EXPLANATORY STATEMENT

Social Security (Exemption Notices for Special Disability Trusts) (DEST) Guidelines 2006

Summary

The Social Security (Exemption Notices for Special Disability Trusts) (DEST) Guidelines 2006 (the Guidelines) are made under subitem 14(5) of Part 1 of Schedule 7 to the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Act 2006. The purpose of the Guidelines is to set out circumstances in which it may be appropriate for the Secretary of the Department of Education, Science and Training, or the Secretary’s delegate, to exempt a trust, created before 20 September 2006, from certain requirements of Division 1 of Part 3.18A of the Social Security Act 1991 (the Act).  Such an exemption can be on certain conditions and for only a specified period.

The Guidelines are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Items 1 to 3

Items 1 to 3 set out the preliminary information about the Guidelines, namely, the name of the Guidelines (section 1), commencement (section 2), and definitions (section 3).

Items 4 to 6

Section 4 provides that the Secretary may decide to grant an exemption notice in relation to certain aspects of a trust that do not meet the requirements of Division 1 of Part 3.18A of the Act as long as the trust is a protective trust, the principal beneficiary meets the requirements of either subsection 1209M(2) or (4) and, if necessary, the trust deed can be varied to comply with any relevant determinations made by the Secretary under subsection 1209P(2) of the Act.  A “protective trust” is well-known as a common law concept and does not require a definition in general terms. It is a trust that is set up for the protection and care of a disabled person and cannot be ended by that person.  Subsections 1209M(2) and (4) set out the criteria that a principal beneficiary must meet for a trust to be a Special Disability Trust.  The Secretary makes determinations under subsection 1209P(2) of the Act as to one or more of the following: the form of a trust deed required for a Special Disability Trust; the provisions that must be included in a trust deed to be a Special Disability Trust; the form of those provisions; and the provisions which cannot be included in the trust deed.

Subsection 5(1) provides that in deciding what conditions to include in an exemption notice, the Secretary must consider imposing conditions requiring the trustees to ensure that the trust deed complies with a determination made by the Secretary under subsection 1209P(2) of the Act. The Secretary makes determinations under subsection 1209P(2) of the Act as to one or more of the following: the form of a trust deed required for a Special Disability Trust; the provisions that must be included in a trust deed to be a Special Disability Trust; the form of those provisions; and the provisions which cannot be included in the trust deed.

Subsection 5(2) provides that a condition that is placed upon trustees in accordance with subsection 5(1) may require the trustees to take particular action in regard to the trust deed, including varying the trust deed to provide one of the following:

(a)         that the principal beneficiary of the trust (ie the beneficiary who meets the requirements of subsection 1209M(2) or (4)) is the only beneficiary of the trust, other than a residuary beneficiary; or

(b)         that the income and assets of the trust are used only for the reasonable care and accommodation needs of the principal beneficiary or for ancillary purposes that are necessary or desirable to facilitate the meeting of those needs.

Section 6 provides that an exemption notice, made under subitem 14(1) of Part 1 of Schedule 7 to the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Act 2006, may be made for any period starting no earlier than 20 September 2006 and ending no later than 30 June 2007.

Consultation

The Department of Families, Community Services and Indigenous Affairs and the Department of Employment and Workplace Relations were consulted in the making of this Determination, to ensure a co‑ordinated approach in respect of payments under the Act for which they have responsibility. 

Regulation Impact Statement

There was no requirement to prepare a Regulation Impact Statement in regard to the Guidelines, as this measure is not likely to have a direct, or a substantial indirect, effect on business and is not likely to restrict competition.

Commencement

The Guidelines commenced on 20 September 2006, but were registered on 21 September 2006.  The Guidelines have a beneficial effect and therefore rights and liabilities of persons are not disadvantaged for the purposes of subsection 12(2) of the Legislative Instruments Act 2003.