Source test 043-04030040

The source test may attribute the assets of a private trust or private company to a customer if the customer transferred assets to the trust or company for inadequate consideration, or if the customer provides services to the trust or company for inadequate remuneration. The source test works on the principle that a person generally transfers assets into the trust or company because the trust or company will use those assets:

• for that person's benefit, or
• for their family's benefit. For example, to shelter them from the means test while preserving their full value for the beneficiaries of their estate

The source test applies only to contributions made to entities after 9 May 2000. Attribution assessments resulting from the application of the source test only take effect from 1 January 2002.

The source test works in tandem with the control test. Where control may be difficult to establish, the source test can simplify attribution. It is not intended that the source test be absolute. Where the matter is unclear, the Complex Assessment Officer (CAO) will need to investigate issues such as the level of contributions made and whether the person who made the contribution can exhibit control.

If a person can show that a genuine gift or genuine loan has been made, and that they have no ongoing involvement in the private trust or private company, attribution would not be made to that person and gifting rules may apply.