4.12.10.20 Disposal of Assets to a Private Trust or Private Company On or After 01/01/2002

Date of effect

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

Disposal of assets to a private trust or private company by an attributable stakeholder

If a person gives an asset (whether fixed or financial) to a private trust or private company on or after 1 January 2002, and the person is an attributable stakeholder or as a result of the transfer, is subsequently attributed with a percentage of the assets of the structure, the asset will NOT be a deprived asset of the person. (Subject to the percentage of the assets of the structure attributed to the person.)

Example: Bill gifts a holiday home worth $150,000 and financial investments of $30,000 to a private family trust on 5 June 2002. Bill is the appointor and trustee of the trust and is attributed with 100% of the assets and income of the trust. The deprivation rules do not apply to Bill as he is the SOLE attributable stakeholder and he cannot 'gift to himself'.

Note: This would also be the case for members of a couple (1.1.M.120) who were the ONLY attributable stakeholders.

Where a person who is a part-controller of a private trust or private company entity independently injects capital into the entity, they will be assessed with deprivation in inverse proportion to their level of control in the entity.

Example: Jenny is attributed with 30% of the assets and income of a family trust. On 10 July 2002, Jenny gives $50,000 to the trust. Jenny's deprivation amount is $25,000 ($50,000 - (30% of $50,000) - $10,000). She serves a 5-year deprivation period from the date of the gift.

Disposal of assets to a private trust or private company by a non-attributable stakeholder

If a person transfers assets (whether fixed or financial) to a controlled company or trust and at the time of the transfer is NOT attributed with the assets or income of the entity, the person will be subject to the deprivation provisions of the Act for the amount s/he has 'gifted' to the entity.

If that person is subsequently attributed with the assets and income of a controlled company or trust, whether wholly or partially, the deprivation period and amount are NOT changed.

Example: On 10 February 2002, Richard 'gifts' $50,000 to a controlled private trust. He is subject to a 5-year deprivation period for the amount he has gifted. On 3 June 2002, Richard is attributed with 40% of the assets and income of the trust. Richard's deprivation period or amount does not change as he was not an attributable stakeholder, (or did not become an attributable stakeholder) of the trust at the time the transfer of assets occurred.

Act reference: SSAct section 1208K Individual disposes of asset to company or trust, section 1208Q Individual disposes of ordinary income to company or trust

Policy reference: SS Guide 4.1.1 General Provisions of Deprivation

Last reviewed: 9 November 2015