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Assessment of Income and Assets for SDT

Document

Last amended: 27 May 2011

    

VEA ?

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

VEA ? (go back)

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".    

More ?

Reference Library – Pension Rates

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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.

Non-exempt assets

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.


According to section 52ZZZW of the VEA, a special disability trust is a trust that has been established solely in order to provide for the current and future care and accommodation needs of the beneficiary who is a person with a severe disability.

 

 

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.

 

 

An exempt asset is one that is disregarded when calculating the value of a person's assets under the assets test.  Examples of exempt assets include:

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.

Means testing is application of the income test and the assets test to determine a person's rate of pension.  The rate that is payable to a person is the lesser of the rates determined under each test.  All income support pensions paid by DVA are means tested.