Special Disability Trusts 

Key Elements

This measure introduces key changes to remove some of the barriers to establishing Special Disability Trusts to encourage take-up. Immediate changes to be implemented are:

  • Unexpended Special Disability Trust income will be taxed at the beneficiary’s personal income tax rates, rather than the top marginal tax rate.
  • The sale of a residence owned by a Special Disability Trust and used by the beneficiary as their main residence will be exempt from capital gains tax.

These changes form part of the Government’s response to the report by the Senate Standing Committee on Community Affairs. Building trust: Supporting families through Disability Trusts.

Background

Special Disability Trusts were introduced in 2006 to assist families who wish to make private financial provision for the future care and accommodation needs of a family member with severe disability.

As at 31 March 2009, Centrelink had received 353 applications for beneficiary assessment for a Special Disability Trust. Of these, 326 beneficiaries were assessed as eligible.

However, take up has been slow and as at 31 March 2009 only 52 Special Disability Trusts had been established.

The Senate Standing Committee on Community Affairs inquired into the barriers to the uptake of Special Disability Trusts, and made 14 recommendations aimed at addressing these barriers.

These measures form part of the Government’s response to these recommendations.

Implementation

The change to taxation of unexpended income of a Special Disability Trust at the beneficiary’s personal income tax rate is to take effect from the 2008-09 income year.

The change to introduce a capital gains tax exemption on the sale of a residence, owned by a Special Disability Trust and used by the beneficiary as their main residence, is to take effect from 1 July 2009.

Total Government Funding

The tax changes will reduce revenue collected by $1 million per annum.

Content Updated: 27 June 2012