EXPLANATORY STATEMENT
Veterans' Entitlements (Means Test Treatment of Private Companies — Excluded Companies) Declaration 2001
Summary
Subsection 52ZZA(5) of the Veterans' Entitlements Act 1986 (the Act) provides that the Repatriation Commission (the Commission) may, by writing, declare that a company in a specified class of companies is an excluded company for the purposes of section 52ZZA.
Pursuant to subsection 52ZZA(5) the Commission made the attached Instrument which specifies a class of companies within which a company is an "excluded company".
The effect of a company being an excluded company is that the assets and income of such a company will not be attributed to an individual for the purposes of ascertaining the person's assets or income for means-testing purposes under the Act.
Background
The Social Security and Veterans’ Entitlements Legislation Amendment (Private Trusts and Private Companies – Integrity of Means Testing) Act 2000 amended the Social Security Act 1991 and the Veterans' Entitlements Act 1986 to give effect to a measure in the Government's 2000-2001 Budget to revise the means test treatment of private companies and private trusts.
The measure aims to ensure that clients who hold their assets in private companies or private trusts receive comparable treatment under the means test to those clients who hold their assets directly. The assets and income of the structure will be attributed to the person or persons who control the company or trust, or to the person or persons who were the source of the capital or corpus of the company or trust.
One of the criteria that establishes whether an asset or the income of a company will be attributed to an individual under the Act is that the company is a "designated private company". Within the definition of a designated private company are a number of criteria that establish if a company is a designated private company. One of these criteria states that "the company is not an excluded company". In short, a designated private company cannot be an excluded company.
The attached Instrument, therefore, excludes certain companies from the ambit of the definition of designated private company with the result that the assets and income of the excluded company will not be attributed to the individual in question for means-testing purposes.
The key question is: "what is an 'excluded company' " and this is explained in the attachment.
ATTACHMENT
Explanation of the Instrument
Part 1
Section 1 states the name of the Instrument.
Section 2 provides that the Instrument will commence on gazettal. The Instrument is a "disallowable Instrument" meaning that it must be gazetted and tabled in Parliament.
Section 3 sets out the purpose of the Instrument.
Section 4 contains "interpretation provisions".
Part 2
Section 5 specifies the characteristics a company must possess in order for that company to be an excluded company.
Where the sole or dominant purpose of a company is to receive, manage and distribute property given to it, directly or indirectly, by a government or government-type body, for a community purpose, then the company is an excluded company.
The terms "government body" and "community purpose" are defined in section 4 of the Instrument.
Similarly, where the sole or dominant purpose of a company is to receive, manage and distribute income generated from the use of indigenous-held land, then, likewise, that company is an excluded company.
The terms "income" and "indigenous-held land" are defined in section 4 of the Instrument.
Repatriation Commission