4.7.2.30 Treatment of Assessable Assets - Private & Unlisted Public Companies - Not Assessed Under Trusts & Companies Rules

Summary

This topic outlines the treatment of assessable assets (1.1.A.290) - private and unlisted public companies (1.1.C.220) which DO NOT come under the trust and companies rules that came into effect from 1 January 2002.

Policy reference: SS Guide 4.7.2.20 Assessable Assets from Private Companies & Unlisted Public Companies, 4.12.1.10 Determining a designated private trust or private company from 01/01/2002

Treatment of assessable assets

The following table describes the treatment of assessable assets and provides references to further information, if appropriate.

Assessable Asset Treatment/Further Information
Shares in a private or unlisted public company, which carry rights to participate in capital distributions

Assess using the market value if a market exists. If no market exists, generally the net asset backing method is used.

4.7.2.20 Assessable Assets from Private Companies & Unlisted Public Companies

Shares in a private or unlisted public company, which do NOT carry rights to participate in capital distributions Assess using the market value if a market exists. If no market exists use the amount paid for the shares or some other valuation (4.7.2.20).
Assets, excluding the principal home and adjacent land (1.1.A.58), which are transferred or sold to the company by the income support recipient and/or partner Deprivation of assets may apply if the recipient did not receive adequate financial consideration (1.1.A.55).

- Transfer of the principal home to company, OR

- Principal residence of the income support recipient owned by the company

Deprivation of assets may apply unless valuable consideration (1.1.V.25) is received, even though the value of a recipient's interest in their principal home is exempt from the assessment of the assets test.
Partly paid shares 4.6.5.50 Assessing Shares in Private & Unlisted Public Companies - Not Assessed Under Trusts & Companies Rules
Loans to a private company

Shareholder loans are the assets of the individual shareholder and MUST be maintained for asset test purposes. Deeming rules apply to outstanding loan balances.

Explanation: This recognises that a company is a separate legal entity.

Shareholders' loans should NOT be removed from the balance sheet of the company.

Explanation: These loans represent a liability of the company which, if not repaid earlier, will be repaid when the company is wound up.

Failed loans 4.6.5.65 Loans that No Longer Exist
Governing director's shares 4.6.5.50 Assessing Shares in Private & Unlisted Public Companies - Not Assessed Under Trusts & Companies Rules
Distribution of capital when a company is wound-up If a company has been, or is being, wound-up, any distribution of assets is NOT income.

Act reference: SSAct section 8(1)-'income', section 11A(1) Principal home, section 1118(1) Certain assets to be disregarded in calculating the value of a person's assets, section 1123 Disposal of assets, section 1207N Designated private companies

Policy reference: SS Guide 4.4.2 Deeming of Financial Investments, 4.6.5.50 Assessing Shares in Private & Unlisted Public Companies - Not Assessed Under Trusts & Companies Rules, 4.7.2.20 Assessable Assets from Private Companies & Unlisted Public Companies, 4.12.1.10 Determining a designated private trust or private company from 01/01/2002

Last reviewed: 20 September 2016