Trusts and companies - calculating a gift amount 043-04080010

The gift amount is automatically derived by comparing the attributed percentage of control and actual distributions. These values are recorded at the organisation level. The result ripples down to the customer record and is then calculated on the basis of the customer circumstances.

The Date of Event (DOV) will be the date from the Trust and Companies Assessment Result (TRAR) and Trust and Companies Miscellaneous Details (TRMD) screens. Provided that information is coded accurately and completely the system will calculate the gift amount and pass it to the Gifted/Deprived Asset (GIFT) screen on the customer's record.

Complex Assessment Officers (CAOs) can prompt a gifting calculation via the TRAR screen. The question 'Is gifting to apply?' will display on the last page for an organisation or structure for the specified event date. If the CAO answers 'yes', the gift amount will be calculated and passed to the customer's GIFT cluster screen. The question 'Is gifting to apply?' will not be displayed if any of the following circumstances apply:

• a gift amount has already been calculated for that organisation and financial year, unless it is a Benefit Assessment (BA) reassessment
• the latest Individual Tax Return (ITR) financial year on the most recent TRMD screen is 1999/2000 or earlier
• there are multiple organisations in the interposed entity and the ITR financial year on the most recent TRMD is not the same for them all
• the DOV on TRAR does not match the most recent DOV on the TRMD screen for the organisation or structure
• the trust is a fixed trust (F95) set up before 9 May 2000

In particular circumstances, trust and company set-ups may include 'conduit' companies or other anomalies. In these circumstances the CAO must manually calculate and record any gift amount via the customer's GIFT screen.

The GIFT screen provides for two indicators in relation to trusts and companies:

• TAC = Trusts and Companies Auto. Calc. amount
• TRM = Trusts and Companies Manually determined amount

Organisation circumstances that need changing without changing the gift amount can only be done outside of a BA reassessment or refresh activity.

For further information about calculating the gift amount, see Step 1 of Calculating gift amount for a company or trust table.

For information on the return of gifts see Assessing returned gifts.

Is the gift to an approved Special Disability Trust (SDT)?

• Yes, this procedure does not cover gifting concessions for SDTs, see Gifting concessions to a Special Disability Trust (SDT). Procedure ends here
• No, go to Step 2

Is an amendment to the current gift amount required?

• Yes, see Amendments to gift amount below
• No, go to Step 3

Calculate the amount of actual income distributions made by each entity to natural persons or non-related entities, including distributions made to genuine investors.

To prevent double-counting, distributions to related trusts or companies are not included in this step. Related trusts or companies have a direct or indirect attributable relationship, for example, an actual income distribution made from one trust or company to another and then to a natural person is effectively one distribution.

Counting the distribution twice, once when made to the trust or company and again when passed to the customer would be double counting.

For this reason, only actual income distributions made to natural people and non-related trusts or companies are included in the gift amount calculation.

Deduct any actual income distributions paid by the entity to a genuine investor.

Genuine investors are people who have injected equity in to a company and whose investment is assessed as being genuine.

If the primary entity is subject to attribution to an intermediary entity, multiply by the applicable attribution income percentage and include the result when calculating the total figure for all related entities.

The result of Step 4 will form part of the total result. It will be added to the other amounts in respect of other entities in the structure. Steps 3 and 4 must be performed in relation to all entities in a structure.

Is the primary entity subject to attribution to a natural person?

• Yes, go to Step 6
• No, procedure ends here

Multiply the result of Step 5 by the applicable attribution income percentage that applies between the entity and the natural person.

Calculate the total amount of actual income distributions received by the customer from the same group of related entities.

Deduct the result of Step 7 from the result of Step 6.

• For a single customer or for a partnered customer who has a positive gift amount, the amount greater than zero is the gift amount
• A partnered customer whose partner has a negative gift amount will have the partner's gift amount added to their gift amount, reducing the customer's gift amount

Note: adding a negative amount will reduce the gift amount. Procedure ends here.

Gifting is a one-off calculation and is not varied as a result of subsequent changes in the customer record. However, if a gift amount is applied in error or with incorrect circumstances it can be deleted and, if appropriate, recalculated.

This would be unusual, but for example:

• an incorrect date of event may have been used
• the original gift calculation may have been processed on the basis of known information, but Centrelink is then advised by the customer their relationship status had changed prior to the date for the gift calculation

In these cases a CAO must amend a calculated gift amount, by reassessing a record via the Benefit Assessment (BA) screen for the organisation. This will allow a CAO to answer 'N' to the gifting question on the Assessment Result (AR) screen which will then zero the corresponding gift amount on the customer's record.

Final actions

Update any circumstance details that were incorrectly recorded in the same activity. A new activity must be created via the BA screen in order to invoke the gifting question again so that a new gifting calculation can be done.

Note: correction of the Date of Event (DOV) or Individual Tax Return (ITR) is to be completed via the Trust and Companies Miscellaneous Details (TRMD) screen.