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.

4.7.3.50 Assessable Assets from Non-discretionary Trusts pre-01/01/2002

Summary

This topic provides information on the following:

  • assessment of assets (1.1.A.290) from non-discretionary trusts (1.1.N.100),
  • description of asset assessment for different roles within trusts, and
  • summary of assessable assets for pensions, benefits and allowances.

Note: For the assets test treatment of general business items also see 4.7.1.40 and 4.7.1.50. The assessment of general business items applies to all business structures including sole traders, partnerships, private trusts and private companies.

Assessment of assets

The following table describes how the assets from a non-discretionary trust are assessed.

If an income support recipient is… Then they…
a CO-BENEFICIARY of the assets of a non-discretionary trust,

have an asset. The value of the asset is determined by the share of the trust held by each beneficiary, as set out in the trust deed.

Example: If an income support recipient is one of 5 beneficiaries of a trust that has $100,000 in assets and the terms of the trust provide that the beneficiaries have an equal interest, then the value of each beneficiary's interest is $20,000.
the SOLE beneficiary of the assets of a non-discretionary trust, have beneficial ownership of the trust assets which are considered to be theirs, UNLESS the assets are exempt.

Description of asset assessment for different roles within trusts

The following table describes the roles of individuals within the trust and the treatment of their trust related assets. A person may have more than one role, and each needs to be considered separately.

Role Description
Settlor Is NOT usually entitled to a share of the trust assets, but deprivation of assets provisions MAY apply for gifts to the trust.
Contributor

Loans made to the trust are assessable assets, and deprivation of assets MAY apply for gifts to the trust.

Deeming applies to the balances of outstanding loans to the trust.
Beneficiary Assessment is based on the total asset value divided by the recipient's share of ownership, as specified in the trust deed.
Trustee Is NOT entitled to a share of the trust assets unless they are also a beneficiary, although asset/s may be registered in their name.

Summary table of assessable assets

The following table summarises the assessment of assets from non-discretionary trusts, for pensions, benefits and allowances.

Type of Asset Description
Interest in the trust assets Assess using the amount or proportion as set out in the trust deed.
Beneficiary account

Assess as an asset of the income support recipient.

Explanation: The money is put in the account by the trust usually as reinvested trust distributions or interest. These may be called beneficiary loan accounts, current accounts or beneficiary current accounts.
Loan to a trust

Assess as an asset of the income support recipient.

Explanation: The money has been loaned to the trust by the recipient. These may also be called beneficiary loan accounts or loans.
Gifting to a non-discretionary trust

The amount of the deprivation is the difference between the value of the asset/s gifted and any resulting increase in the value of the income support recipient's interest in the trust assets, LESS the allowable gifting amount.

4.1 Deprivation of income & assets
Assets gifted to a trust Maintain the amount which was disposed of, as a deprived asset for 5 years from the date of disposal, LESS the allowable gifting limit.
Managed investments and shares sold/transferred to the trust Deprivation provisions may apply if adequate financial consideration (1.1.A.55) is NOT received.

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