Trusts and companies - recording liabilities 043-04090020

Liabilities are recorded using the various fields on the TRLD screen.

Liabilities are then passed to the customer's Direct Investment (SVDI) screen for a loan, or the Other Assets (OAS) screen for a debt.

Liabilities not allowed for social security purposes will not be recognised as a deductible liability. The reason they are not recognised will be recorded on the TRLD screen.

For information about the fields on the TRLD screen, see the Correctly recording liabilities table.

The TRIA screen will display the:

• total attributable net income and net assets of a trust or company
• total assets amount for each asset type

The asset total will be further broken down to primary production and non-primary production assets.

Allowable liabilities are then deducted to provide the attributable asset amount (primary production and non-primary production).

The TRLS screen displays a summary of all of the entity's liabilities.

A separate line is provided for each of the recorded liabilities with the following information displayed:

• the description entered on the details screen
• the allowable primary production liability amount
• the allowable non-primary production liability amount
• the category of liability
• Customer Reference Number (CRN) of the customer who is owed, where the liability has been recorded as being owed to a customer
• whether the liability is a loan or debt

In the Description: field a free text description of the liability can be recorded. It can be up to 30 characters in length.

The Event Date: field is used to record the date the circumstances occurred. For each new event date recorded there will be a new Trust/Company Liabilities (TRLD) page.

The Total Amount $: field is used to record the current gross value of the liability. It is recorded in whole dollar amounts.

The amount allowed in respect of a liability secured against non-primary production asset(s) is limited to the value of the secured assets.

In these situations only the amount of the liability that will be allowed is coded in this field. Where the loan exceeds the value of the assets, there is no requirement to code the unrecognised excess.

Because of the principles of primary production aggregation, the full amount of any liability secured against primary production asset(s) of a trust or company may be allowed in respect of primary production assets.

In these situations the full amount of the liability should be coded in this field. The system will automatically aggregate primary production assets. The allowed primary production liability amount will be limited to the total of the primary production assets.

The Primary Production %: field is used to record/display what percentage of the liability is considered primary production.

If the Real Estate ID for Loan Apportionment: field is left blank this Primary Production %: field can have data entered. If the Real Estate ID for Loan Apportionment: field has a valid value the Primary Production %: field is calculated by the system.

The Liability Category: field is used to record whether the liability is allowed or not.

A liability may be secured against an asset(s) which includes a mix of exempt and assessable assets. In this situation the amount of the liability allowed will need to be apportioned.

One of the following values must be recorded:

• 'REC' - recognised
• 'NDO' - not recognised as not documented
• 'N18' - not recognised as under 18 years old
• 'NOC' - not recognised as not commercial
• 'NSN' - not recognised as secured by assets not owned by trust or company. These liability details should be recorded on a DOC screen so that the liability is not incorrectly allowed in a future assessment

Note: if a value other than 'REC' is used the liability will not be deducted from the assets of the trust or company.

This field is used to record a real estate ID if the liability relates to a particular item of real estate owned by the trust or company. If the liability is linked to an item of real estate owned by the organisation, the real estate details first need to be recorded on the Real Estate Detail (RE) screen.

The system will generate a real estate identification number (RE ID). In the Real Estate ID for Loan Apportionment: field the RE ID should be recorded (but only if the liability category is recognised). This will enable the system to apportion the liability between the assessable asset amount and any exempt home and curtilage asset amount coded on the RE or Real Estate Home and Curtilage (REHC) screens.

For more detail on house and curtilage assessments, see Assessing house and curtilage.

This field is used to record the Customer Reference Number (CRN) of the lender or debtor. This field does not need to be completed if the liability is owed to a non-Centrelink customer. The CRNs of children who are not Centrelink customers in their own right also do not need to be recorded.

Note: regardless of whether a loan is allowed as a liability of the trust or company, loans will be assessed as an asset of the customer who made the loan and deemed income will apply. Debts owed by the trust or company will also be assessed as an asset of a customer who is owed the money, without deemed income applying regardless of whether the debt is allowed as a liability of the trust or company.

This field is used to record the CRN of the customer who is owed the liability.

The valid values for this field are 'LON' (loan) or 'DBT' (debt).

If 'LON' is recorded, the liability amount will be passed to the record of the customer whose CRN has been recorded. It will create a new Direct Investment (SVDI) screen and the amount will be included with the customer's other financial assets and the customer's assessment for Assets Test and deeming purposes. This will happen regardless of the liability category.

If 'DBT' is recorded, the liability amount will be passed to the record of the customer whose CRN has been recorded. It will create a new Other Assets (OAS) screen and the amount will be included with the customer's other assets for assessment purposes. This will happen regardless of the liability category.

Where the loan or debt is owed to another trust or company the trust or company CRN should not be recorded in the CRN: field. It is necessary to check that the amount has been manually recorded as an asset of the other trust or company.

This field will be populated by the system and shows the allowable primary production liability.

Where the liability category is NOC, NDO, NSN or N18 the allowable liability amount will be zero.

Otherwise the allowable liability amount will be the value recorded in the Total Amount $: field multiplied by the value recorded in the Primary Production %: field.

This field will be populated by the system and shows the allowable non-primary production liability.

Where the liability category is NOC, NDO, NSN or N18 the allowable liability amount will be zero.

Otherwise the allowable liability amount will be the value recorded in the Total Amount $: field less the value stored in the Primary Production %: field.