Last chance to arrange trusts
Today I am pleased to announce a three-month extension for people who want to transfer control of their private trusts or private companies, before social security deprivation provisions are applied.
For people who haven’t understood the changes to the treatment of trusts and companies, this 3 month breathing space gives them time to consider what’s best for them and their families.
Although the new deprivation provisions start from 1 January 2002, the opportunity now exists for Centrelink to re-start people’s pensions from the date they proved they had transferred control of their trust or company, provided it was before 1 April 2002 and other requirements were met.
We have given ample time and notice to all those who may be affected by the new measure, however, there still appears to be a small group of people who need more time to finalise their affairs.
For too long the rules surrounding private trusts and companies have been inconsistent. The new measure ensures that people will receive the same treatment under the income and assets tests no matter how they choose to hold their assets.
It has simply been unfair to allow some people to avoid their assets being counted under the social security means test – the Trusts and Companies changes are a further move to ensure income support only goes to those in genuine need.
To take advantage of the opportunity being offered, people have to prove to Centrelink that they have surrendered all involvement in their family trust.
The main group of clients who are not fully aware of the change appears to be in the farming community.
With the help of the National Farmers Federation, who assure me that they will use all their resources to reach those farmers who are not yet aware of the changes, the extra three months should give them enough time to get organised.
So, those who run their family farm through a trust and are thinking about retiring should think seriously about taking up this last opportunity to hand over their farm and still receive income support in their retirement.
Those farmers who are currently winding up involvement in their farm trusts will also have the opportunity to ‘wind down’ their farming partnerships.
If farmers have complied with all the other requirements of surrendering control of their business, they will be able to continue operating their farming partnership until 30 June 2002 without necessarily having all of the farm assets attributed to them. This recognises the difficulty of winding up partnerships in the middle of a tax year