Informal control test 043-04030030

Informal control can be exercised via:

• a scheme
• an associate
• use and enjoyment of assets

A customer may be capable under a scheme of gaining control. A scheme means:

• any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether enforceable or not, or intended to be enforceable by legal proceedings, or
• any scheme, plan, proposal, action, course of action or course of conduct, whether there are two or more parties or only one party involved

Schemes may include:

• a customer holding a signed but undated letter of resignation from a trustee, which can be dated and put into effect at any future time and revert control of the trust to a customer, or
• a signed but undated transfer of shares from a private company so that control can revert to the customer

A person may have the use and enjoyment of assets but apparently pass control to an associate. An associate is defined in section 1207C of the Social Security Act 1991 and includes:

• a relative of the individual
• an entity that acts in accordance with the wishes of the individual
• a business partner or the partner or child of a business partner
• a trustee of a trust where the individual, or another entity that is an associate of the individual benefits under the trust

Note: if a person can show that a genuine gift or a genuine loan has been made, the associates rule will not apply. Nor will the associate rule apply if an income support recipient genuinely resigns their involvement in a trust or company.

If a customer has the use and enjoyment of assets of a private trust or private company, but not formal control, then attribution can be made to the customer. This is a discretionary decision and would be invoked in determining control of a private trust or private company in cases where there is a blatant attempt to use and enjoy assets while giving away formal control to avoid being attributed with the private trust or private company assets.