Last amended: 10 June 2011
The purpose of a special disability trust [2] (SDT) is to assist families, who have the financial means to do so, to make private financial provision for the current and future care and accommodation needs of family members with severe disabilities [2]. This measure took effect from 20 September 2006. Each trust can have only one principal beneficiary and a principal beneficiary can have only one SDT. The principal beneficiary can have other (non-SDT) trusts in addition to the SDT.
A beneficiary assessment must be completed prior to setting up a SDT. When the beneficiary is being paid by Centrelink, the assessment is completed by Centrelink. Once the assessment has been completed, a copy of the assessment should be requested for placement on file. All SDT cases should be referred to the Trust and Companies Team.
An SDT must meet the following requirements:
Note: If a trust does not contain the compulsory clauses (and cannot be issued with a waiver), or it contains clauses that could override the relevant compulsory clauses, it will not be classed as an SDT.
The beneficiary must have a severe disability.
More → [11]
The primary purpose of an SDT is to meet the reasonable care and accommodation needs of the principal beneficiary.
More → [12]
All income from the SDT is exempt from the income test, while the principal beneficiary is allowed an assets test exemption up to the special disability trust assets value limit.
More → [13]
There are limitations to gifting to an SDT.
More → [14]
According to section 52ZZZW of the VEA [38], 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 [2].
To be eligible to be the principal beneficiary of a special disability trust [2], a person must have a severe disability. A person with a severe disability is:
Trustee has two meanings depending on the context, (i) and (ii).
(i) a person who looks after someone else's affairs
According to section 202 of the VEA [38], a trustee is a person appointed by the Commission to administer the financial affairs of a pensioner who may be incapable of managing their own affairs for reasons such as:
These criteria include circumstances where a pensioner has a psychiatric disorder or a mental illness as a result of alcohol or drug addiction.
A trustee can be appointed, with or without the consent of the pensioner and once appointed, a trustee has full control of the pension payment.
(ii) a person responsible for administration of a trust
According to section 52ZO of the VEA [38], trustee has the same meaning as in the Income Tax Assessment Act 1997 [39].
Arm's length is the description of an agreement made by two parties freely and independently of each other, and without some special relationship, such as:
It becomes important to determine if an agreement was freely entered into to show that the price, requirements, and other conditions were fair and genuine.
According to subsection 5Q(1) [38] of the VEA, for the purposes of the means test concession, a parent or immediate family member includes:
Centrelink is a Government service delivery agency responsible for delivering a range of Commonwealth Government services (including social security pensions and allowances) to the Australian community through a network of more than 400 Centrelink offices.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16557%23comment-form
[2] https://clik.dva.gov.au/%23
[3] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn534
[4] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn535
[5] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn536
[6] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn537
[7] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn538
[8] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn539
[9] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn540
[10] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn541
[11] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn542
[12] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn543
[13] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn544
[14] https://clik.dva.gov.au/book/export/html/16557#tgt-cspol_part10_ftn545
[15] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10318-assessment-special-disability-trusts/eligibility-principal-beneficiary
[16] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn534
[17] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10318-assessment-special-disability-trusts/trust-purpose
[18] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn535
[19] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10319-rules-and-requirements-special-disability-trusts/expenditure-rules
[20] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn536
[21] https://clik.dva.gov.au/system/files/media/sdt_model_trust_deed_december2012_v1.0.pdf
[22] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn537
[23] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10319-rules-and-requirements-special-disability-trusts/trustee-requirements
[24] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn538
[25] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10319-rules-and-requirements-special-disability-trusts/investment-rules
[26] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn539
[27] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10319-rules-and-requirements-special-disability-trusts/reporting-requirements
[28] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn540
[29] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10319-rules-and-requirements-special-disability-trusts/audit-requirements
[30] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn541
[31] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn542
[32] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10318-assessment-special-disability-trusts/overview-assessment-special-disability-trusts
[33] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn543
[34] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10318-assessment-special-disability-trusts/assessment-income-and-assets-sdt
[35] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn544
[36] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts/10318-assessment-special-disability-trusts/gifting-special-disability-trusts
[37] https://clik.dva.gov.au/book/export/html/16557#ref-cspol_part10_ftn545
[38] http://clik.dva.gov.au/legislation-library
[39] http://www.comlaw.gov.au/comlaw/management.nsf/lookupindexpagesbyid/IP200401745?OpenDocument