Assessment of trusts and companies 043-04000000

This document outlines how to identify and determine the amount of income and assets to consider when assessing private companies and private trusts. It also looks at the issues that should be considered in relation to income support payments and concessions. On 1 January 2002, the way private companies and private trusts are treated under the Income and Assets Tests changed.

Special Disability Trust rules

Different rules apply to an approved Special Disability Trust (SDT). An SDT's income is exempt from the income test. The SDT's assets are exempt from the Assets Test as long as the assets are not over the concessional asset limit. A separate procedure covers SDTs.

Rules for the treatment of private companies and trusts

The rules changed to align the social security Assets Test treatment of customers who hold assets in private trusts and private companies with that of individuals who hold similar levels of assets personally, or via public companies or in fixed trusts.

This means that where a customer controls or has contributed to a private company or private trust, the income and assets of that entity may be taken into account (attributed to the customer) when assessing entitlement to income support payments and concessions. Overseas companies not registered under Australian corporations law may still be assessed under trust and company rules if they are considered to be designated and controlled private companies.

These rules have no effect on customers who only own shares in public companies or units in publicly listed trusts. Nor do they affect complying superannuation funds (including do it yourself (DIY) funds) or most court-ordered statutory trusts. The assets owned by sole trader and partnership businesses are already assessable for customers who own or have an interest in these businesses

Attribution decisions are made by the Complex Assessment Officer (CAO) based on information provided on the Private Trust MOD PT or Private Company MOD PC and accompanying documents. Refer all assessments of a private company or private trust to a Complex Assessment Officer (CAO).

Determining the attribution of income and assets

Important dates

9 May 2000

Budget night - Policy changes were announced. Source test applies to any contributions made from 7.30 p.m. Australian Eastern Standard Time (AEST) on this date. Concessions may apply for certain trusts established before this date.

31 March 2001

The impact of a customer's involvement in a testamentary trust on their rate of entitlement to an income support payment may depend on whether the testamentary trust was activated on/before or after 31 March 2001.

1 January 2002

The new trust and company rules apply from this date. Deprivation provisions apply to resignations by the attributable stakeholders from this date.

The Resources page contains links to the Private Company (MOD PC) and Private Trust (MOD PT) forms.

Companies

Trusts

Attribution for private trusts and private companies

Multiple entity structures

Assessment of income from trusts and companies

Assessment of assets for trusts and companies

Special Disability Trust (SDT)

Gifting rules for trusts and companies

Assessing and recording loan and liabilities for trusts and companies