This page contains links to Private trusts and private companies information and an example of the effect of a customer surrendering control of a private trust and the gifting decision.
Effect of a customer surrendering control of a private trust - gifting decision
This table describes an example of the effect of a customer surrendering control of a private trust and the gifting decision.
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Wally is a farmer who has a $500,000 farming property in a discretionary trust. Wally had been planning to transfer control of this trust to Peter (child) prior to 1 January 2002 in order to continue to be eligible for the Age Pension.
However, Wally failed to make the necessary changes in time and as a result the pension was cancelled on 1 January 2002, when the trust assets were attributed to Wally as the trust controller. Wally has decided that control of the farming trust will be transferred to Peter. Wally does this and supplies the necessary documentation to Centrelink on 28 February 2002.
Wally will be considered not to be a controller of the trust from 28 February 2002 and the pension can be restored from this date. As Wally has surrendered control of the trust prior to 1 April 2002, deprivation will not be considered to have been incurred as a result of surrendering control of the trust under the rules in force from 1 January 2002. Wally will instead be assessed as if control of the trust had been surrendered prior to 1 January 2002.
If Wally transferred control of the farming trust to Peter on or after 1 April 2002, Wally would be considered to have incurred deprivation as a result of surrendering control of the trust under the rules in force from 1 January 2002. Wally would be assessed as having deprived themselves of an assessable asset and a five year deprivation period would apply.
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