Documents required to assess a private trust 043-04020020

A customer may be unable to provide the documents requested for various reasons.

If a customer is unable to provide the documents requested on the Private Trust form (MOD PT), firstly check the entity details on the Miscellaneous Details (TRMD) screen, in Environment A, to see if Services Australia already has the documents required. If the required information has not yet been provided, the MOD PT gives details of the person to contact for further information regarding the trust.

The MOD PT is used:

• to ensure correct identification of the trust
• to determine the extent of the customer's involvement in this trust
• to determine who exerts control over the trust
• to determine any concessions that are applicable to the assessment of the customer's entitlement to income support
• to establish if any property valuations are required by a professional valuer
• to calculate the income and assets of the trust to be attributed to the customer

The MOD SDT is used to determine if a trust can be approved as a Special Disability Trust (SDT).

For more information, see Special Disability Trust (SDT) Beneficiary Assessment Process.

Refer to Companies for information on the assessment of private companies.

Refer to Assessing and coding the Business details for sole traders and partnerships (MOD F) for information on the assessment of customers (or their partners) who indicate they are involved in a business as a sole trader or are a member of a partnership.

Real estate held by the private trust will be listed on the balance sheet. However, the balance sheet often records assets at historical cost value rather than at current market value.

The real estate details section of the MOD PT asks for information to accurately identify the property in case a valuation is required, and asks for the customer's estimate of the current market value to determine if a valuation is required.

When assessing business income, the individual tax return:

• helps to identify the type of business
• differs from the Notice of Assessment (NOA) in the amount of detail provided - the NOA is issued by the Australian Taxation Office (ATO) after it has assessed the tax return
• provides details of the taxable income of the person and lists the expenses they have claimed as being deductible against their income, some of which may not be allowable under the Social Security Act 1991

The income of the customer's partner may affect the customer's entitlement to an income support payment.

For more information, see Income tax returns (ITRs) and the taxation notice of assessment (NOA).

The trust income tax return is the form lodged with the ATO which declares the taxable income of a trust and lists the expenses it has claimed as being deductible against its income.

• It provides details of all sources of income for the trust
• It provides some detail of business expenses and deductions
• It shows how the profit or loss of the trust is distributed to beneficiaries
• It shows other types of income paid to beneficiaries by the trust such as wages and director's fees
• It lists all beneficiaries who receive distributions of income in the tax year

The trust tax return does not provide all the information required in respect of income and expenses. It contains only a summary of the total income and a summary of the expenses claimed.

The 'profit and loss statement' is also required as it details the amount of each type of income derived by the trust and the type and amount of each expense claimed by the trust.

For more information, see Income tax returns (ITRs) and the taxation notice of assessment (NOA).

This document shows the gross profit after taking into account the cost of the purchase of the stock that has been sold. Sometimes the trading account details are included on the same page as the profit and loss statement.

For more information, see Livestock trading account.

Whereas the trust tax return contains a summary of the total income and a summary of the expenses claimed, the profit and loss statement itemises the amount of each type of income derived by the trust and the type and amount of each expense claimed by the trust for a period of time.

It is needed to determine the amount claimed for expenses that are not allowable for Social Security purposes as not all expenses claimed for tax purposes are allowed when determining entitlement to an income support payment.

For more information, see The profit and loss statement.

The trustee's Resolution to Distribute is used to determine the date of event of the distribution. The distribution statement is needed to determine what amount was allocated to each beneficiary including the customer.

This document provides details of the depreciated value recorded for individual assets held by the trust. The depreciated value may not reflect the current market value.

Depreciation is calculated by reducing the cost of an asset by a certain percentage. The percentage rates of depreciation applicable to particular assets are set by the ATO.

It can be used to determine:

• If a valuation is required for plant and equipment
• The amount claimed for any type of depreciation that is not an allowable expense for social security purposes
• Details of the depreciated value recorded for individual assets held by the trust. The depreciated value may not reflect the current market value

For more information, see The depreciation schedule.

The balance sheet lists the assets, liabilities and proprietorship of a business at a particular date.

Assets are the things the business owns (such as properties, investments, stock, etc.), liabilities are amounts the business owes (such as overdrafts, creditor debts, mortgages, etc.) and the proprietorship is the difference between the value of the assets and the value of the liabilities. It is the amount the owners of the business would receive if they sold all the business assets and repaid all the business liabilities.

The financial position of a business as detailed in the balance sheet does not necessarily equate to the current market value or 'worth' of a business. For this reason it may be necessary to revalue business assets, particularly property and listed shares, at their 'market' or realisable value.

For more information, see The balance sheet.

The beneficiary loan statement or account is a statement of loans made by beneficiaries to a trust. They are usually made when the trust is established or in order to inject capital.

Beneficiary loans can be in the form of cash funds or assets (for example, property, plant and equipment etc.) with the value of the funds or assets at the time the loan is made making up the value of the loan.

The beneficiary current account is an account of income distributions made to beneficiaries which have not been physically paid to the beneficiary and therefore remain owing to them.

Both statements are often part of the trust balance sheet or an attachment or note to the balance sheet.

They can be used to determine:

• how much is owed to the customer and their associates by the trust
• which liabilities are not to be recognised

When determining if a loan is to be recognised as a liability of the trust, Services Australia are looking for the loan agreement to contain the following:

• the purpose of the loan
• details of any security offered for the loan for example, the address of real estate
• the terms of the loan for example, interest rate, repayment schedule, period of the loan
• the name and signature of the borrower and lender
• the company seal (if the trustee is a corporate trustee)
• the name and signature of an independent third party acting as witness
• the date of the agreement
• the words 'signed, sealed and delivered'

Note: even if the loan agreement provided by the customer does not contain all of the above information, a copy should be retained by Services Australia for future reference. For example, it may be used if a customer requests a review of a determination.

The notes to and forming part of the accounts, explain the details recorded in the financial statements and any extraordinary circumstances affecting the trust.

For example, whereas a balance sheet may contain an amount listed as the total value of 'retail property' held by the trust, the notes to and forming part of the accounts may list the address details for each property.

This information is required for primary producers who wish to apply for special concessions. The statutory declaration or legal document confirming your resignation from the trust must state you will not exert any control over, or benefit in any way, from the trust.

A council rates notice will contain some or all of the following information:

• Identification for the parcel of land for example, shire, folio. This will ensure the correct identification of each property in case a professional valuation is required
• Site value or land value
• Capital Improved Value (CIV)
• The date of the council valuation of the property

The rates instalment notice does not contain all the information required by Services Australia in respect of real estate. The instalment notice often only provides details of the amount owing on the rates at that time.

Note: the valuation on the council rates is not used as the current market value for the purposes of determining the payability of income support.

The trust deeds and a copy of the will if the trust is a testamentary trust and contributor's schedule, schedules showing contribution(s) or Donor Register and Statutory Declaration(s) by Trustee(s)

The following documents are required to determine if a trust meets the requirements to be an approved SDT:

• trust deeds
• a copy of a will is also required if trust is the result of monies from a death bequest
• the contributor's schedule
• Trustee(s) Statutory Declaration(s)

For more information, see Special Disability Trust (SDT) Beneficiary Assessment Process.

When making an assessment of the income and assets of a customer in respect of their involvement in a private trust, Services Australia will take into account all details provided by the customer and their representative.

The customer has the option of providing any additional information they would like the agency to consider. This information may be relevant to the determination of the extent of the customer's involvement in the private trust or may be relevant to the financial circumstances of the private trust.

This information may be relevant to make an accurate first assessment and reduce the need for reviews and appeals.

The trust deed or will would only be requested by Services Australia if the information recorded on the Private Trust form (MOD PT) was insufficient to make a determination.

For example, when considering if the special concession for farmers can be applied it may be necessary to sight the irrevocable clause of the trust deed or amendments to the trust deed and confirm the limited powers of the appointor.

The trust 'Deed of Settlement' or 'Last Will and Testament' will confirm the extent of the customer's involvement in this trust (for example, the parties involved in the trust, the rights and interests of beneficiaries and unit holders, the powers of the trustee and appointor).

The trust deed will state if the trust is discretionary or non-discretionary regarding the trust's income and/or assets.

If the trust is non-discretionary, the trust deed will state the beneficiaries' entitlement to the income and/or assets of the trust.

This document would only be requested by Services Australia if the information recorded on the Private Trust form (MOD PT) was insufficient to make a determination. For example, to confirm the extent of a customer's shareholding in the trustee company.

All companies are required to lodge a return with the ASIC each year, regardless of whether they are producing any income. This annual return must be lodged with ASIC before 31 January of the following year to which it relates. That is, the annual return for 2001 would be due 31 January 2002.

ASIC mail a pre-printed annual return to the trust well before the due date, unless the trust is lodging their return electronically.

This document would only be requested by Services Australia if the information recorded on the Private Trust form (MOD PT) was insufficient to make a determination. For example, to confirm the extent of the customer's unit holding in the trust.

These documents would only be requested by Services Australia if the information recorded on the Private Trust form (MOD PT) was insufficient to make a determination and a title search was not considered appropriate. For example, to confirm the date a property was transferred by the customer to the trust.

The certificate of title provides the following information:

• identification for the property (for example, location details)
• the name of the current proprietor and the date they became same
• a history of the previous registered owners
• the type of ownership of each proprietor (for example, Tenants in common, joint tenants)
• details of debts secured by the property (for example, the name of the lender)

These documents would only be requested by Services Australia if the information recorded on the Private Trust form (MOD PT) was insufficient to identify the investment in the Securities and Investment (SIN) system.

It will help identify the investment in the SIN system and obtain the current market value.

These documents would only be requested by Services Australia if the information recorded on the Private Trust form (MOD PT) was insufficient to identify the investment in the Managed Investment (MIN) system.

It will help identify the managed investment in the MIN system and obtain the current market value.