Trusts and companies - calculating a gift amount 043-04080010

Trusts and companies gifting may apply to a customer involved in a trust or company who transfers or sells assets to an organisation without receiving adequate consideration. Gifting may also apply if a customer is attributed control of a trust or company but receives 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 the gifting rules applied where the customer's gift amount from trusts and companies combined with any other gifts made personally, exceed the $10,000 allowable gift amount each income year to a maximum $30,000 disposal limit over a five year rolling period. Only the gift amounts in excess of the limits are assessed as an asset and deemed for a period of 5 years.

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 will not apply in regards to trusts and companies:

• when the distribution made by the trust or company is to a genuine investor
• for any distributions made by the trust or company for the 1999/2000 financial year or earlier
• in respect of any fixed trust set up before 9 May 2000
• where a customer has been determined to be a full or part controller, deprivation does not apply to a controller where the shareholders have a legal entitlement to the capital upon wind up and they receive their entitlements