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Assessment of Income and Assets for SDT
Last amended: 27 May 2011
Attribution of income
Section 52ZZZWI VEA
Income amounts from SDT
Section 52ZZZWJ VEA
Attribution of assets
Section 52ZZZWK VEA
Effect of certain transfers to SDT
Section 52ZZZWL VEA
The effect of exceeding the $500,000 limit
Section 52ZZZWM VEA
Transfers by the immediate family members prior to reaching pension age etc
Section 52ZZZWN VEA
Assets test exemption
The principal beneficiary of a special disability trust (SDT) is allowed an assets test exemption on the asset value of the SDT, up to the SDT asset value limit. This limit is indexed on 1 July each year. The current asset value limit for special disability trusts can be found in the current pension rates charts, under the heading "Special disability trust".
Trust assets above that limit, not including the principal home, are added to the assessable assets of the principal beneficiary. The controllers of the SDT are not attributable stakeholders. The primary residence is an exempt asset and will not be included in the assessable assets of the trust. The principal beneficiary is the only attributed stakeholder under the trust and company rules.
There is no limit on the value of assets that can be held in the SDT. Where the trust's assessable assets are above the concessional limit, the amount of assessable assets above the assets value limit are to be included in the principal beneficiary's assessable assets.
Income test exemption
All income from the trust is exempt from means testing. The income can only be used for the benefit of the principal beneficiary, including trust expenses and any personal income tax associated with assessable income from the trust. Expenditure is to be restricted to what can be considered reasonable in relation to the principal beneficiary's care and accommodation needs.
One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL).
The principal home has the meaning given by subsection 5LA(1) of the VEA and subsection 5LA(2) of the VEA. The principal home of a person is generally the place in which they reside. In certain circumstances, however, the principal home of a person can be the place in which they formerly resided. The following property is regarded as part of the principal home.
- the residence itself (e.g. house, flat, caravan),
- permanent fixtures (e.g. stoves, built-in heaters, dish-washers, light fittings and affixed carpets),
- [glossary:curtilage:DEF/Curtilage] (i.e. two hectares or less of private land around the home where the private land use test has been satisfied, or all land held on the same title as the person's principal home where the extended land use test has been satisfied), or
- any garage, shed, tennis court or swimming pool used primarily for private purposes provided it is on the same title as the principal home.
According to section 52ZZJ of the VEA, a person is an attributable stakeholder if a company or trust is a controlled private company or trust in relation to the individual unless the Commission determines otherwise.
- the value of a person's principal home,
- any motor vehicle provided under the Vehicle Assistance Scheme,
- the value of any medal or decoration awarded for valour, other than used as an investment or hobby,
- up to two funeral bonds where the combined amount invested is within the funeral bond threshold,
- a prepaid funeral or cemetery plot
- value of a superannuation fund investment prior to pension age.
For a full legislative definition see section 52 of the VEA.
Assets value limit is the maximum value of assets a person can have without affecting the person's pension rate. The assets value limit is worked out in accordance with SCH6-F3 of the VEA.