EXPLANATORY STATEMENT

Veterans’ Entitlements (Exemption Notices for Special Disability Trusts) Guidelines 2006

Summary

The Veterans’ Entitlements (Exemption Notices for Special Disability Trusts) Guidelines 2006 (the Guidelines) are made under subitem 33(5) of Part 2 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 Repatriation Commission (the Commission), or the Commission’s delegate, to exempt a trust, created before 20 September 2006, from certain requirements of Subdivision A of Division 11B of Part IIIB of the Veterans’ Entitlements Act 1986 (the Act).  Such an exemption can be for certain conditions and for only a specified period.

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

Sections 1 to 3

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

Sections 4 to 6

Section 4 provides that the Commission may decide to grant an exemption notice in relation to certain aspects of a trust that do not meet the requirements of Subdivision A of Division 11B of Part IIIB of the Act as long as:

• the trust is a protective trust;
• the principal beneficiary meets the requirements of either subsection 52ZZZWA (2) or (4) of the Act; and
• if necessary, the trust deed can be varied to comply with any relevant determinations made by the Commission under subsection 52ZZZWC (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 person with a disability and cannot be ended by that person.  Subsections 52ZZZWA (2) and (4) set out the criteria that a principal beneficiary must meet for a trust to be a Special Disability Trust.  The Commission makes determinations under subsection 52ZZZWC (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 Commission must consider imposing conditions requiring the trustees to ensure that the trust deed complies with a determination made by the Commission under subsection 52ZZZWC (2) of the Act. The Commission makes determinations under subsection 52ZZZWC (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 (i.e. the beneficiary who meets the requirements of subsection 52ZZZWA (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 33(5) of Part 2 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

When the Special Disability Trusts measure was announced an Advisory Group was established.  This group was chaired by Ian Spicer, chair of the National Disability Advisory Council, and included financial experts and parents of children with a severe disability.  The Advisory Group first met in December 2005 and made twenty recommendations in March 2006, the majority of which were accepted and included in the resulting policy.

These determinations form part of the policy that was developed from the recommendations provided by the Advisory Group.  As such consultation has already been undertaken.

The Department of Families, Community Services and Indigenous Affairs (FaCSIA) recently made a legislative instrument virtually identical to the one attached.  FaCSIA consulted the Department of Education, Science and Training (DEST) and the Department of Employment and Workplace Relations (DEWR), to ensure a co‑ordinated approach in respect of payments under the Social Security Act 1991, for which DEST and DEWR share 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.