Assessing asset attribution 043-04060010

The current market value of investments can be obtained from the Managed Investments (MIN) system and the Shares Investments (SIN) system. The latest prices or values should be applied at the time of the assessment. The date of the assessment may be the date of:

• the initial recording of the entity
• the annual review of the entity, or
• a review of the entity is requested by an attributable stakeholder

If there is no entity record but a current market valuation already exists for a particular property of the company, use these details when adjusting the balance sheet. A valuation may be available for various reasons including:

• the property was owned by a customer and was subsequently transferred to the company. If the property was valued by a professional valuer when owned directly by the customer to determine the customer's entitlement to income support. Then there is no need to have the property professionally valued again
• the property is jointly owned by the company and another entity and property was valued by a professional valuer to determine the attribution assets of that other entity
• the property was recently purchased at arm's length

Professional revaluations for a property held by a private trust or company may be done on a rolling basis. However, the new valuation will only impact on the assessment of the asset attribution amount for a company at the date the entity is recorded, the date of the annual review or at the date an assessment is being completed at the customer's request. See Initial contact about a decision and the review of decision process.

Loans to, or debts owed by, an entity will be recognised as a genuine liability of the entity and therefore allowed as a genuine deduction from the gross asset value of the borrowing entity if:

• they appear on the balance sheet
• they are made under a written agreement signed by all parties to the agreement and witnessed by a third party (associates are not considered to be third parties)
• they are not made by a person who is under 18 years of age (Note: they may be allowed if the lender is aged 16 and a full time employee or receiving a Social Security entitlement such as Disability Support Pension), and
• considering the circumstances of, nature of and parties to the loan, the loan can be considered to be genuine and not created as part of a scheme to gain a social security advantage

Note: reasonable interest paid on loans will be accepted as a genuine deduction from the income of the entity, regardless of whether the loan is recognised or not, as long as the loan appears on the balance sheet. Refer to Assessing attribution income for more information

Although a liability may not be recognised when assessing the total asset attribution amount for a company, it is still a personal asset of a customer.

After adjusting the balance sheet for exempt and disregarded assets, current market values, non recognised and apportioned liabilities, etc. the adjusted net asset figure needs to be reduced by the historical value of genuine equity investments.

For the amount of the historical value of the injection of capital, refer to the Module PC - Private Company (Mod PC) form. If it is considered necessary to confirm the amount of the contribution the company financial statements may help. For example, previous financial statements or Australian Security and Investments Commission (ASIC) returns may show the amount of issued and paid up capital and any share capital reserves indicating the price paid for shares at the time of the share purchase.

For information about assessing the value of a genuine investment, see Genuine investors in private trusts and companies.

All assets and liabilities should be identified as either primary production or non-primary production. The primary production aggregation rules will apply.

When assets and liabilities are passed to a customer or to another organisation they should pass as primary production or non-primary production assets. This will allow the primary production attributed assets and liabilities to be aggregated with the customer's other primary production assets or liabilities.

Any income or assets derived from a foreign trust or company should be coded via the Trust and Company screens. Convert and enter amounts in Australian dollar values. The Foreign Income/Asset Detail (FID) screen should not be used for trust and company processing.

A Special Disability Trust (SDT) is a trust established for a sole beneficiary, who has a severe disability, by the parent/s or a close relative for the future care and accommodation needs of the beneficiary. A SDT may be exempt from the income and asset tests.

Different rules apply to an approved Special Disability Trust (SDT) - initial contact.