EXPLANATORY STATEMENT
Social Security (Special Disability Trust – Discretionary Spending) (DEEWR) Determination 2011
Summary
The Social Security (Special Disability Trust – Discretionary Spending) (DEEWR) Determination 2011 (the Determination) is made under subsection 1209RA(3) of the Social Security Act 1991 (the Act). The purpose of the Determination is to set out the maximum amount of a special disability trust’s income and assets that can be spent for purposes that are primarily for the benefit of the principal beneficiary.
The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Section 1 sets out the name of the Determination.
Section 2 provides that the Determination is taken to have commenced on 1 January 2011. The reason this Determination commences retrospectively is due to legislative amendments which were made to Part 3.18A of the Act by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendments (Budget and Other Measures) Act 2010 and have a retrospective commencement date of 1 January 2011. The changes relate to a broadening of the purpose requirements from a sole purpose to a primary purpose of the trust. The amendments also introduce a new purpose which allows the trust to undertake a level of discretionary spending for other purposes that are primarily for the benefit of the principal beneficiary. These changes are beneficial in nature. Retrospective commencement of this Determination does not affect the rights of a person so as to disadvantage that person or impose any liabilities in respect of anything done or omitted to be done before the date of registration.
Section 3 provides definitions of terms used in the Determination.
Section 4 provides that, for the purposes of subsection 1209RA(3) of the Act, the maximum value of the trust’s income and assets that can be spent by the special disability trust for other purposes that are primarily for the benefit of the principal beneficiary (other than the primary purposes of a special disability trust), is:
(a) ten thousand dollars ($10,000) in the 2010-2011 financial year; and
(b) ten thousand, two hundred and fifty dollars ($10,250) in the 2011-2012 financial year.
Consultation
The Department of Families, Housing, Community Services and Indigenous Affairs and the Department of Veterans’ Affairs were consulted in the making of this Determination, to ensure a co‑ordinated approach.
Regulation Impact Statement
There was no requirement to prepare a Regulation Impact Statement in regard to the Determination, 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 (Special Disability Trust – Discretionary Spending) (DEEWR) Determination 2011 was enacted to address the issue of setting the maximum allowable amount of discretionary spending from a special disability trust for purposes primarily benefiting the principal beneficiary. This Determination was made under subsection 1209RA(3) of the Social Security Act 1991 and was introduced by the Department of Education, Employment and Workplace Relations (DEEWR). The purpose of this legislative instrument is to provide clarity and limits on discretionary spending from special disability trusts, ensuring that such spending aligns with the primary benefit of the principal beneficiary while allowing for a level of flexibility in other specified purposes. The Determination came into effect retrospectively from 1 January 2011, aligning with the legislative amendments that broadened the purpose requirements of the trust. This retrospective commencement was intended to be beneficial and not to disadvantage or impose liabilities on any individual for actions taken prior to the Determination's registration.
Scope and Application
The Social Security (Special Disability Trust – Discretionary Spending) (DEEWR) Determination 2011 applies to special disability trusts established under the Social Security Act 1991, governing the maximum amount of the trust's income and assets that can be spent for purposes primarily benefiting the principal beneficiary. This Determination is made under subsection 1209RA(3) of the Act and sets out specific limits for discretionary spending in the financial years 2010-2011 and 2011-2012, which are $10,000 and $10,250 respectively. The Determination was designed to accommodate legislative amendments that expanded the trust's purpose requirements, allowing for a broader range of discretionary spending for the benefit of the principal beneficiary. It applies across the Commonwealth of Australia, and its retrospective commencement from 1 January 2011 ensures that it does not disadvantage individuals or impose liabilities for actions taken before its enactment. The legislation does not require a Regulation Impact Statement as it is not expected to have a significant effect on business or competition.
Key Provisions
The main operative sections of the Social Security (Special Disability Trust – Discretionary Spending) (DEEWR) Determination 2011 (the Determination) are set out in section 4, which specifies the maximum value of the trust’s income and assets that can be spent by the special disability trust for purposes that are primarily for the benefit of the principal beneficiary, but not for the primary purposes of the trust. Section 4(a) establishes that the maximum value is ten thousand dollars ($10,000) for the 2010-2011 financial year, while section 4(b) increases this to ten thousand, two hundred and fifty dollars ($10,250) for the 2011-2012 financial year. This section is critical as it delineates the financial parameters within which discretionary spending can occur, ensuring that funds are directed towards the principal beneficiary's benefit without overstepping the primary objectives of the trust.
The Determination imposes specific obligations on the trustees of special disability trusts to ensure they adhere to the spending limits outlined. Trustees must maintain clear records of the income and assets of the trust and ensure that any spending on purposes other than the primary objectives does not exceed the prescribed limits. This requirement is aimed at maintaining the integrity of the trust and ensuring that funds are used for the intended benefit of the principal beneficiary, while also preventing any misuse of trust resources. Trustees are also obligated to consult with relevant departments to ensure compliance with the Determination and to maintain transparency in their financial dealings.
Breach of the spending limits set out in the Determination can result in significant consequences. While the Determination does not explicitly detail offences, penalties, or criminal/civil consequences, it operates under the broader framework of the Social Security Act 1991. Any misuse of funds or failure to comply with the spending limits could potentially lead to legal action against the trustees, including civil penalties or even criminal charges if the breach is deemed to be wilful or negligent. The maximum penalties would be in line with the provisions of the Social Security Act, which could include fines and potential imprisonment for serious breaches. Trustees are thus under a strong obligation to ensure strict adherence to the financial limits specified in the Determination.