Trusts and companies - calculating a gift amount 043-04080010

Gifting may apply to a customer involved in a trust or company if they do any of the following:

• transfer or sell assets to an organisation without receiving adequate consideration
• relinquish control of a trust or company without receiving adequate consideration
• receive income or capital distributions below the amount determined by their attribution percentage

Different rules apply to an approved Special Disability Trust (SDT). Gifts to a SDT may be exempt from the deprivation provisions if the contributor is an immediate family member, of Age Pension age and the SDT concessional gifting cap has not been reached. This procedure does not cover gifting concessions for SDTs.

The customer will only have deprivation applied where the customer's gift amount to a private trust or private company combined with any other gifts made personally, exceeds the gifting free areas. The gifting free areas are both:

• $10,000 each income year and
• a maximum $30,000 over a five year rolling period

Amounts in excess of the gifting free areas are assessed as an asset and deemed for a period of 5 years. See Assessing deprivation/gifting for more information about the assessment of gifting.

Note: a partnered couple are considered to be one unit. Where assets are transferred between the members of a couple, the gifting rules do not apply. If the couple separates, neither of the customer's deprivation determination will be reassessed.

Deprivation is based on the balance sheet after adjustments are made for the current marked value but before any adjustments are made for non-allowable loans.

Gifting does not apply:

• when the distribution made by the trust or company is to a genuine investor and the distribution amount is reasonably equal to their level of investment
• when a distribution is paid to a non-attributable stakeholder in lieu of wages
• for any distributions made by the trust or company for the 1999/2000 financial year or earlier
• for fixed trusts set up before 9 May 2000
• to entitlements paid to a shareholder upon wind up where a customer has been determined to be a full or part controller and, the shareholders have a legal entitlement to the capital