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Trusts and companies - calculating a gift amount 043-04080010

For Complex Assessment Officer (CAO) use.

This document outlines information on the calculation of the gift amount applicable to a customer who is involved in a trust or company.

On this page:

Calculating a gift amount for a company/trust

Recording gifting details

Amending previously recorded gifting details

Calculating a gift amount for a company/trust

Table 1

Step	Action
1	Determine type of entity gift is relating to Is the gift to an approved Special Disability Trust (SDT)? Yes, see Gifting concessions to a Special Disability Trust (SDT). Procedure ends here No, go to Step 2
2	Determine if gift amount requires amendment Is an amendment to previously recorded gifting details required? Yes, see Table 3 No, go to Step 3
3	Gift amount derived from If the customer: Has transferred or sold assets to an organisation without receiving adequate consideration, see Assessing deprivation/gifting Has relinquished control of a trust or company without receiving adequate consideration, go to Step 4 Is attributed control of a trust or company and has received income or capital distributions below the amount determined by their attribution percentage, go to Step 6
4	Calculating value of organisation when relinquishing control The value of the organisation on the date of relinquishment must be determined. See Assessment of assets for trusts and companies to determine this value. Make any required updates to the organisation's record Non-allowable loans are not to be adjusted, see Resources for an example Return to this Step once finished and continue to Step 5
5	Determine deprivation amount Multiply the value of the organisation (as determined in Step 4) by the attribution percentage that applies to the customer who has relinquished control. Deduct the value of consideration received (if any), see Adequate financial consideration. The result is the amount is assessed as deprivation: This is recorded on the personal record of the person that is relinquishing control See Table 2 > Step 4 to record gifting details
6	Calculate total amount of distributions See Assessing and recording distribution income to calculate the total amount of actual income distributions made by each entity to natural persons or non-related entities, including distributions made to genuine investors. Deduct any actual income distributions paid by the entity to a genuine investor that is reasonably equal to their level of investment.
7	Calculate total amount of attribution income Determine the total amount of attribution income for the entity (or group of related entities) for the event date of the distribution income. See Assessing attribution income for assistance with determining the amount. For partnered customer's, total the couple's attribution income.
8	Compare to determine deprivation Deduct the amount determined in Step 6 (total distributions) from the amount determined in Step 7 (total attribution income) to determine if deprivation has occurred: 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. If deprivation has occurred, see Table 2 to record the gift details Otherwise, procedure ends here

Recording gifting details

Table 2

Step	Action
1	Recording the gift amount Gifts to private trusts and private companies are recorded in the organisation record. The result then ripples down to the customer's personal record. Deprivation amounts are then calculated on the basis of the customer's circumstances.
2	The Date of Event (DOV) 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. Is the date of event for the gift the same as the TRMD date of event? Yes: The system will calculate the gift amount and pass it to the Gifted/Deprived Asset (GIFT) screen on the customer's record Go to Step 3 No: Manual coding of the gift is required Go to Step 4
3	Prompting a gifting calculation Complex Assessment Officers (CAO) 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 DOV on the TRMD 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 Within the activity, on the TRAR screen, enter 'Y' in the 'Is gifting to apply?' field. The gift amount will be calculated and passed to the customer's personal record. Procedure ends here.
4	Manually calculate and record a gifting calculation In some circumstances, gifting must be manually recorded. Some examples of this are: The trust and company set-up may include 'conduit' companies or other anomalies The DOV for a distribution to a non-controller or genuine investor differs from the DOV recorded on the TRMD screen To manually record the gifting details: Within the activity, on the TRAR screen, enter 'N' in the 'Is gifting to apply?' field Finalise the activity, ensuring the ripple activity is set to started (STA) See Ripple manager consequences for details on starting a ripple activity. Within the started ripple activity on the customer's record, go to the GIFT screen Code gifting details using the gift amount calculated in Table 1 Use the type code TRM = Trusts and Companies Manually determined amount See Assessing deprivation/gifting for assistance with recording the details on the GIFT screen Procedure ends here

Amending previously recorded gifting details

Table 3

Step	Action
1	Amending previously recorded gifting details Assessment of gifting is done at a point in time and is not varied as a result of subsequent changes in the customer's record. However, if a gift amount is applied in error or with incorrect circumstances, it can be deleted and, if appropriate, recalculated. Examples of where this may be appropriate are: An incorrect date of event was used The original gift calculation was determined 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 Returned gifts, see Assessing returned gifts for more information Is it appropriate to amend previously recorded gifting details? Yes, go to Step 2 No, procedure ends here
2	Recording the amendment Previously recorded gifting details can be amended by reassessing a record via the Benefit Assessment (BA) screen for the organisation. In the entity record, go to the BA screen Service Reason: Input relevant system for customer's payment type Action: Reassess (REA) Effect Date: Input date of event on TRMD screen Within the activity, on the TRAR screen, enter 'N' in the 'Is gifting to apply?' field This will zero the corresponding gift amount on the customer's record
3	Final actions Update any circumstance details that were incorrectly recorded in the same activity. 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.