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

Last reviewed: 11 August 2014