A court may decide that a trust exists due to the conduct of the relevant parties, although no action has been taken to declare a trust in writing.
Example: These trusts include:
VEA ? [2]
If one of these trusts exists, determine the role of the person in the trust and assess the trust income and assets according to that role. The following table outlines the 2 roles that a person may play in these trusts and how to assess them.
Role |
Assessment |
Trustee |
Although the legal owner of assets, they do not have beneficial ownership, therefore no asset is assessable. Deprivation provisions may apply. More ? [3] |
Beneficial owner |
Assessment is based on the person's share of the beneficial ownership of the assets. |
Any asset held in trust by a person for any other person or child, cannot be regarded as the person's asset. Assets held in trust for children are not treated differently to assets held for any other person. Ownership of the asset belongs to the beneficial owner, not the trustee [4].
A person can establish a trust by opening a bank account as trustee for another person. For example a bank account could be opened on behalf of a child or any other person. The following table describes assessment of bank accounts held in trust.
If a person... |
Then... |
transfers money to a trust account |
it is the property of the beneficiary(s), along with interest credited to the account. The deprivation of income and assets provisions may apply. |
as trustee of the account, is using the account for personal benefit |
the balance of the account is assessed as the trustee's asset, and is subject to deeming. In these cases it cannot be accepted that a trust has been created. |
The person is legally obliged in the same way as other trustees to use the trust's assets for the benefit of the beneficiary(s).
A person who loans assets to a trust retains ownership of the assets, which are assessed in the same way as other amounts on loan. The loan will be reflected as a liability in the trust's balance sheet.
Disposal of assets may have occurred if a person gifts assets to a trust within 5 years of becoming qualified to receive a pension. The disposal may be subject to deeming.
Trustee has two meanings depending on the context, (i) and (ii).
(i) a person who looks after someone else's affairs
According to section 202 of the VEA [9], a trustee is a person appointed by the Commission to administer the financial affairs of a pensioner who may be incapable of managing their own affairs for reasons such as:
These criteria include circumstances where a pensioner has a psychiatric disorder or a mental illness as a result of alcohol or drug addiction.
A trustee can be appointed, with or without the consent of the pensioner and once appointed, a trustee has full control of the pension payment.
(ii) a person responsible for administration of a trust
According to section 52ZO of the VEA [9], trustee has the same meaning as in the Income Tax Assessment Act 1997 [10].
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16432%23comment-form
[2] https://clik.dva.gov.au/book/export/html/16432#tgt-cspol_part10_ftn406
[3] https://clik.dva.gov.au/book/export/html/16432#tgt-cspol_part10_ftn407
[4] https://clik.dva.gov.au/%23
[5] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[6] https://clik.dva.gov.au/book/export/html/16432#ref-cspol_part10_ftn406
[7] https://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/96-deprivation-income-and-assets
[8] https://clik.dva.gov.au/book/export/html/16432#ref-cspol_part10_ftn407
[9] http://clik.dva.gov.au/legislation-library
[10] http://www.comlaw.gov.au/comlaw/management.nsf/lookupindexpagesbyid/IP200401745?OpenDocument