing to maintain a PAF over the long term offers several benefits:
- Ability to build a philanthropic legacy across generations
- Ongoing tax-free investment growth within the fund
- Flexibility to adjust grant-making to meet evolving community needs or priorities
A long-term PAF allows donors and families to remain actively involved in philanthropy, shaping their charitable impact year after year.
Bringing It All Together
A Private Ancillary Fund doesn’t have an expiration date—it can last as long as it remains compliant, financially sustainable, and supported by committed trustees. Whether a PAF continues for decades or is wound up earlier depends on governance, resources, and family or organisational priorities.
If you’re considering setting up or managing a PAF, seeking professional advice can help you plan for both its immediate goals and its long-term future.