VEA ? [2]
Distributions of the capital of a private trust or private company to an attributable stakeholder [3] will not be assessed as income [3] for pension purposes (provided the distribution amount is equal to the income attribution percentage [3] of the stakeholder). This is because the capital of the structure is already assessed as an asset of the attributable stakeholder. A distribution of that capital to the stakeholder, in accordance with their attribution percentage, is merely a shift of those assets and is not income for pension purposes.
More ? [4]
Bill and Ben operate a gardening shop through a private company. They are both in receipt of an income support payment. Bill is attributed with 60% of the assets and income of the structure, Ben is attributed with 40%. Bill and Ben decide to withdraw $100,000 (capital) from the business. Bill receives $60,000 (60%), Ben receives $40,000 (40%). As the distribution of capital has been made in accordance with their attribution percentages it is not assessed as income for pension purposes.
VEA ? [5]
The portion of the capital of a structure distributed to an attributable stakeholder in excess of their attribution percentage will be assessed as income for 12 months from the date of receipt/distribution.
VEA ? [6]
Bill and Ben decide to draw further capital of $60,000 from the structure. Bill receives $50,000, Ben receives $10,000. Bill received $14,000 in excess of his attribution percentage ($36,000). The excess amount of $14,000 is assessed as income for 12 months from the date of receipt.
The portion of the capital of a structure distributed to an attributable stakeholder that is less than the stakeholder's attribution percentage, will be a gift of that stakeholder and subject to the deprivation provisions [3].
More ? [7]
In the previous example Ben received $10,000 from the distribution of the capital. As this amount is less than his attribution percentage of 40% ($24,000), Ben is assessed as having gifted $14,000 and the deprivation rules are applied.
Distributions of the capital of a structure to a non-attributable stakeholder will be assessed as a gift from the attributable stakeholder (subject to their attribution percentage [3]), and income of the non-attributable stakeholder for 12 months from the date of receipt.
More ? [8]
Bill and Ben have made a capital distribution of $20,000 to Bill's daughter, Jill, from the business. Jill is in receipt of income support pension. Bill is deemed to have gifted $12,000 (60%) and Ben is deemed to have gifted $8,000 (40%). Jill has income of $20,000 assessed against her for 12 months from the date of receipt. However, the distribution of the capital of a structure to a non-attributable stakeholder will be disregarded if:
The deprivation provisions in relation to the attributable stakeholder still apply.
Disposal of assets by a company or trust
Section 52ZZW [9] VEA
Constructive transfers of property or services to an entity
Section 52ZV [9] VEA
10.3.12/Distribution of the Income of a Private Trust or Company to an Attributable Stakeholder [11]
Certain amounts taken to be received over 12 months
Section 46A [9] VEA
Disposal of assets
Section 52E [9] VEA
Disposal of ordinary income
Section 48 [9] VEA
According to section 52ZZJ of the VEA [20], 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.
According to section 5H of the VEA [21] income is:
If the individual is an attributable stakeholder [3] of the trust or company, the individual's income attribution percentage in relation to the trust or company is:
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.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16349%23comment-form
[2] https://clik.dva.gov.au/book/export/html/16349#tgt-cspol_part10_ftn488
[3] https://clik.dva.gov.au/%23
[4] https://clik.dva.gov.au/book/export/html/16349#tgt-cspol_part10_ftn489
[5] https://clik.dva.gov.au/book/export/html/16349#tgt-cspol_part10_ftn490
[6] https://clik.dva.gov.au/book/export/html/16349#tgt-cspol_part10_ftn491
[7] https://clik.dva.gov.au/book/export/html/16349#tgt-cspol_part10_ftn492
[8] https://clik.dva.gov.au/book/export/html/16349#tgt-cspol_part10_ftn493
[9] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[10] https://clik.dva.gov.au/book/export/html/16349#ref-cspol_part10_ftn488
[11] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10312-assessing-income-distributions-private-trust-or-company-01012002/distribution-income-private-trust-or-company-attributable-stakeholder
[12] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/1037-attribution-percentage-derivation-and-attribution-period-01012002/attribution-percentage
[13] https://clik.dva.gov.au/book/export/html/16349#ref-cspol_part10_ftn489
[14] https://clik.dva.gov.au/book/export/html/16349#ref-cspol_part10_ftn490
[15] https://clik.dva.gov.au/book/export/html/16349#ref-cspol_part10_ftn491
[16] https://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/96-deprivation-income-and-assets/962-general-provisions-deprivation
[17] https://clik.dva.gov.au/book/export/html/16349#ref-cspol_part10_ftn492
[18] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10312-assessing-income-distributions-private-trust-or-company-01012002/distribution-income-private-trust-or-company-non-attributable-stakeholder
[19] https://clik.dva.gov.au/book/export/html/16349#ref-cspol_part10_ftn493
[20] http://clik.dva.gov.au/legislation-library
[21] http://clik/health-procedure-library/health-information-and-management-notes-himn/vhc/072014-vhc-veterans-home-care