Do you have a private NFP foundation?
Well you might want to read this…
The ATO have announced a crackdown on private foundations!
Yep, I’m serious.
On 3 February 2023, the accountants association told their members the ATO had given the heads up of a pending crackdown on private foundations.
To break it down quickly for you … this is a snippet of what Assistant Commissioner Jennifer Moltisanti said…
“We’ve received intelligence about the promotion of ‘private’ not-for-profit foundations created to avoid or evade tax.”
She went on to say…
“We’re taking this matter seriously and have already commenced investigations of potential promoters.”
“Where we form a view that individuals or entities are not acting in accordance with their obligations, we will take appropriate action. That may include a review or audit”.
Does this surprise us? NOT at all.
Warren Black has been predicting governments would crackdown on private foundations for some time now. Why?
Simply because it technically breaks the law and goes against the matrix or system. Some would say it’s unfair. And you have a good case.
However, it’s CRITICAL you see the situation for WHAT IT IS rather than what your fantasy world dictates it SHOULD BE.
To put it in other words, play with the cards you’ve been dealt and respond accordingly.
Any promoter telling you a “shortcut” private foundation is the way to go is skating on thin ice. (The ATO says they’ll target the promoters too, so if I was one of them, I’d be shaking in my boots right now.)
So far EVERY legal court case the government has taken against private foundations, they’ve won easily.
Let’s just say I wouldn’t like my odds fighting the ATO on this one.
The question arises … what’s next?
The game is about to change.
In our humble opinion, this article shows anyone trying to operate independently outside the system WILL get targeted and WILL shut down.
So what do you do from here?
If you have a private foundation, you have 3 choices…
1. Shut it down
Pretty straightforward. If you feel like it’s too risky, you can shut it down and set up a new structure to stay out of trouble.
2. Still do it and hope you don’t get caught
This is another option. And no doubt many will take it. Many are outraged at the unjust taxes in Australia and how the rich get favoured & small business gets penalised.
But before you do it, know this.
EVERY case the government has taken on against private foundations they’ve won and the individual(s) involved have faced serious consequences.
With a microscope under private foundations now, all I would say is consider the consequences carefully before embarking down this road.
3. Work within the system and see if you’re eligible for a PUBLIC foundation
If you’re paranoid about the crackdown on private foundations and want to be able to sleep at night … the good news is there’s an alternative.
Rather than fighting on the battle field (protesting and yelling) you become the King or Queen (strategist).
That is, learn to work WITHIN the system rather than fighting against it.
You do what the wealthy do in Australia. You learn to successfully co-exist with the system rather than fight against it.
I call it the “Neo and Morpheus” principle.
In the Matrix, Neo and Morpheus (and their colleagues) were able to enter and exit the matrix on their own terms. You can do the same.
You set up a public foundation and do what the wealthy do and be 100% legal.
How is this different? Well … the main difference is you’re registering your foundation within the system at the Australian National Charities Commission and the ATO.
(In a previous blog “Setting up a Charitable Foundation in Australia” we go into more depth on how they work).
Most of the benefits are the same and in some rare instances, even better than the private. That said, sometimes they aren’t as good but that’s the way it works.
What choice should you make?
As the captain of your own financial ship, it’s up to you.
A sovereign individual is self-empowered and carefully considers the consequences of the choice they make.
Personally, I’d much rather play it safe than potentially face severe penalties, stress and not sleep at night. No money is worth that risk.
If you’d like to find out more … foundations specialist Warren Black has recorded a free 8-part FREE series on foundations which you can view below.
(If you don’t have an account, make sure you create one first then come back to this link).
In this series we cover:
- Overview of foundations
- Different types of foundations, benefits of each and which one is best for you
- The risks of private foundations and why we DON’T endorse them
- And more
If you have friends or networks you know who have private foundations, this is critical information. It could be seriously costly for you and for them by not taking action on this issue. So feel free to share this article with them.
GWC Advice is Limited to Educational Advice.
The information provided by Global Wealth Club is provided for educational purposes only. It should not be relied upon as financial product, tax, asset protection or legal advice. None of the information provided by Global Wealth Club takes into account your personal objectives, financial situation or needs. You must make your own decision how to proceed.
If you want financial product advice that takes account of your particular objectives, financial situation or needs, please seek advice from an Australian Financial Services licensee before making any financial decision.
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