Why the new financial year could be the smartest time for tax-effective giving

The tax benefits of philanthropy are no different in July than they were in June, but everything around them has changed. The new financial year turns from a reactive, deadline-driven decision into one where a client can begin to shift their focus to what legacy they wish to leave behind.

The mechanics of structured giving are straightforward and generous. A donation into a private ancillary fund (PAF), or into a giving fund within a public ancillary fund (PuAF), is fully tax-deductible in the year it is made, or the deduction can be spread over up to five years. Inside the fund, investment earnings are tax exempt and franking credits can be claimed, so capital committed to charity compounds over time. A minimum annual distribution flows to charities each year, while the balance remains invested for long-term growth.

A donation made early in the financial year buys the client something a late-June donation never can: time. Time inside the fund, where the capital enjoys many additional months of tax-free investment growth before the deduction is even claimed. And time outside it, to think carefully about which causes matter, to bring adult children into the conversation, and to shape the gift around the year's expected income rather than in reaction to it.

It also removes a constraint that catches so many people out in June. Establishing a PAF - recommended for starting balances of $1.5 million or more – typically takes around five weeks, which feels impossibly tight in the first week of June but entirely comfortable in July. Clients who want their own foundation, with their own trustee arrangements and investment strategy, can now build one properly. For those who want a simpler entry point, a giving fund in a public ancillary fund, such as the APS Foundation, can be opened in as little as one business day with a donation of $40,000 and remains an excellent option at any time of year.

Accountants occupy a unique position in this conversation because they see the triggers for structured giving before anyone else. The contract for a business sale, the disposal of an investment property, the vesting of employee shares, the year of exceptional profit – these all cross the accountant's desk long before the tax consequences crystallise. A client facing a large CGT event in the coming financial year is the textbook candidate for structured giving, because a deduction claimed in a high-income year is worth considerably more than the same deduction in an ordinary one.

The new financial year also happens to be the moment when clients are most engaged with their finances. Tax return season means accountants are sitting down with clients right now, reviewing the year just gone and, inevitably, discussing the tax bill it produced. That conversation is the natural opening. A client wincing at their assessment is a client ready to hear that next year could be planned differently, and that a charitable structure could reduce their tax while building something meaningful.

The evidence suggests this conversation is not happening nearly often enough. ATO data shows that more than half of Australians earning over $1 million a year claim no charitable donation deduction at all. These are clients with a genuine capacity to give, many of whom simply have not been shown the options. In our experience, the barrier is rarely reluctance. It is the absence of a conversation, and accountants are ideally placed to start it.

Structured giving is growing quickly in Australia. ATO statistics show PAF distributions over $914 million in FY2023-24, up 14 per cent, with more than 2,289 private ancillary funds operating nationally at that time (this number has since grown to 2,547). Giving by the main public offer PuAFs also grew by 12 per cent in FY2023-24 and a further 14 per cent the following year.

Our clients have committed over $2.9 billion to charity through the structures we support (as at 30 June 2025) and gifted more than $245 million to charity last financial year (FY2026). Accountants understand that clients who begin giving in a structured way describe it as some of the most satisfying financial planning they have ever done.

Raising philanthropy early positions accountants to build trust by opening conversations about values, family and legacy, and it frequently draws the next generation into the advisory relationship at precisely the time an estimated $5.4 trillion in intergenerational wealth begins changing hands.

Raising giving strategies strengthens client relationships at any time of the year, but giving these conversations the space and time they deserve can maximise these benefits. For clients who have just experienced the sting of a large tax bill, or who can see one coming, the message is simple: this financial year, plan your giving early.

Kevin Robbie is the head of the APS Foundation.