Disposal of Assets to a Private Trust or Company before 1 January 2002

General provisions

If, on 1 January 2002, a person or members of a couple are:

• attributable stakeholders with respect to the assets of a private trust or private company, and
• are subject to a deprivation period due to the gifting of assets to the trust or company before 1 January 2002,

the deprivation amount is to be adjusted in line with the percentage of the assets of the structure allocated to them.    

Example 1 of effect on existing deprivation from 1 January 2002 - 100% control

On 1 January 2002 Bill and Bev, a married couple, are attributed with 100% ($300,000) of the assets of a private family trust. Bill and Bev are currently serving a five-year deprivation period in respect to assets gifted to the trust on 3 June 1998. From 1 January 2002 the disposition amount is to be reduced to nil. Bill and Bev control 100% of the assets and income of the trust therefore they are the only attributable stakeholders and cannot gift to themselves.

Example 2 of effect on existing deprivation from 1 January 2002 - 100% control

On 1 January 2002 Laurie is attributed with 40% of the assets of a private company. Laurie is currently serving a 5-year deprivation period in respect to assets he gifted to the company on 15 July 1999. Laurie's deprivation amount is $200,000. On 1 January 2002, Laurie's deprivation AMOUNT is reduced to $120,000 ($200,000-40%). Laurie's deprivation period remains the same.

Deprivation treatment post 1 January 2002, where attribution percentage is less than 100%

If on 1 January 2002, one or both members of a couple are attributed with a percentage of the assets and income of an entity which is less than 100%, and one or both of them are subject to a deprivation period due to the gifting of assets to the structure before 1 January 2002, the deprivation amount for each is reduced by the couple's combined attribution percentage.

Example 1 of effect on existing deprivation from 1 January 2002 - control is less than 100%

On 1 January 2002 Paul and Maureen, a married couple, are attributed with 40% and 20% of a private trust. Paul and Maureen are subject to a deprivation period in respect to assets gifted to the trust on 10 July 1998. Paul's deprivation amount is $150,000, Maureen's deprivation amount is $100,000. On 1 January 2002 Paul's deprivation amount is reduced to $60,000 ($150,000-60%). Maureen's deprivation amount is reduced to $40,000 ($100,000-60%). Their deprivation periods remain the same.

Example 2 of effect on existing deprivation from 1 January 2002 - control is less than 100%

On 1 January 2002, Vince is attributed with 60% of the assets of a private company. Vince and his wife Fran are serving a deprivation period in respect to assets gifted to the company on 3 November 1999. Fran is not an attributable stakeholder of the company. Vince and Fran's combined deprivation amount is $70,000. On 1 January 2002 Vince and Fran's (combined) deprivation amounts are reduced to $28,000 ($70,000-60%). Their deprivation periods remain the same.