4.7.3.70 Assessable Income & Assets from Statutory Trusts

Summary

This topic provides information on the following:

  • new trusts and companies rules do not apply to court-ordered (statutory) trusts until 18 May 2005,
  • pre-18 May 2005 assessment of income from statutory trusts (1.1.T.180),
  • pre-18 May 2005 assessment of assets (1.1.A.290) from statutory trusts, and
  • pre-18 May 2005 statutory trusts for minors.

Note: For the income test treatment of general business items also see 4.7.1.20. For the assets test treatment of general business items also see 4.7.1.40 and 4.7.1.50. The assessment of general business items applies to all business structures including sole traders, partnerships, private trusts and private companies.

Act reference: SSAct section 8(1)-'income'

Court-ordered (statutory) trusts

The assessment of statutory trusts assessment did not change from 1 January 2002. The new rules that apply to the assessment of income and assets held in private trusts from 1 January 2002 apply to income and assets held in statutory trusts from 18 May 2005. This is the date that the Disallowable Instrument, Social Security (Means Test Treatment of Private Trusts - Excluded Trusts) Declaration 2005, was remade so that court-ordered trusts are no longer excluded from the private trusts and companies rules.

Statutory trusts are described at 4.12.3.80.

Act reference: SSAct section 1207P Designated private trusts

Policy reference: SS Guide 4.12.3.80 Assessable Income & Assets from Court-Ordered (Statutory) Trusts

Pre-18 May 2005 assessment of income

The following table describes the assessment of income from statutory trusts.

If money is held by a public trustee or similar body… Then the interest…
on behalf of an individual income support recipient, generated by its investment is the recipient's income.

Explanation: This is regardless of whether individual investment accounts are maintained or whether the property is held in a 'common fund'.

and NO specific amount is held for the benefit of an individual income support recipient,

Example: The property is held in common for the recipient and their children.

credited to the investment account is NOT assessed as the recipient's income, until distributed or allocated to them.

Act reference: SSAct section 1073 Certain amounts taken to be received over 12 months

Distribution of capital funds - income assessment

One-off payments made from the capital funds held by the trust are NOT taken into account as income.

Example: Distributions to enable modifications to be made to the person's home to assist with their disability.

Pre-18 May 2005 assessment of assets

The following table describes the assessment of assets from statutory trusts.

If money is held by a public trustee or similar body… Then…
on behalf of an individual income support recipient, the full value of that money is the recipient's asset.

Explanation: This is regardless of whether individual investment accounts are maintained or whether the property is held in a 'common fund'.

a payment is made to an income support recipient out of the money held by the statutory trust and NO specific amount is held for the benefit of an individual recipient,

Example: The property is held in common for the recipient and their children.

that payment, which is the recipient's interest in the account is an exempt asset.

Distribution of capital funds - asset assessment

One-off payments made from the capital funds held by the trust are the income support recipient's property and are assessed as an asset. The amount which is assessed as the assets held by the trust, MUST be reduced by the amount of the payment.

Example: Distributions to enable modifications to be made to the person's home to assist with their disability.

Pre-18 May 2005 statutory trusts for minors - assessment of income & assets

Payments to minors MAY be held on their behalf in a statutory trust.

Examples: Payments could include:

  • third party motor vehicle damages (1.1.D.16),
  • workers compensation after the death of their sole surviving parent, and
  • superannuation after the death of their sole surviving parent.

Money held in a statutory trust, on behalf of a minor, is the property of the minor, and interest credited to the account is their income.

Last reviewed: 3 January 2017