Social Security (Attribution of Assets) Principles 2017 (Cth)

Social Security (Attribution of Assets) Principles 2017

I, FINN PRATT, Secretary of the Department of Social Services, formulate these Principles under section 1209E of the Social Security Act 1991.

Dated 8 March 2017

Finn Pratt Secretary of the Department of Social Services

Contents

Page Part 1 Preliminary 1 Name of Principles 2 Commencement 3 Definition 4 Purpose Part 2 Excluded assets 5 Purpose of Part 2 6 Excluded asset — capital transfer by genuine investor Part 3 Excluded charge or encumbrance 7 Purpose of Part 3 8 Determination that charge or encumbrance is excluded 9 Criteria for arm's length transaction 10 Other matters

Part 4 Effect of loan not secured by charge or encumbrance over asset of company or trust 11 Purpose of Part 4 12 Effect of unsecured loan on value of assets 13 Criteria for arm's length transaction 14 Other matters

Part 1 Preliminary

1 Name of Principles These Principles are the Social Security (Attribution of Assets) Principles 2017. 2 Commencement These Principles commence on 1 April 2017. 3 Definition In these Principles: Act means the Social Security Act 1991. 4 Purpose These Principles set out decision-making principles with which the Secretary must comply for the purposes of making a determination under subsection 1208E (2), 1208G (6) or 1208H (1) of the Act.

Part 2 Excluded assets 5 Purpose of Part 2 This Part sets out decision-making principles with which the Secretary must comply for the purposes of making a determination under subsection 1208E (2) of the Act. 6 Excluded asset — capital transfer by genuine investor (1) This section applies if an individual (the investor), who is not an attributable stakeholder of a company, makes a genuine transfer of capital to the company for shares in the company. (2) This section also applies if an individual (the investor), who is not an attributable stakeholder of a trust, makes a genuine transfer of capital to the trust for units in the trust. (3) For subsections (1) and (2), a transfer of capital is a genuine transfer of capital if: (a) the investor is over 18 years; and (b) the investor receives, as consideration for the transfer, shares in the company, or units in the trust, of a value that is equivalent to the value of the capital transferred; and (c) the investor has a legal or equitable right to a share of the capital on the winding-up of the company or trust; and (d) the investor has a legal or equitable right to receive dividends or distributions under the constituent documents of the company or the terms of the trust. (4) The Secretary must consider the extent to which capital transferred in accordance with subsection (3) should be determined to be an excluded asset in relation to an attributable stakeholder of the company or trust, having regard to: (a) the value of the capital transferred to the company or trust; and (b) the value of shares or units received by the investor; and (c) the extent, if any, to which the value of the capital would not be required to be disregarded by any express provision of the Act.