Designated private trusts 043-04020080

Different rules apply to an approved Special Disability Trust (SDT). A SDT's income is exempt from the Income Test. The SDT's assets are exempt from the assets test as long as the assets do not exceed the concessional asset limit. This procedure does not cover SDTs.

This document outlines how to determine if a private trust is a designated private trust. If a customer is involved in a designated private trust, the income and assets of the trust may be taken into account via attribution to the customer when assessing entitlement to income support.

Rules from 1 January 2002

On 1 January 2002, the way private trusts are assessed under the Income and Assets Tests changed.

If the trust is not a designated private trust then the customer's involvement in the trust is not assessed in accordance with Part 3.18 of the Social Security Act 1991, that is, attribution does not apply. The assessment of non-designated private trusts is in accordance with Pre 1 January 2002 treatment of private trusts.

Definition of a private trust

Under the Social Security Act 1991 private trusts are defined by exclusion, that is, all trusts are designated private trusts unless specifically excluded. A trust is a designated private trust unless:

all of the following conditions are satisfied:

the trust is a fixed trust
the units in the trust are held by 50 or more persons
the trust was not created or operated under a scheme that was entered into to gain a Social Security or Veterans' Affairs advantage, or

the trust is a complying superannuation fund, or
the trust is an excluded trust

Note: excluded Native Title trusts are only those defined under the Aboriginal and Torres Strait Islander Commission Act and do not include overseas native title, for example, New Zealand Maori trusts are not excluded.

Types of trusts that are designated private trusts

Trusts that are designated private trusts include those commonly known as:

family trusts
fixed trusts with less than 50 members
discretionary trusts
testamentary trusts
statutory trusts (for example, Court ordered trusts)
hybrid trusts - these are mixed fixed/discretionary trusts

Trusts that exist in other countries may also be designated trusts.

Trusts such as where a grandparent has a bank account 'in trust for' a grandchild are affected, as are implied and constructive trusts.

Trusts that are not designated private trusts

Trusts not considered designated trusts are:

fixed trusts with 50 or more members
public unit trusts
complying superannuation funds
some fixed trusts with fewer than 50 members that were set up before 9 May 2000

CAO role and delegation from 1 January 2002

Where the customer is involved in a private trust there is a need to have their involvement assessed and coded by a Complex Assessment Officer (CAO), based on information provided in the Module PT - Private Trust (MOD PT) and accompanying documents.