VEA ? [2]
Distributions or dividends paid to non-attributable stakeholders before 1 July 2000 are not subject to the deprivation provisions [3] of the Act. For the non-attributable stakeholder the distribution or dividends are to be treated as income for 12 months from the date they became eligible to receive the distribution, ie. the date of resolution to distribute (usually 30 June). This concession was given in recognition of the fact that until Ministerial Announcement on 9 May 2000, most people would not have been aware of the proposed new means test treatment of private trusts and private companies.
Distribution or dividends paid to a non-attributable stakeholder on or after 1 July 2000 may be assessed as a gift from the attributable stakeholder [3](s) (subject to their attribution percentage [3](s)) and income of the non-attributable stakeholder for 12 months from the date of resolution to distribute. However distributions paid to a non-attributable stakeholder will be disregarded if:
The deprivation rules in relation to the attributable stakeholder still apply. If future distributions or dividends are made to the pensioner a reconciliation of the pensioner's entitlements may occur with the possibility of an overpayment being raised from the date the dividend or distribution was exempted.
More ? [5]
John, who is in receipt of an income support payment, is the sole attributable stakeholder of a private family trust. After 1 July 2000, John distributes $6,000 each to his son and daughter (recorded on the trust's income tax return), who are also in receipt of income support payments. From 1 January 2002 John is subject to the deprivation provisions in respect of the $12,000 he has 'gifted' to his children. The distribution received by his son and daughter is treated as their income for 12 months from date of assessment.
According to section 52ZZJ of the VEA [12], 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.
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.
An individual will be treated as a genuine investor in a private company where:
A genuine injection of capital in return for equity in a private trust can only occur where the trust is a fixed trust, and the person obtains units [3] in return for the injection of capital. Genuine investors have the historical value of the injected equity capital assessed as their asset.
An entity means any of the following:
an individual,
a company,
a trust,
a business partnership,
a corporation sole,
a body politic.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16350%23comment-form
[2] https://clik.dva.gov.au/book/export/html/16350#tgt-cspol_part10_ftn497
[3] https://clik.dva.gov.au/%23
[4] https://clik.dva.gov.au/book/export/html/16350#tgt-cspol_part10_ftn498
[5] https://clik.dva.gov.au/book/export/html/16350#tgt-cspol_part10_ftn499
[6] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[7] https://clik.dva.gov.au/book/export/html/16350#ref-cspol_part10_ftn497
[8] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10311-assessment-capital-injection-private-trust-or-company-01012002/capital-injection-return-equity-private-trust-or-company
[9] https://clik.dva.gov.au/book/export/html/16350#ref-cspol_part10_ftn498
[10] https://clik.dva.gov.au/compensation-and-support-policy-library/part-12-compliance-and-obligations/126-overpayments
[11] https://clik.dva.gov.au/book/export/html/16350#ref-cspol_part10_ftn499
[12] http://clik.dva.gov.au/legislation-library