Assessable Assets from Non-discretionary Trusts pre 01/01/2002

If a person is...

Then they...

a co-beneficiary of the assets of a non-discretionary trust

have an asset. The value of the asset is determined by the share of the trust held by each beneficiary, as set out in the trust deed.

Example: If a person is one of 5 beneficiaries of a trust that has $100,000 in assets and the terms of the trust provide that the beneficiaries have an equal interest, then the value of each beneficiary's interest is $20,000.

the sole beneficiary of the assets of a non-discretionary trust

have the beneficial ownership of the trust's assets which are considered to be theirs, unless the assets are exempt.

Role

Description

Settlor

Is not usually entitled to a share of the trust assets, but deprivation of assets provisions may apply for gifts to the trust.

Contributor

Loans made to the trust are assessable assets, and deprivation of assets may apply for gifts to the trust. Deeming applies to the balances of outstanding loans to the trust.

Beneficiary

Assessment is based on the total asset value divided by the person's share of ownership, as specified in the trust deed.

Trustee

Is not entitled to a share of the trust assets unless they are also a beneficiary, although asset(s) may be registered in their name.

Type of Asset

Description

Interest on the trust's assets

Assess using the amount or proportion set out in the trust deed.

Beneficiary account

Assess as a financial asset of the person. The money is put in the account by the trust usually as reinvested trust distributions or interest. These may be called beneficiary loan accounts, current accounts or beneficiary current accounts.

Loan to a trust

Assess as a financial asset of the person. The person has loaned the money to the trust. These may also be called beneficiary loan accounts or loans.

Gifting to a non-discretionary trust by a beneficiary or unit holder

The amount of the deprivation is the difference between the value of the asset(s) gifted and any resulting increase in the value of the person's interest in the trust's assets, less the allowable gifting amount.    

Assets gifted to a trust

Maintain the amount that was disposed of as a deprived asset for 5 years from the date of disposal, less the allowable gifting limit.

Managed investments and shares sold/transferred to the trust

Deprivation provisions may apply if adequate financial consideration is not received.