You need to know
Benefits of a Special Disability Trust
The benefits of a Special Disability Trust are:
- that a gifting concession of up to $500,000 combined is available for eligible family members of the principal beneficiary and
- that an assets test assessment exemption of up to $596,500 (indexed each year) is available to the principal beneficiary
We recommend that you consult a financial adviser or solicitor for advice before establishing a Special Disability Trust.
Characteristics of a Special Disability Trust
A Special Disability Trust must:
- have only one principal beneficiary (the person for whom the trust is established), who must meet the eligibility criteria
- provide for the accommodation and care needs of the principal beneficiary
- have a trust deed that contains the clauses as set out in the model trust deed
- have an independent trustee, or alternatively have more than one trustee
- comply with the investment restrictions
- provide annual financial statements and
- conduct independent audits when required
The principal beneficiary and Special Disability Trusts
To be eligible to be a principal beneficiary, the person with a disability must meet the definition of severe disability.
Eligibility for the gifting concession and Special Disability Trusts
Immediate family members of the principal beneficiary who are of age or of service-pension age or more and are receiving a pension (for example, Age Pension or Carer Payment) are eligible for the gifting concession.
If there is more than one contributor to the trust, the combined concession first applies to those eligible family members who are receiving a pension after reaching age or service pension age.
Immediate family members
Immediate family members include:
- natural parents
- legal guardians (as defined)
- adoptive parents
- step parents
Note: The term legal guardian used in the definition of parent or immediate family member includes a person who is, or was, the legal guardian of the person with a severe disability while that person was aged under 18. The term sibling refers to a brother, sister, half-brother, half-sister, adoptive brother, adoptive sister, step-brother or step-sister.
Fund contributions and Special Disability Trusts
Contributions or gifts of assets to any value can be made to this type of trust at any time by almost anyone.
The rate of a contributor’s Centrelink payment may be affected if the contribution is worth more than the allowable concessional amount or if the contributor does not meet the required eligibility criteria.
Gifts can affect Centrelink payments because they directly or indirectly reduce the assets available for personal use. Contributors must tell us about any gifts or transfers within 14 days of when they have occurred.
Any gift or number of gifts whose total value is greater than the allowable concessional amount will be assessed under normal gifting rules.
Read more about disposing of assets or making a gift.
Gifting concessions and Special Disability Trusts
A gifting concession of up to $500,000 combined is available for eligible family members of the principal beneficiary.
This concessional amount can only be used once. For example, if an eligible contributor gifts to a Special Disability Trust and receives a concession and then dies, his or her concession amount cannot be accessed by any other immediate family member.
Using Special Disability Trust funds
The funds are intended to meet the reasonable care and accommodation needs of the principal beneficiary.
The trustee is able to:
- pay for the beneficiary’s dental and medical expenses, including membership costs for private health funds
- pay the maintenance expenses of the trust-property assets
- spend up to $10,250 in a financial year on discretionary items not related to the care and accommodation needs of the beneficiary. (This expenditure should remain compliant with the legislative requirements of a Special Disability Trust).
Tax concessions for Special Disability Trusts
A Special Disability Trust’s unexpected income is taxed at the beneficiary’s personal income tax rate(s), rather than at the highest marginal tax rate.
To find out more about Special Disability Trusts: