Assessing asset attribution 043-04060010

Asset attribution is the attribution of a private trust or private company's assessable assets to a customer. The amount is determined by the private trust or private company's assessable assets multiplied by the customer's attribution percentage. This determination could involve attribution of assets from multiple trusts and companies. In certain limited circumstances a customer who is a genuine investor will be assessed on a dollar and not attribution percentage basis based on the original value of their genuine investment.

The assets of each private trust or private company will be recorded on the relevant screens for that trust or company. It is essential that assets are not double-counted. To prevent double-counting, if a trust or company balance sheet includes equity in a related private trust or private company, the assets will only be recorded on that private trust or private company's own record.

The asset attribution amount for the private trust or private company equals (adjusted assets less adjusted liabilities less genuine equity investments) multiplied by the stakeholder's applicable attribution asset percentage.

When determining the value of the entity's assets to be attributed to the stakeholders, the net asset on the balance sheet will be the starting point. Certain assets, such as the home of the attributable stakeholder may be exempt. The value of other assets may need to be updated to show their current market value. Certain liabilities, such as monies owed to a person under the age of 18 years, may not be allowed as deductions from gross assets. It will therefore be necessary to adjust the balance sheet.

To calculate the true value of the private trust or private company assets to be attributed to the stakeholders, the balance sheet may need the following adjustments:

• exempt or disregarded assets not assessed (removed)
• asset values updated to reflect their current market value
• the asset value of any shares in private companies or units in unit trusts removed
• non-recognised liabilities will not be allowed
• liabilities secured by exempt or disregarded assets will not be allowed
• the apportionment of liabilities secured by both exempt assets and assessable assets will be adjusted

The historical value of genuine equity investments is generally accepted as the current value of a genuine investment. While this is not an adjustment to the balance sheet to determine the entity's total net assets, genuine investment asset and liability values need to be removed when determining the total attributable assets. Information about genuine investors in private trusts and companies is not covered in this procedure.

Other considerations that may be required when determining the value of an entity's assets include:

• real estate valuations
• applicable interest rate
• primary production aggregation