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Gifting to Special Disability Trusts

Document

Last amended: 9 October 2006

    

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)

 

Who can gift to an SDT

Parents and immediate family members of pension age can gift to a complying special disability trust (SDT), up to the value of $500,000 (as at 20 September 2006) in total, without incurring any adverse effect on their DVA or Centrelink payments. Contributions to the SDT can come from several different sources within the immediate family (until the total reaches $500,000). The deprivation provisions only apply to amounts gifted over the $500,000 limit. Once an SDT has been established anyone, or any organisation or corporation, can make a gift to it.    

 

Who cannot gift

The following cannot gift to an SDT:

  • neither the principal beneficiary nor their partner can gift to the trust unless the contribution is funded by a bequest or superannuation death benefit within three years of the event,
  • the disabled person cannot contribute their compensation payments into the SDT. The trust is intended only for succession planning by parents and immediate family members, and
  • the settlor of the trust, that is the person who establishes the trust, cannot be a donor to it.    
Death of the principal beneficiary

    

 

If the principal beneficiary dies within five years of the trust's establishment, the trust must be wound up and the proceeds distributed to the original donors in the proportions in which they gave. The assets then become assessable assets of the donor/s. If the original donor is deceased, the trust's secondary (reversionary) beneficiaries may benefit from the proceeds.

Gifting prior to pension age

    

 

In certain circumstances, gifts may be made to the trust by family members under pension age without being taken to be disposal of an asset. For instance, if an immediate family member donated to the trust within five years of reaching pension age and during that period the gifting concession was not claimed by any other person, then it can be claimed by the donor on reaching pension age.

Unconditional gifting

All gifts to the SDT must be unconditional. Any type of asset can be gifted to the SDT provided that it can be utilised to produce income or provide for the care and accommodation for the principal beneficiary.


 

 

According to subsection 5Q(1) of the VEA, for the purposes of the means test concession, a parent or immediate family member includes:

  • natural parents,
  • legal guardians (a person who is, or was the legal guardian of the person with a severe disability while that person was under the age of 18 years),
  • adoptive parents,
  • step parents,
  • grandparents, and
  • siblings.

 

 

Currently, the pension age for a veteran is 60 years of age (VEA 5QA).

The pension age for a non-veteran is determined by the table below:

Date of birth (both dates inclusive)

Age Pension age

1 July 1952 to 31 December 1953

65 years and 6 months

1 January 1954 to 30 June 1955

66 years

1 July 1955 to 31 December 1956

66 years and 6 months

On or after 1 January 1957

67 years

 

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.

 

 

When making a decision whether a course of conduct warrants application of the deprivation provisions, reference should be made to section 48 of the VEA in relation to income and section 52E of the VEA in respect of assets.

 

 

A person's 'partner' is someone who is a member of a couple with that person.

Currently, the pension age for a veteran is 60 years of age (VEA 5QA).

The pension age for a non-veteran is determined by the table below:

Date of birth (both dates inclusive)

Age Pension age

1 July 1952 to 31 December 1953

65 years and 6 months

1 January 1954 to 30 June 1955

66 years

1 July 1955 to 31 December 1956

66 years and 6 months

On or after 1 January 1957

67 years