Fixed trusts set up before 7.30 pm on 9 May 2000 043-04110020
Expand allThis document outlines information on fixed (non-discretionary) trusts set up before 7:30 pm on 9 May 2000 and the effect on a customer's income and assets assessment.
Assessment of assets of fixed trusts
Assessment of the assets of fixed trusts set up before 7:30 pm on 9 May 2000 is based on the fixed entitlements of the customer and the assessment of the income on actual distributions to the customer. Fixed trusts set up before 7:30 pm on 9 May 2000 have been excluded from the definition of a private trust for trust and company purposes because the assets of, and income distributed by, fixed trusts were already fully assessable to the trust beneficiaries in the proportions fixed by the trust deed.
If a fixed trust assessed under the pre 1 January 2002 old trust and company rules makes a profit but does not distribute that profit then there will be no income assessed. If the trust is wound up, then any previous distributions made would continue to be assessed under section 1073 of the Social Security Act 1991.
If additional units are issued after 9 May 2000 then the unit trust will be assessed under the new trust and company rules.
If existing units are bought and sold then the unit trust is still assessed under the pre 1 January 2002 trust and company rules.
The trust deeds of some fixed trusts include an alteration of power. If, after 7:30 pm on 9 May 2000, a customer:
- transfers additional assets to the fixed trust
- provides services to the fixed trust, or
- alters the entitlements of the trust beneficiaries
then the new attribution rules will apply.
Where trust entitlements are re-fixed in limited circumstances, for example following the death of a beneficiary, this will not result in the trust being affected by the 1 January 2002 trust and companies legislation.
Fixed trusts established after 7:30 pm on 9 May 2000 will be subject to the post 1 January 2002 trust and companies legislation that is, treated in the same manner as discretionary trusts.
Related links
Assessing assets from fixed trusts pre 1 January 2002
Assessing income from fixed trusts pre 1 January 2002
Assessment of assets for trusts and companies
Coding the T&C Miscellaneous Details (TRMD) screen
Genuine investors in private trusts and companies
Life interest in an asset or income
Protective and statutory trusts for persons unable to handle their own affairs
Trusts and companies - concessions and exceptions
Where a controller could not access trust capital and/or income as at 7:30 pm on 9 May 2000