Source: http://clik.dva.gov.au/print/book/export/html/16512
Timestamp: 2019-08-19 16:20:52
Document Index: 477240671

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

﻿ Example of Primary Production Concession & other Related Issues
Home > Compensation and Support Policy Library > Part 10 Types of Income and Assets > 10.3 Business Structures and Trusts > 10.3.16 Primary Production Private Trust & Company Issues - From 01/01/2002 > Example of Primary Production Concession & other Related Issues
Whilst handing over control, the individual and their spouse would still be able to retain a life interest in their principal residence [3] and the right to some incidental fringe benefits, such as:
If the individual and their spouse are serving a 5-year deprivation period due to the gifting of the assets of the primary production trust they will be able to access income [3] (other than as an income beneficiary) from the private trust, up to the current income threshold of Family Tax Benefit Part A. Access to this income will be during the deprivation period only. This income could be in the form of wages or consulting fees but cannot be in the form of distributions as the individual and their spouse are no longer income or capital beneficiaries of the trust.
Joe and Edith are retired farmers, aged 66 and 65 respectively. They have handed over operation of the farm to their son Bill. Joe and Edith are both receiving service pension. They made succession and retirement plans more than 6 years ago and transferred their farm assets to a discretionary trust [3]. Joe and Edith are the appointors of the trust and they live in the family home, which is worth $80,000 and is part of the trust assets. The total value of the trust is $900,000. It consists of the farmland, machinery, livestock and the family home. They also have a liability against the farming property of $110,000. Their (primary production) net adjusted taxable income over the last 3 tax years is ($30,000+$25,500+$23,000) ?3=$26,166.
While Joe and Edith are happy to give up their interest in the trust and for their son Bill to have control of and run the farm, they are concerned that he may sell the property and move into town. They decide to take advantage of the concession and retain a right of veto should Bill decide to sell. As the primary production assets of the trust are more than 70% and the net value of the primary production assets are less than $818,000 (($900,000-$110,000)-$80,000=$710,000) and the average adjusted net primary production income [3] for the previous 3 tax years is less than the FTB Part A income threshold, Joe and Edith qualify for the concession. In addition, Joe and Edith maintain a life interest [3] in the family home and are able to access income from the farm during their deprivation period. However, if Joe and Edith accessed this concession and gave away the trust assets before 1 January 2002, they would not be subject to the deprivation provisions [3]. If this action is taken on or after 1 January 2002 the deprivation provisions apply to the assets they have 'gifted' to their son.
Section 52ZZZF(4) [7] VEA
Section 52ZZZG [7] VEA
Section 45UT [7] VEA
http://www.fahcsia.gov.au/guides_acts/fag/faguide-3/faguide-3.1/faguide-3.1.1/faguide-3.1.1.20.html [10]
Section 9.6.1 Overview of Deprivation Provisions [12]
10.3.14/Resignation from a Controlled Private Trust or Company before 1 January 2002 [13]
According to section 5H of the VEA [16] income is:
a company being a controlled private company [3] in relation to the individual throughout that tax year
a trust that was a controlled private trust [3] in relation to the individual throughout that tax year:
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 [15] in relation to income and section 52E of the VEA [15] 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/10316-primary-production-private-trust-company-issues-01012002/example-primary-production-concession-other-related-issues
[1] http://clik.dva.gov.au/user/login?destination=node/16512%23comment-form
[2] http://clik.dva.gov.au/book/export/html/16512#tgt-cspol_part10_ftn526
[4] http://clik.dva.gov.au/book/export/html/16512#tgt-cspol_part10_ftn527
[5] http://clik.dva.gov.au/book/export/html/16512#tgt-cspol_part10_ftn528
[6] http://clik.dva.gov.au/book/export/html/16512#tgt-cspol_part10_ftn529
[8] http://clik.dva.gov.au/book/export/html/16512#ref-cspol_part10_ftn526
[9] http://clik.dva.gov.au/book/export/html/16512#ref-cspol_part10_ftn527
[10] http://www.fahcsia.gov.au/guides_acts/fag/faguide-3/faguide-3.1/faguide-3.1.1/faguide-3.1.1.20.html
[11] http://clik.dva.gov.au/book/export/html/16512#ref-cspol_part10_ftn528
[12] http://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/96-deprivation-income-and-assets/961-overview-deprivation-provisions
[13] 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
[14] http://clik.dva.gov.au/book/export/html/16512#ref-cspol_part10_ftn529
[16] http://clik/health-procedure-library/health-information-and-management-notes-himn/vhc/072014-vhc-veterans-home-care