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Formal control of a private trust 043-04030010

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Different rules apply to an approved Special Disability Trust (SDT). A 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. This procedure does not cover SDTs.

For Complex Assessment Officer (CAO) use only

This document outlines an overview of formal control of a private trust. Information about who controls a trust is used by Services Australia in making the attribution decision.

Formal control

Formal control of a private trust is evident by the power to:

  • appoint or dismiss the trustee
  • vary or veto the trustee's decisions
  • change the trust deed
  • these powers are known as the appointorship powers. The individual(s) or entity that holds this role is called the 'appointor', but may also be known by another name within the Trust Deed, for example, Principal or Guardian

Appointor

The appointor of the trust will usually be the person (or persons) who exercise formal control of the trust.

If no appointor is mentioned in the trust deed then usually the trustee will have the power to appoint a successor, and hence be the controller of the trust.

Unit holders in a fixed trust may hold voting rights to exercise these powers, including the appointment and removal of trustees.

The factors to consider when establishing control for purposes of attribution percentages for any stakeholder are as follows:

  • If there is a sole appointor, attribution will generally be made to that appointor
  • If the appointor is a professional, attribution will generally be made to the person or persons instructing the professional in relation to the affairs of the trust. If the professional is receiving instructions from an entity, attribution will be made to the controller of that entity either directly or via an interposed entity
  • If there is no appointor, attribution may be made to the trustee of the trust. If the trustee is a company, attribution of the trust assets would generally be to the person who controls the company either directly or via an interposed entity
  • If there are multiple appointors/trustees, but one appointor/trustee clearly directs the exercise of the appointer's/trustees' power, attribution will be made to that appointor/trustee
  • If there are multiple appointors/trustees, but they include a partnered couple acting as appointors/trustees who can jointly exercise control, attribution may be made to the members of that couple
  • In any other circumstances where there are multiple appointors/trustees, attribution may be made amongst those stakeholders who jointly exercise control. Attribution will be made in proportion to the capacity of those stakeholders to exercise control

Controlled private trusts

Informal control test

Attributable stakeholders for private trusts

Attribution percentages

Special Disability Trust (SDT) - initial contact