Source: http://clik.dva.gov.au/print/book/export/html/16515
Timestamp: 2019-06-15 20:38:04
Document Index: 82000055

Matched Legal Cases: ['art 10', 'art-10', 'art10', 'art10', 'art10', 'art-9', 'art10']

﻿ Resignation from a Controlled Private Trust or Company before 1 January 2002
Home > Compensation and Support Policy Library > Part 10 Types of Income and Assets > 10.3 Business Structures and Trusts > 10.3.14 Resignation from a Private Trust or Company > Resignation from a Controlled Private Trust or Company before 1 January 2002
Resignation from a discretionary trust before 1 January 2002
As a discretionary trust [3][glossary:'s:] assets and income do not become assessable until 1 January 2002, the deprivation provisions [3] do not apply if a person resigns from the trust before that date. If a person is already serving a five-year deprivation period arising from having originally gifted assets to the trust, any deprivation amount will continue to be assessed for the balance of the five-year period. However, if the person making the gift is deemed to still be the controller, the amount of the disposition is to be reduced by the person's attribution percentage [3] from 1 January 2002.
Example of an attributable stakeholder resigning control with life interest in family home
Henry and Mary are the appointors and trustees of a discretionary family trust that was set up 7 years ago. The assets [3] of the trust total $700,000, including the family home that is valued at $170,000. Henry and Mary are in receipt of a service pension. They realise that come 1 January 2002 they will be attributed with the assets and income of the trust and will no longer be entitled to the pension. On 1 November 2001 they resign from the trust, keeping a life interest [3] in the family home. Their entitlement to pension is not affected.
Resignation from a fixed unit trust or private company before 1 January 2002
If a person resigns from a fixed unit trust or private company before 1 January 2002 and relinquishes their units [3] or shares for less than the value assessed (using the net asset backing method [3]), the deprivation provisions [3] will apply.
Example of a resignation from a private company – deprivation applies
Rodney and Marie (a married couple) are the majority shareholders in a private company. They hold 95 voting shares between them. Their shares are valued at $50,000 (using the net asset backing method). On 20 September 2001, Rodney and Marie resign from the company and sell the shares to their children for $15,000. Rod and Marie are subject to deprivation for the amount of $25,000 ($50,000-$15,000-$10,000(gifting free area)).
Section 52E [5] VEA
Disposal of Assets (general provisions)
Part IIIB, Division 11, Subdivision B [6] VEA
Section 9.6.2 General Provisions of Deprivation [8]
When making a decision whether a course of conduct warrants application of the deprivation provisions, reference should be made to section 48 of the VEA [6] in relation to income and section 52E of the VEA [6] in respect of assets.
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/10314-resignation-private-trust-or-company/resignation-controlled-private-trust-or-company-1-january-2002
[1] http://clik.dva.gov.au/user/login?destination=node/16515%23comment-form
[2] http://clik.dva.gov.au/book/export/html/16515#tgt-cspol_part10_ftn506
[4] http://clik.dva.gov.au/book/export/html/16515#tgt-cspol_part10_ftn507
[7] http://clik.dva.gov.au/book/export/html/16515#ref-cspol_part10_ftn506
[8] http://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/96-deprivation-income-and-assets/962-general-provisions-deprivation
[9] http://clik.dva.gov.au/book/export/html/16515#ref-cspol_part10_ftn507