C05/2010 Church and Charitable Funds

Amends DI No.

N/A

Replaces DI No.

N/A

Purpose

The purpose of this Departmental Instruction is to outline the changes to deeming exemptions for church and charitable funds.

Background

Under section 46L of the Veterans' Entitlements Act 1986 (VEA), deeming exemptions have been provided for specific accounts or funds operated by church and charitable organisations where the money is deposited in funds used principally for the purpose of capital expenditure on schools, churches or welfare services.

FaHC — S — IA has reviewed the relevance of the exemptions for church or charitable investments given that the deeming rules apply to all other financial investments regardless of the returns earned, or the purpose of the investment.  The Minister for Families Housing Community Services and Indigenous Affairs has signed a determination to cease deeming exemptions for new investments in church and/or charitable development funds made on or after 1 January 2010.  To ensure consistency, the Minister for Veterans' Affairs will also apply the revised policy to investments held by the veteran community.

Who will be affected

Any pensioners who make new or additional investments in previously exempt church or charitable funds will be affected.  Investments made prior to 1 January 2010 in exempt church or charitable funds will not be affected.

Determination

The exemption has been revoked by Veterans' Entitlements (Church and Charitable Development Fund Deeming Exemption) Determination 2010.

Implementation

The commencement date for the determination is 1 January 2010.

For p — ensioners who hold a church or charitable investment made prior to 1 January which was exempted from the deeming provisions, the deeming exemptions continue to apply.  In these cases, the actual return earned, derived or received by the pensioner on the investment will be counted as income and used to calculate their pension entitlements.

For new investments made on or after 1 January 2010, or additional funds placed in existing investments normal deeming provisions apply.

Mailout

FaHCSIA is notifying the organisations operating these funds to ensure they have time to adjust their administration processes if necessary.

Fact sheets

IS — 89 Deeming and Financial Assets has been update to reflect the changes.

Policy updates – CLIK

The following policy references in the CLIK Library have been reviewed and updated:

• 9.5.2 General Provisions for Deeming
• 9.5.3 Exemptions from Deeming

Forms

No DVA forms have been updated.  Details of investments in church or charitable funds will still need to be confirmed when applying for pensions or updating financial details so that deeming exemptions for investments made prior to 1 January 2010 can be applied.

Contact

The contact officers for this initiative are:

Anastasia Davy, Costing and Implementation x16 — 562

Eddie Bolanac, Investment Database Unit x27875