Attribution percentages 043-04030050

Many private trusts and private companies may appear to have multiple attributable stakeholders. However, by examining the Private Company (Mod PC) or Private Trust (Mod PT) forms and other documents available, it often becomes clear that one person or a group of people have overall control.

For example, a private company may have issued one share each to four people, a father, a mother and two adult children. As the parents control 50 per cent of the voting shares, the assessment would generally be 100 per cent attribution of the private company's income and assets to the parents, zero per cent attribution to the children.

The disallowable instrument Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2017 outlines a number of factors to be considered when determining the appropriate attribution percentage, including:

• Formal control - see Formal control of a trust and Formal control of a company for more information
• Who makes the day to day decisions regarding the business of the entity
• Contributions to the entity as a portion of the assets of the entity
• Past benefit
• Current benefit
• Future benefit

In most cases the person or people with the formal control will be involved with the decisions of the entity, receive income, etc. Therefore, the attribution percentage will be proportionally split between the formal controllers.

However the legislation and disallowable instrument compel the CAO to reconsider all the factors in determining both the income and asset attribution percentages. The person, or people, with the formal control may have a higher or lower effective control, and this may differ in relation to income and assets.

For example, the customer may be the sole person with formal control, but has contributed no more than the other beneficiaries of the entity and receives only a proportional benefit. In those cases, the attribution percentage may be reduced from 100 per cent.

For example, a company may have three major shareholders with 26, 28 and 30 per cent respectively. The other 16 per cent of the shares are held by another 20 unrelated parties, with no more than 1 per cent each. The minority shareholders are determined not to be attributable stakeholders due to their lack of influence. The three major shareholders are attributed one third each. Regardless of their differing shareholding percentages, they each have equal influence upon one another to exercise a majority vote.

Although a CAO may be doing an assessment for only one Centrelink customer involved in a private trust or private company, it is important to understand the impact of this assessment on all parties involved in that trust or company, regardless of whether they are customers or not. Other parties involved in the trust or company may be current Centrelink or Department of Veterans' Affairs (DVA) customers, or potential customers.

Centrelink and DVA are able to exchange information. Services Australia Certificate of Disclosure of information to other Commonwealth Departments or authorities allows the release of information to DVA. If it is required to confirm if a pre-existing attribution exists, email the DVA income support payments team.

If DVA have assessed a veteran as having 100 per cent income and asset attribution, it would not be appropriate to also assess a Centrelink customer involved in the same company as having a 100 per cent income and asset attribution, without considering the basis of the DVA assessment.