Controlled private trusts 043-04020090

When a private trust is assessed as a controlled private trust, the income and assets of the trust may be attributed to the customer if they are assessed as being an attributable stakeholder.

If the trust is not a controlled private trust, the assessment of the customer's interest in the trust will be in accordance with Pre 1 January 2002 private trusts.

The control test looks at both formal and informal control, and is applied on the grounds that the controller of a structure can be considered the de facto owner of the structure's income and assets. This is because he or she can use the assets for their own benefit or that of their family.

Whereas the source test recognises that a customer transferring assets to a structure generally retains some means of control.

To determine if a private trust is under an obligation or could reasonably be expected to act in accordance with the directions or wishes of the customer (alone or with associates) the following factors may be relevant:

• the relationship of the parties to each other, for example:
• professional adviser
• family
• friends
• any written agreements between the parties, for example, regarding the use of accommodation or other trust assets
• the nature and extent of any gift made by a customer to the private trust, for example:
• the value of the contributions
• the type of contribution such as home, car, cash
• the proportion that the value of the contribution has to the total assets of the trust
• if the individual received consideration for the contribution, the amount of consideration
• the nature and extent of any loans made by a customer to the private trust, for example:
• the value of the loan
• the rate of interest payable
• the proportion that the value of the loan has to the total liabilities of the trust
• the nature of any benefit received by a customer from the trust for example, use of a motor vehicle or holiday home of the trust