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This topic outlines the treatment of assessable assets (1.1.A.290) - private and unlisted public companies (1.1.C.220) which DO NOT come under the trust and companies rules that came into effect from 1 January 2002.
Policy reference: SS Guide 4.7.2.20 Assessable Assets from Private Companies & Unlisted Public Companies, 4.12.1.10 Determining a Designated Private Trust or Private Company from 01/01/2002
The following table describes the treatment of assessable assets and provides references to further information, if appropriate.
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Assessable Asset |
Treatment/Further Information |
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Shares in a private or unlisted public company, which carry rights to participate in capital distributions |
Assess using the market value if a market exists. If no market exists, generally the net asset backing method is used. SS Guide 4.7.2.20 Assessable Assets from Private Companies & Unlisted Public Companies |
|
Shares in a private or unlisted public company, which do NOT carry rights to participate in capital distributions |
Assess using the market value if a market exists. If no market exists use the amount paid for the shares or some other valuation (4.7.2.20). |
|
Assets, excluding the principal home (section 11A(1)) and adjacent land (1.1.A.58), which are transferred or sold to the company by the income support recipient and/or partner |
Deprivation of assets may apply if the recipient did not receive adequate financial consideration (1.1.A.55). |
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- Transfer of the principal home to company, OR - Principal residence of the income support recipient owned by the company |
Deprivation of assets may apply unless valuable consideration (1.1.V.25) is received, even though the value of a recipient's interest in their principal home is exempt from the assessment of the assets test. |
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Partly paid shares |
4.6.5.50 Assessing Shares in Private & Unlisted Public Companies - Not Assessed Under New T & C Rules |
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Loans to a private company |
Shareholder loans are the assets of the individual shareholder and MUST be maintained for asset test purposes. Deeming rules apply to outstanding loan balances. Explanation: This recognises that a company is a separate legal entity.
Shareholders' loans should NOT be removed from the balance sheet of the company. Explanation: These loans represent a liability of the company which, if not repaid earlier, will be repaid when the company is wound up. |
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Failed loans |
4.6.5.65 Loans that No Longer Exist |
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Governing director's shares |
4.6.5.50 Assessing Shares in Private & Unlisted Public Companies - Not Assessed Under New T & C Rules |
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Distribution of capital when a company is wound-up |
If a company has been, or is being, wound-up, any distribution of assets is NOT income (section 8(1)-'income'). |
Act reference: SSAct section 8(1)-'income', section 11A(1) Principal home, section 1118(1) Certain assets to be disregarded in calculating the value of a person's assets, section 1123 Disposal of assets, section 1207N Designated private companies
Policy reference: SS Guide 4.4.2 Deeming of Financial Investments, 4.6.5.50 Assessing Shares in Private & Unlisted Public Companies - Not Assessed Under New T & C Rules, 4.7.2.20 Assessable Assets from Private Companies & Unlisted Public Companies, 4.12.1.10 Determining a Designated Private Trust or Private Company from 01/01/2002
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Last reviewed: 16 May 2011
