Below is Chapter 8 of our ‘Special Disability Trusts’ booklet. To read the other chapters of our booklet, click the links below:
- Chapter 1 – What is an SDT?
- Chapter 2 – What are the requirements of an SDT?
- Chapter 3 – What can an SDT pay for?
- Chapter 4 – What are the eligibility criteria of an intended beneficiary?
- Chapter 5 – Do you need medical reports confirming the disability?
- Chapter 6 – What are the advantages of an SDT?
- Chapter 7 – What is the effect of the gifting concession?
- Chapter 9 – Are there beneficial taxation consequences?
- Chapter 10 – What are the administrative requirements of an SDT?
- Chapter 11 – Are there investment restrictions on an SDT?
- Chapter 12 – What are the ongoing obligations of an SDT?
- Chapter 13 – Summary
Please note that the information in this booklet is current as at the 2024/2025 financial year.
Under the Social Security Act 1991 (Cth), a means test applies to the assets and income of an individual for the purposes of assessing their entitlement to social security payments.
The asset test exemption means that the beneficiary may have assets worth up to the set amount in an SDT as well as certain other exempt assets (such as the beneficiary’s principal residence) before there are any implications on the beneficiary’s Disability Support Pension or other relevant social security payment.
Example
A single adult receives a Disability Support Pension and is assessed by Services Australia as an eligible beneficiary under the SDT requirements. The parents of the beneficiary, who set up an SDT for the beneficiary, contribute a house and $400,000 for their child’s care and accommodation costs. The beneficiary of the SDT lives in the house.
In that scenario:
- The house is assessed as the beneficiary’s principal residence and therefore, for the beneficiary, this is an exempt asset under the Social Security Act 1991 (Cth) and not counted for assets test assessment purposes; and
- The trust’s $400,000 is under the Special Disability Trust beneficiary’s concessional limit.
Therefore, there is no effect on the beneficiary’s Disability Support Pension payments.
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The information contained in this post is current at the date of editing – 11 September 2024.