220.127.116.11 Treatment of Assessable Assets - Private & Unlisted Public Companies - Not Assessed Under Trusts & Companies Rules
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.
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.
18.104.22.168 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 (22.214.171.124).|
|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||126.96.36.199 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||188.8.131.52 Loans that No Longer Exist|
|Governing director's shares||184.108.40.206 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, 220.127.116.11 Assessing Shares in Private & Unlisted Public Companies - Not Assessed Under Trusts & Companies Rules, 18.104.22.168 Assessable Assets from Private Companies & Unlisted Public Companies, 22.214.171.124 Determining a designated private trust or private company from 01/01/2002