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Timestamp: 2019-06-26 00:40:52
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﻿ Controlled Private Trust
Home > Compensation and Support Policy Library > Part 10 Types of Income and Assets > 10.3 Business Structures and Trusts > 10.3.6 Attribution Guidelines for Private Trusts & Private Companies - From 01/01/2002 > Controlled Private Trust
A trust is a controlled private trust [2] in relation to an individual if:
the trust is a designated private trust [2], and
the individual passes the private trust control test [2], or
the individual passes the source test [2].
When deciding whether an individual passes the control [2] or source tests reference must be had to the associates [2] of the individual.
The control test, in conjunction with the associates [2] rule, is used to determine the level of control [2] a stakeholder exercises in relation to a designated private trust. Although a trustee [2] often undertakes the day to day management of a trust, effective control of a trust generally rests with the person(s) who can:
The person with the above power is commonly known as the appointor [2], or alternatively the principal or guardian. In the event that the trust does not have an appointor, or the trust deed does not provide the appointor with these powers, it may be that the trustee has effective control of the trust. Control can rest with one person, a couple, or multiple stakeholders. While being an appointor or trustee is a strong indicator that control of the trust may rest with that person, all factors relating to control are considered before a decision regarding the attribution of assets [2] of a trust is made.
if the appointor is a professional, attribution will generally be made to the person(s) instructing the professional in relation to the affairs of the trust. If the professional is receiving instructions from an entity [2], attribution may be made to the controller(s) of that entity,
if there is no appointor, attribution may be made to the trustee [2] (or trustees) of the trust. If the trustee is a company, attribution of the trust assets would generally be to the person(s) who control the company,
whether a person(s) is capable under a scheme [2] of gaining control,
George, aged 59, sets up a discretionary family trust with himself as appointor. The trust's assets consist of a $600,000 investment portfolio and the family home, which is worth $120,000. George appoints his son David as trustee, assured that he retains control via his power to unilaterally veto David's decisions or to replace David as trustee. George receives annual distributions from the trust at a level decided by him. Other trust income is officially distributed to children and grandchildren, however in reality George pays any taxation liability on behalf of his family and either unofficially retains the distributions or arranges for the distributions to be officially returned to the trust as a 'loan'. Under the control test [2], George would be attributed with the trust assets and income and would not have entitlement to an income support payment.
10.3.6/Associate Rule [6]
the trust is an excluded trust [12].
a group in relation to the individual is capable under a scheme [2] of gaining beneficial enjoyment or control of the application of the trust, or
An associate of an individual for the purposes of private trusts and private companies has the meaning given by section 52ZQ of the VEA [13].
According to section 202 of the VEA [13], a trustee is a person appointed by the Commission to administer the financial affairs of a pensioner who may be incapable of managing their own affairs for reasons such as:
According to section 52ZO of the VEA [13], trustee has the same meaning as in the Income Tax Assessment Act 1997 [14].
According to section 52ZR of the VEA [15], if at a particular time on or after 1 January 2002:
Source URL (modified on 20/10/2014 - 3:25pm): http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/1036-attribution-guidelines-private-trusts-private-companies-01012002/controlled-private-trust
[1] http://clik.dva.gov.au/user/login?destination=node/16318%23comment-form
[3] http://clik.dva.gov.au/book/export/html/16318#tgt-cspol_part10_ftn426
[4] http://clik.dva.gov.au/book/export/html/16318#tgt-cspol_part10_ftn427
[5] http://clik.dva.gov.au/book/export/html/16318#tgt-cspol_part10_ftn428
[6] http://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/1036-attribution-guidelines-private-trusts-private-companies-01012002/associate-rule
[7] http://clik.dva.gov.au/book/export/html/16318#ref-cspol_part10_ftn426
[9] http://clik.dva.gov.au/book/export/html/16318#ref-cspol_part10_ftn427
[11] http://clik.dva.gov.au/book/export/html/16318#ref-cspol_part10_ftn428
[12] clikpopup://DEF/Excluded%20trust