EXPLANATORY STATEMENT
Social Security (Exemption Notices for Special Disability Trusts) (DEWR) Guidelines 2006
Summary
The Social Security (Exemption Notices for Special Disability Trusts) (DEWR) 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 Employment and Workplace Relations, 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, Communities and Indigenous Affairs consulted with the Department of Employment and Workplace Relations and the Department of Education, Science and Training to ensure a co‑ordinated approach in respect of payments under the Act. The Department of Families, Communities and Indigenous Affairs also consulted with the Department of Human Services in relation to service delivery issues.
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.
Overview
The Social Security (Exemption Notices for Special Disability Trusts) (DEWR) Guidelines 2006 were enacted to address the need for flexibility in the application of certain requirements under the Social Security Act 1991, specifically concerning Special Disability Trusts that were created prior to 20 September 2006. These 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 policy objective is to provide a mechanism by which the Secretary of the Department of Employment and Workplace Relations, or their delegate, can exempt certain trusts from specific requirements, subject to conditions and for a specified period. This measure aims to ensure that these trusts can continue to operate in a way that best supports the needs of the principal beneficiaries while maintaining the integrity of the Social Security system.
Scope and Application
The Social Security (Exemption Notices for Special Disability Trusts) (DEWR) Guidelines 2006 apply to protective trusts created before 20 September 2006, which may not meet certain requirements of Division 1 of Part 3.18A of the Social Security Act 1991. These Guidelines allow the Secretary of the Department of Employment and Workplace Relations, or their delegate, to grant exemption notices for specific aspects of such trusts, provided that the principal beneficiary meets certain criteria and the trust deed can be varied to comply with relevant determinations made by the Secretary. The Guidelines are designed to offer flexibility in certain circumstances while ensuring that the trust remains dedicated to the care and protection of a disabled person. The exemptions can be granted for a period starting no earlier than 20 September 2006 and ending no later than 30 June 2007. The Guidelines also outline the conditions that may be imposed on trustees to ensure compliance with the requirements of a Special Disability Trust.
Key Provisions
The Social Security (Exemption Notices for Special Disability Trusts) (DEWR) Guidelines 2006 (sections 1-6) outline the conditions under which the Secretary of the Department of Employment and Workplace Relations may exempt certain trusts from specific requirements of the Social Security Act 1991. These 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 primary focus of these Guidelines is to provide clarity on the circumstances where a trust, created before 20 September 2006, may be exempted from certain provisions in Division 1 of Part 3.18A of the Social Security Act, provided it is a protective trust and meets other specified criteria. A protective trust, as understood under common law, is one established for the protection and care of a disabled individual and cannot be terminated by that individual.
The Guidelines impose several obligations on the parties involved. For instance, Section 4 mandates that the Secretary can grant an exemption notice for aspects of a trust that do not meet the Act's requirements if the trust is a protective trust, the principal beneficiary satisfies the criteria set out in subsections 1209M(2) or (4) of the Act, and the trust deed can be altered to comply with any determinations made by the Secretary under subsection 1209P(2) of the Act. The trustees are required to ensure that the trust deed aligns with these determinations, which may include specific provisions regarding the form of the trust deed, mandatory inclusions, the format of those inclusions, and prohibited provisions. These conditions are intended to safeguard the interests of the principal beneficiary, ensuring the trust's resources are used exclusively for their reasonable care and accommodation needs or for ancillary purposes that facilitate these needs.
Failure to comply with the conditions specified in the exemption notice or the requirements of the Guidelines may result in various consequences. While the Guidelines themselves do not explicitly outline penalties or specific legal repercussions for non-compliance, breaches of the underlying Social Security Act 1991 or the terms of the exemption notice could lead to civil or criminal penalties. The Social Security Act provides for various offences, including fraudulent behaviour and improper use of funds, which can attract penalties. Under the Act, penalties can range from fines to imprisonment, depending on the severity of the breach. Trustees found in breach of their obligations could also face personal liability, including financial penalties or even disqualification from acting as trustees in the future. It is important to note that while the Guidelines provide a framework for exemptions, adherence to the conditions set forth is critical to avoid any adverse legal or financial consequences.