Last amended: 9 October 2006
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
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.