Trust Purpose

Last amended: 2 July 2013

Care and Accommodation

The primary purpose of a special disability trust (SDT) is, during the lifetime of the principal beneficiary, to meet the reasonable care and accommodation needs of the principal beneficiary. The trust's expenditure is to be not more than is reasonable having regard to all of the circumstances and, in particular, the principal beneficiary's care and accommodation needs that are necessary because of their disability, and the trust's total assets.

Reasonable Care Cost

The general approach, as set out in the Guidelines, is that the trust can pay for any costs that relate to the principal  beneficiary's disability, medical or dental needs and approved fees. Approved fees are the charges in relation to the care and accommodation of the principal beneficiary in an approved residential care service, or an institution, hostel or group home operating under a specified Commonwealth agreement. The care needs of the principal beneficiary must be met in Australia to be considered reasonable.

Reasonable accommodation needs

A special disability trust can pay for the reasonable accommodation needs that relate to the principal beneficiary's disability. Accommodation that is acquired or rented from an immediate family member is specifically precluded from being a reasonable accommodation need. Allowable costs include payments made for:

• acquisition or rental of a property
• rates, taxes on the property or for its maintenance,

where the property, or an interest in the property is either:

• the principal beneficiary's accommodation, or
• an investment property rented at market value where the income from the rent is used for the benefit of the principal beneficiary.

Note: The trust cannot be used to meet the costs of care provided by the trustee, partner, parent or immediate family member.

Primary purpose test where care and accommodation needs are already met

The requirement for the special disability trust to have the primary purpose of meeting the reasonable care and accommodation needs of the principal beneficiary may not be satisfied in circumstances where the person's care and accommodation needs are already being met.  For example, where the principal beneficiary already owns their own accommodation, and is a Gold Card holder, the primary purpose test is unlikely to be met.  In these cases the trustee will need to demonstrate, to the delegate's reasonable satisfaction, how the special disability trust addresses the principal beneficiary's care and accommodation needs, in order for the trust to be accepted as complying with the legislative requirements.

Other trust purposes

A trust may also have other purposes such as the maintenance and the practical administration of the trust. These are considered to be ancillary to the primary purpose and are not required to be addressed in the expenditure guidelines.

Discretionary spending limits

From 1 January 2011, the trust can undertake a level of discretionary spending that is not directly related to the care and accommodation needs of the beneficiary. The discretionary spending must be for the benefit of the beneficiary. The maximum value of the income and assets of the trust that can applied for this purpose is determined by Commission and is indexed on 1 July each year to the CPI.    

The discretionary amount can be expended in a financial year. This allows special disability trusts greater flexibility to meet additional costs relating to the beneficiary's health, wellbeing, recreation, independence and social inclusion.

The following are some examples of what the trust can pay for from the discretionary amount as they are not considered reasonable care needs:

• food,
• household items for the beneficiary,
• vehicle maintenance and vehicle-related expenses other than those required for, or because of, the principal beneficiary's disability,
• petrol for vehicle,
• recreation and leisure activities,
• communication devices, unless modified because of the principal beneficiary's disability,
• payment of utilities charges in connection with the principal beneficiary's place of residence,
• building and content insurance,
• household cleaning services, and
• life skills and social inclusion workshops.

Receipts and expenditure will need to be included in the yearly financial statements.

Prohibition on payment of immediate family members

The trustee cannot pay any immediate family member for providing care to the principal beneficiary. Any paid care must be provided by an arm's-length employee of the SDT, e.g. nurse, physio, etc.

Incidental benefit from expenditure

A third party can only benefit from expenditure for the care and accommodation of the principal beneficiary where the benefit is incidental. The expenditure is allowable where the other party's benefit is of a non-cash nature, minor and provided on a basis that is infrequent and irregular. For e — xample, w — here the trust purchases a motor vehicle for transport of the principal beneficiary to and from their medical treatment, other family members can also travel in the vehicle.