"We can't sell those shares" — what Centrelink actually does with your private company or trust

It's one of the most common things pensioners with shares in a family business say: "We can't sell them — so surely Centrelink won't count them?"

The logic is understandable. But it's wrong. And it can be an expensive mistake.

Here's how Centrelink actually values unlisted investments for the Age Pension means test, and what you need to know before you lodge a claim.

What counts as an "unlisted investment"?

Any financial interest that isn't traded on a stock exchange. That includes shares in a private company — a family farming company, a property holding company, a small trading business structured as a Pty Ltd — units in an unlisted unit trust, interests in a discretionary family trust (including where you're the appointor or director of the corporate trustee), and partnership interests. If your family put the farm or the business into a company or trust decades ago, you almost certainly have one of these.

The NAV method: what Centrelink uses to value it

Centrelink doesn't use market price — for unlisted investments, there is no market price. It uses the Net Asset Value (NAV) method: the entity's total assets at market value, minus total liabilities, equals the NAV. Your assessed asset value is your proportionate share of that NAV.

A worked example: a family company holds $2 million in assets — farmland, equipment, and cash. It has $500,000 in liabilities, including a mortgage. The NAV is $1.5 million. If you hold 40% of the shares, Centrelink assesses you at $600,000. Two things to note: Centrelink uses market value, not book value, so if the property inside the entity has appreciated since the last financial statement, the current market value is what matters. And Centrelink values the assets as if it can see through the company or trust and count every asset directly.

The illiquidity myth

Here is the part that surprises most people: illiquidity does not reduce your assessed value.

Even if you genuinely cannot sell your shares — no buyer exists, the other family members won't agree, the shares are restricted from transfer — Centrelink still assesses the proportionate NAV as your asset. There is also no minority discount. If you hold 5% of a $5 million company, that's $250,000 assessed against you, regardless of the practical reality that a 5% stake in a private family business is nearly impossible to sell to a stranger at anything close to the theoretical proportionate value. The paper asset is the assessed asset.

Trusts: where it gets more complex

For a straightforward unlisted unit trust, the rule is the same as for a company: you're assessed on your proportionate share of the trust's NAV.

For a discretionary trust, Centrelink may attribute the entire trust to you — not just a proportionate share — if you have effective control (Social Security Act 1991 Part 3.18). Control includes being the appointor (the person who can appoint or remove the trustee), a director of the corporate trustee, or someone who can effectively direct distributions even without formal authority. If attribution applies, Centrelink looks through the trust and counts all the underlying assets as yours, not just a proportionate fraction.

Many people who stepped back from day-to-day management of a family trust years ago still hold the appointor role. That role is enough for Centrelink to potentially attribute the whole trust to them.

Goodwill

Trading businesses often include goodwill — the value beyond physical assets that comes from client relationships, brand recognition, or operating systems. Business goodwill attributable to the enterprise itself, rather than to any individual, is included in the NAV. Personal goodwill — value that exists only because of your specific skills or reputation and that cannot be separately transferred — may be arguable out of the NAV, on the basis that it isn't a separable asset you could sell independently. This is a contested area and requires documentation and specialist advice to support.

The income test: no deeming

One thing that often surprises people is that private company shares and trust interests are not "financial assets" for the purposes of the income test deeming rules. Centrelink does not assume a notional return on your shares. If the company hasn't paid you a dividend, your assessed income from that holding is zero for income test purposes — even though the full NAV sits in the assets test.

If the company does pay distributions, salaries, or director's fees, those are assessed as actual income. But zero distributions means zero income under the income test. The assets test and income test work independently for unlisted investments.

Disclosure obligations

When you claim the Age Pension, you must disclose all interests in private companies, unlisted trusts, and partnerships. Centrelink uses data matching — it checks ABN registrations, company directorship records from ASIC, and other sources — so undisclosed interests are likely to be found. The forms required are MOD PC (Module Private Company) and MOD PT (Module Private Trust), which require entity financial statements and ownership structure details.

Once you're receiving the pension, you must notify Centrelink of material changes: new entities, changes in ownership interests, significant changes in value, or winding up of an entity. Using financial statements that are years out of date when property or other values have risen is a live compliance risk, and the resulting pension overpayment becomes a Centrelink debt.

Before you claim

The best time to understand your position is before you lodge the claim. Get current financials from your accountant for any entity you have an interest in. Confirm your role in any trust — particularly whether you hold the appointor role, even if you haven't exercised it in years. For farming families, ask specifically about primary production provisions, which can provide more favourable treatment for primary production assets held within a company or trust structure. For any complex situation, specialist advice before claim is almost always worthwhile.

Sources

• Private trusts and companies (Age Pension) — Services Australia
• Assessable Assets from Private Companies & Unlisted Public Companies (net asset backing/NAV method) — Social Security Guide 4.7.2.20
• Attribution Guidelines for Private Trusts & Private Companies from 01/01/2002 — Social Security Guide 4.12.1
• Private Company form (MOD PC) — Services Australia
• Private Trust form (MOD PT) — Services Australia
• Aggregation Assessments of Controlled Primary Production Private Trusts & Private Companies — Social Security Guide 4.12.11.10