Booklet: Special Disability Trusts (SDT) (Chapter 11 – Are there any investment restrictions on a SDT?)

Booklet: Special Disability Trusts

Below is Chapter 11 of our ‘Special Disability Trusts’ booklet. To read the other chapters of our booklet, click the links below:

Please note that the information in this booklet is current as at the 2024/2025 financial year.

Once an SDT has been established, anyone can make a contribution into the SDT subject to a number of exceptions.

A beneficiary or the beneficiary’s partner cannot transfer any assets into an SDT, including any compensation received by or on behalf of the principal beneficiary (for example, damages received from a personal injury claim). The reason behind this restriction
is that SDTs are not intended to allow a beneficiary to move their assets into a non-assessable environment for social security purposes.

This investment restriction mirrors the restriction on superannuation funds from intentionally acquiring an asset from a related party to the fund (i.e. a member).

The ‘blanket ban’ against beneficiary contributions for SDTs does not apply to the following assets:

  • All or part of a bequest (gifts received by Will); and
  • Superannuation death benefits,

provided that the beneficiary transfers the assets into the SDT within 3 years of receipt of the bequest or superannuation death benefit.

For example, John’s mother set up a SDT for him in 2015. John’s grandfather died on 30 April 2017 leaving John $50,000 in his will. John can transfer the money into his SDT provided he does so by 30 April 2020.

To download a PDF of our booklet, enter your email below.

 

The information contained in this post is current at the date of editing – 11 September 2024.

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