18.104.22.168 Distributions of the Income of a Private Trust or Private Company to a Non-attributable Stakeholder
Date of effect
This topic has effect to controlled private trusts and controlled private companies from 1 January 2002.
This topic contains information on the following:
- distributions paid to non-attributable stakeholders before 1 July 2000, and
- distributions paid to non-attributable stakeholders on or after 1 July 2000.
Distributions paid to non-attributable stakeholders before 1 July 2000
Distributions or dividends paid to non-attributable stakeholders before 1 July 2000 will NOT be subject to the deprivation provisions of the SSAct. For the non-attributable stakeholder the distribution or dividend will be treated as income for 12 months from the date of the resolution to distribute.
Explanation: This concession is given in recognition of the fact that until Ministerial Announcement on 9 May 2000, most people would not have been aware of the proposed new means test treatment of private trusts and private companies.
Distributions paid to non-attributable stakeholders on or after 1 July 2000
Distribution or dividends paid to a NON-ATTRIBUTABLE stakeholder on or after 1 July 2000 may be assessed as a gift from the attributable stakeholder/s (subject to their attribution percentage/s) and income of the non-attributable stakeholder for 12 months from the date of the resolution to distribute.
Example: John, who is in receipt of an income support payment, is the sole attributable stakeholder of a private family trust. After 1 July 2000, John distributes $6,000 to each of his 2 children (recorded on the trust income tax return), who are also in receipt of income support payments. From 1 January 2002 John is subject to the deprivation provisions in respect of the $12,000 he 'gifted' to his children. This gift received by John's children is treated as income of John's children for 12 months from the date of the resolution to distribute.
Exception: Distributions paid to a non-attributable stakeholder will not be assessed under the deprivation provisions for the controller if:
- the income support recipient can show they were not in receipt of an income support payment and could not have reasonably known that they would require income support at the time the distribution or dividend was paid, AND
- the income support recipient makes a written declaration of the above.
The distribution will still be assessed as income of the non-attributable stakeholder for 12 months from the date of the resolution to distribute. This rule also applied to income assessed from discretionary trusts pre-1 January 2002.
Act reference: SSAct section 1208R Disposal of income by company or trust, section 1127(b) Disposition more than 5 years old to be disregarded, section 1073 Certain amounts taken to be received over 12 months
Policy reference: SS Guide 22.214.171.124 Assessable Income from Discretionary Trusts pre-01/01/2002