EXPLANATORY STATEMENT
Social Security (Exemption Notices for Special Disability Trusts) (FaCSIA) Guidelines 2006
Summary
The Social Security (Exemption Notices for Special Disability Trusts) (FaCSIA) 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 Families, Communities and Indigenous Affairs, 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 Education, Science and Training 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.
Overview
The Social Security (Exemption Notices for Special Disability Trusts) (FaCSIA) Guidelines 2006 were enacted to provide guidance on circumstances where an exemption may be granted to certain trusts from specific requirements of the Social Security Act 1991. This legislation was introduced by the Australian Government, 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 objective of these guidelines is to offer clarity and direction for the Secretary of the Department of Families, Communities and Indigenous Affairs, or the Secretary’s delegate, in determining whether 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. Such exemptions are conditional and applicable for a specified duration. The Guidelines were created as a legislative instrument under the Legislative Instruments Act 2003.
Scope and Application
The Social Security (Exemption Notices for Special Disability Trusts) (FaCSIA) Guidelines 2006 apply to certain special disability trusts established prior to 20 September 2006, enabling exemptions from specific requirements outlined in Division 1 of Part 3.18A of the Social Security Act 1991, subject to certain conditions and for a specified period. The Guidelines aim to provide flexibility in the application of these requirements to trusts that were created before the specified date. The exemptions are granted by the Secretary of the Department of Families, Communities and Indigenous Affairs or their delegate, and are applicable to trusts that are classified as protective trusts, where the principal beneficiary meets the criteria set out in subsections 1209M(2) or (4) of the Social Security Act 1991, and where the trust deed can be modified to align with determinations made by the Secretary regarding the necessary provisions and form of the trust deed. The exemptions can be granted for a period beginning no earlier than 20 September 2006 and ending no later than 30 June 2007. This legislation provides a framework for the Secretary to impose conditions on trustees to ensure compliance with the requirements set out in the exemption notices, and is intended to ensure that the income and assets of the trust are used solely for the care and accommodation needs of the principal beneficiary.
Key Provisions
The main operative sections of the Social Security (Exemption Notices for Special Disability Trusts) (FaCSIA) Guidelines 2006 (sections 4 to 6) establish the criteria and conditions under which the Secretary of the Department of Families, Communities and Indigenous Affairs may grant an exemption notice to certain Special Disability Trusts that were created before 20 September 2006. Section 4 allows the Secretary to exempt a trust from certain requirements of Division 1 of Part 3.18A of the Social Security Act 1991 if it is a protective trust and the principal beneficiary meets specific criteria (subsection 1209M(2) or (4)). The exemption can be subject to conditions, such as varying the trust deed to ensure it complies with any determinations made by the Secretary regarding the trust deed's form and provisions (section 5). Section 6 specifies that such exemption notices can be issued for any period starting no earlier than 20 September 2006 and ending no later than 30 June 2007.
These Guidelines impose several obligations on the parties involved. Trustees of Special Disability Trusts must ensure that their trust deeds comply with any determinations made by the Secretary, which may include varying the trust deed to meet specific requirements (section 5). Trustees must also ensure that the income and assets of the trust are used solely for the reasonable care and accommodation needs of the principal beneficiary or for ancillary purposes necessary to meet those needs (subsection 5(2)(b)). The Secretary is required to consider the specific conditions to be included in an exemption notice and must make any necessary determinations regarding the form and content of the trust deed (section 5).
There are no explicit offences, penalties, or consequences for breach detailed in the Guidelines. However, failure to comply with the conditions of an exemption notice or the requirements of the Act could potentially lead to the trust losing its exemption status, resulting in it being subject to the full requirements of Division 1 of Part 3.18A of the Social Security Act 1991. This could have significant financial and administrative implications for the trustees and the beneficiaries of the trust. The Guidelines emphasise the importance of adhering to the conditions set by the Secretary to maintain the exemption status of the trust.