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Disposal of Assets to a Private Trust or Company before 1 January 2002
VEA ?
General provisions
VEA ?
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.
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Example 1 of effect on existing deprivation from 1 January 2002 - 100% control
VEA ?
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.
Individual disposes of assets to company or trust before 1 January 2002 – individual is attributable stakeholder
Section 52ZZZ VEA
Individual disposes of assets to company or trust before 1 January 2002 – individual's spouse is attributable stakeholder
Section 52ZZZA VEA
Attributable stakeholder, asset and income attribution percentage
Section 52ZZJ VEA
Disposal of assets
Section 52E VEA
Disposal preclusion period
Section 45UT VEA
According to Section 5E(2) of the VEA a person is a member of a couple, if they are:
- legally married to another person and is not living separately and apart from the other person on a permanent basis; or
- living in a prescribed registered relationship with the other person (whether of the same sex or a different sex) and is not living separately and apart from that other person on a permanent basis; or
- all of the following conditions are met:
- living with another person, whether of the same sex or a different sex;
- not legally married to that person;
- in a de facto relationship with that person; and
- not in a prohibited relationship
The term “partnered” is also commonly used.
According to section 52ZZJ of the VEA, a person is an attributable stakeholder if a company or trust is a controlled private company or trust in relation to the individual unless the Commission determines otherwise.
An entity means any of the following:
an individual,
a company,
a trust,
a business partnership,
a corporation sole,
a body politic.
Attribution percentage is the percentage of income or assets in the private trust or company that will be taken to be the income and assets of the pensioner for the purpose of the income and assets tests. This only applies if the pensioner (or spouse) is determined to be a controller of the private trust or company.