Booklet: Special Disability Trusts (SDT) (Chapter 12 – What are the ongoing obligations of an SDT?)

Booklet: Special Disability Trusts

Below is Chapter 12 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.

Financial Statements

The trustee of an SDT must provide compulsory annual financial statements to Services Australia.

These financial statements must be handed in on or before 31 March each year, and relate to the financial year ending on 30 June in the previous year.

The financial statements must be prepared by a person who is either:

  • A member of CPA Australia; or
  • An employee engaged by the trustee of the SDT as an accountant or financial planner.

The financial statements must include the following information:

  • A profit and loss statement;
  • A balance sheet with applicable notes for the relevant financial year; and
  • A schedule for each class of assets, where applicable.

In addition to providing annual financial statements, the trustee of the SDT must sign a statutory declaration document to confirm that the expenditure for the relevant year was spent on care and accommodation costs related to the principal beneficiary.

The financial statements must be accompanied by a copy of the trust’s income tax return for the relevant financial year, if a return was lodged.

Tax Returns

The general rule is that a trustee is required to lodge a tax return for an SDT each financial year (or part thereof) that it is in existence.

However, if an SDT has not derived assessable income above the tax-free threshold (currently $18,200), a tax return is not required. If a tax return is not required to be lodged by the trustee, the principal beneficiary will still need to include any net income of the trust in the beneficiary’s individual tax return.

Audits

Once established, an SDT may be audited to ensure that the trust utilises its funds for the primary purpose of the beneficiary’s care and accommodation.

Legislation governing SDTs states that the following persons may request an audit at any time:

  • The principal beneficiary;
  • An immediate family member of the beneficiary;
  • A legal guardian or financial administrator of the beneficiary;
  • A person acting as a the beneficiary’s guardian on a long term basis; and
  • The Secretary of the Human Services Department (Services Australia).

If an audit is not requested by one of the eligible people, the SDT does not have to be audited. Accordingly, it may be the case for some SDTs that they are never subjected to an audit.

After an audit has been requested, the trustee of the SDT is under an obligation to cause an audit to be conducted within a reasonable timeframe. However, if an audit has already been carried out for the same 12 month period, the trustee may instead supply a copy of the existing audit report to the person making the request.

If an audit is requested, the audit period must relate to the financial year ending on the last 30 June preceding the request, and must be for at least a whole financial year and up to a maximum period of 5 financial years (depending on the terms of the request).

The person preparing the audit must be a member of:

  • CPA Australia;
  • the Institute of Chartered Accountants in Australia; or
  • the National Institute of Accountants.

In light of conflict of interest considerations, the person preparing the audit must not have prepared any of the SDT’s financial statements, nor be an immediate family member of the beneficiary or trustee.

An audit report must contain a statement that the SDT’s financial statements give a ‘true and fair’ view of the trust’s financial position. Copies of the audit must be provided to the person that requested it, as well as the beneficiary’s legal guardian/financial administrator and the Secretary of Human Services (Services Australia).

Costs

Beneficiaries and their family should be aware of the ongoing nature of costs of maintaining an SDT.

The costs of administering an SDT, including preparation of financial statements, tax returns and audit reports, are to be met from the trust fund itself. This means that the value of the trust fund should be significant enough to warrant the extra costs – a minimum amount of $100,000 is a good general guideline.

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.

Our Great Lawyer Guarantee

We want to be part of your team over the long term. We'll achieve this by sticking closely to the following principles:

  • We'll listen carefully to understand what you want to achieve. Then we'll thoroughly explain our advice and step you through the documents. You can be sure you'll know the full consequences.
  • Our lawyers work as a team, so someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.
  • One of our key goals is to pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.
  • We only do what we're good at. You can be confident that we know what we're doing and won't pass on the cost of our learning.
  • For advice and documents, we provide a fixed or capped quote so you don’t take price risk. If you're in a dispute, we'll map out the process and costs so you know what to expect.
  • We're not in this game for our egos. We're in it for a front row seat to witness your success.

We measure our success on how efficiently we have facilitated your objectives, enhanced your relationships, and reduced the level of stress for all involved.

If we sound like people you can work with, call us now on 1300 654 590 and speak directly with a great lawyer.

What legal issues do you need to look out for in 2025?

What legal issues do you need to look out for in 2025?

With the coming of a new year come new ideas, plans and goals. Sometimes these may come about because of a change in circumstances and needs. In other cases, these may be a necessary undertaking due to a change in law, regulation or requirements. Here are some legal issues that we think will be hot issues in 2025 and our tips to help you navigate them. 

read more