Case: Anstis v Secretary, Department of Family and Community Services [2002] FCA 1043
Outcome: referred to
The expression "beneficial interests in the corpus or income of the trust" appears in subs 1207V(2), which is an important part of Pt 3.18 of the Social Security Act . Part 3.18 introduced a system for the attribution to individuals of the assets and income of private companies and private trusts: see Anstis v Secretary, Department of Family and Community Services [2002] FCA 1043 at [3] - [4] . It must be borne in mind that, broadly speaking, in order to qualify for a pension under the Social Security Act , a person must satisfy an assets test and an income test. Simply put, a would-be pensioner may receive the lower of the two amounts that result from the application of the assets test and the income test. Pt 3.18 is part of this regime. 27 Subsection 1207X(2) of the Social Security Act , which is in Pt 3.18 , concerns private trusts. This subsection relevantly provides that, for the purposes of Pt 3.18 , if a trust is a "controlled private trust" in relation to an individual (and par 1207X(2)(b) is satisfied), then the individual is an "attributable stakeholder" of the trust (unless the Secretary determines otherwise). If the individual is an attributable stakeholder, then, pursuant to pars 1207X(2)(d) and (e), the individual's "asset attribution percentage" and "income attribution percentage" in relation to the trust is either 100%, or such lower percentage as the Secretary determines. Pursuant to subs 1207V(1), for the purposes of Pt 3.18 , a trust is a "controlled private trust" in relation to an individual if the trust is a "designated private trust" (as defined in subs 1207P(1)) and the individual passes the "control test" in subs 1207V(2) or the "source test" in subs 1207V(3). No issue arises in this case as to the application of subs 1207V(3). 28 Subsection 1207V(1) of the Social Security Act provides: For the purposes of this Part, a trust is a controlled private trust in relation to an individual if the trust is a designated private trust and: (a ) the individual passes the control test set out in subsection (2); or (b) the individual passes the source test set out in subsection(3). It is common ground that the trust created under clause 5(b) of the will is a "designated private trust": see subs 1207P(1). 29 Subsection 1207V(2) provides: For the purposes of this section, the individual passes the control test in relation to a trust if: (a ) the individual, or an associate of the individual ... is the trustee, or any of the trustees, of the trust; or (b) a group in relation to the individual was able to remove or appoint the trustee, or any of the trustees, of the trust; or (c) a group in relation to the individual was able to vary the trust deed or to veto the decisions of the trustee; or (d) the aggregate of: ( i) the beneficial interests in the corpus or income of the trust held by the individual (whether directly or indirectly); and (ii) the beneficial interests in the corpus or the income of the trust held by associates of the individual (whether directly or indirectly); is 50% or more; or (e) a group in relation to the individual had the power (by means of the exercise by the group of any power of appointment or revocation or otherwise) to obtain, with or without the consent of any other entity, the beneficial enjoyment of the corpus or income of the trust; (f) a group in relation to the individual was able in any manner whatsoever, whether directly or indirectly, to control the application of the corpus or income of the trust; or (g) a group in relation the individual was capable under a scheme of gaining the enjoyment or the control referred to in paragraph (e) or (f); or (h) a trustee of the trust was accustomed or under an obligation (whether formally or informally) or might reasonably be expected to act in accordance with the directions, instructions or wishes of a group in relation to the individual. (Emphasis added.) 30 It is common ground that the only question in this proceeding is as to the application of par 1207V(2)(d). As noted above, the Elliotts challenged the Tribunal's finding that they passed the control test in relation to the trust established under clause 5(b) of the will on the basis that they satisfied par 1207V(2)(d) of the Social Security Act . The Tribunal confined its attention to this paragraph. It did not consider whether the Elliotts satisfied the control test by reference to any other paragraph in subs 1207V(2), the SSAT having previously determined to the contrary. The Secretary did not contend that there was any error in its approach in this regard.