The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

4.12.10.10 Disposal of Assets to a Private Trust or Private Company Before 01/01/2002

Date of effect

This topic has effect to controlled private trusts and controlled private companies from 1 January 2002.

Summary

This topic contains information on the following:

  • general provisions relating to individuals who, on 1 January 2002, are attributed with the assets (1.1.A.290) and income of a controlled private trust or controlled private company and who are serving a deprivation period due to the gifting of assets to the company or trust before 1 January 2002, and
  • treatment of deprivation for members of a couple (1.1.M.120), whether of the same sex or a different sex, who on 1 January 2002 are attributed with the assets of a structure and their attribution percentage is less than 100%.

Act reference: SSAct section 8(1)-'income', section 11(10A) Pre-pension year-disposal of assets

Policy reference: SS Guide 4.1.4 Deprivation related to trusts & private companies before 01/01/2002

General provisions

If, on 1 January 2002, a person (or members of a couple) are attributed with the assets of a private trust or private company and the person (or members of a couple) are subject to a deprivation period due to the gifting of assets to the trust or company before 1 January 2002, the deprivation amount is to be adjusted in line with the percentage of the assets of the structure attributed to them.

Example 1: On 1 January 2002 Bill and Bev, members of the same couple, are attributed with 100% ($300,000) of the assets of a private family trust. Bill and Bev are currently serving a 5-year deprivation period in respect to assets gifted to the trust on 3 June 1998. From 1 January 2002 the deprivation amount is to be reduced to nil. Bill and Bev control 100% of the assets and income of the trust therefore they are the ONLY attributable stakeholders and cannot gift to themselves.

Example 2: On 1 January 2002 Laurie is attributed with 40% of the assets of a private company. Laurie is currently serving a 5-year deprivation period in respect to assets he gifted to the company on 15 July 1999. Laurie's deprivation amount is $200,000. On 1 January 2002, Laurie's deprivation AMOUNT is reduced to $120,000 ($200,000-40%). Laurie's deprivation PERIOD remains the same.

Deprivation for members of a couple where the attribution percentage is less than 100%

If, on 1 January 2002, one or both members of a couple are attributed with a percentage of the assets and income of an entity which is less than 100%, and one or both of them are subject to a deprivation period due to the gifting of assets to the structure before 1 January 2002, the deprivation amount for each is reduced by the couple's combined attribution percentage.

Example 1: On 1 January 2002 Paul and Maureen, members of the same couple, are attributed with 40% and 20% of a private trust. Paul and Maureen are subject to a deprivation period in respect to assets gifted to the trust on 10 July 1998. Paul's deprivation amount is $150,000; Maureen's deprivation amount is $100,000. On 1 January 2002 Paul's deprivation amount is reduced to $60,000 ($150,000-60%). Maureen's deprivation amount is reduced to $40,000 ($100,000-60%). Their deprivation periods remain the same.

Example 2: On 1 January 2002, Vince is attributed with 60% of the assets of a private company. Vince and his partner Fran are serving a deprivation period in respect to assets gifted to the company on 3 November 1999. Fran is not an attributable stakeholder of the company. Vince and Fran's combined deprivation amount is $70,000. On 1 January 2002 Vince and Fran's (combined) deprivation amounts are reduced to $28,000 ($70,000-60%). Their deprivation periods remain the same.

Act reference: SSAct section 1208N Individual disposes of asset to a company or trust before 1 January 2002-individual is attributable stakeholder, section 1208T Individual disposes of income to company or trust before 1 January 2002-individual's spouse is attributable stakeholder, section 1207X Attributable stakeholder, asset attribution percentage and income attribution percentage, section 1123 Disposal of assets

Policy reference: SS Guide 4.1.1 General Provisions of Deprivation, 4.1.4 Deprivation related to trusts & private companies before 01/01/2002

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