Veterans' Entitlements (Means Test Treatment of Private Trusts — Excluded Trusts) Declaration 2001

Overview

The Veterans' Entitlements (Means Test Treatment of Private Trusts — Excluded Trusts) Declaration 2001 was enacted to address the issue of ensuring comparable treatment under the means test for veterans and beneficiaries who hold their assets in private companies or private trusts, as opposed to those who hold their assets directly. This was achieved through the Social Security and Veterans’ Entitlements Legislation Amendment (Private Trusts and Private Companies – Integrity of Means Testing) Act 2000, which amended the Social Security Act 1991 and the Veterans' Entitlements Act 1986. The policy objective was to attribute the assets and income of such structures to the individuals who control them or who were the source of the capital or corpus of the company or trust. The Repatriation Commission, pursuant to the Veterans' Entitlements Act 1986, made the Veterans' Entitlements (Means Test Treatment of Private Trusts — Excluded Trusts) Declaration 2001 to specify classes of trusts that are considered "excluded trusts." This means that the assets and income of such trusts will not be attributed to an individual for the purposes of ascertaining their assets or income for means-testing purposes under the Act. The Instrument identifies three classes of excluded trusts: community trusts, court-ordered trusts, and certain fixed trusts. Trusts within these classes will not be considered designated private trusts, thereby excluding their assets and income from means testing calculations.

Scope and Application

The Veterans' Entitlements (Means Test Treatment of Private Trusts — Excluded Trusts) Declaration 2001 applies to the means testing provisions under the Veterans' Entitlements Act 1986, specifically targeting private trusts to ensure equitable treatment of veterans under the means test. This instrument declares certain classes of trusts as "excluded trusts", meaning that the assets and income of these trusts will not be attributed to an individual for the purposes of determining their assets or income for means testing under the Act. The exclusion of these trusts aims to prevent double counting of assets held in specific types of trusts, thereby ensuring that veterans holding assets in these trusts do not face unfair disadvantages in means testing. The geographic reach of this legislation is nationwide, as it applies across Australia under the Commonwealth jurisdiction. The declaration specifies three types of trusts: community trusts, court-ordered trusts, and certain fixed trusts, each with specific criteria that determine their status as excluded trusts. The declaration is a disallowable instrument, requiring gazettement and tabling in Parliament, and it commences on gazettal. Subordinate instruments may further extend or specify the application of this declaration.

Key Provisions

The Veterans' Entitlements (Means Test Treatment of Private Trusts — Excluded Trusts) Declaration 2001 is an instrument under the Veterans' Entitlements Act 1986 (the Act), which defines certain classes of trusts as "excluded trusts" for means-testing purposes. Specifically, sections 5, 6, and 7 of the Instrument outline three categories of excluded trusts: community trusts, court-ordered trusts, and certain fixed trusts. A trust falling within any of these categories is not considered a "designated private trust," meaning its assets and income will not be attributed to an individual for the purposes of means testing under the Act (sections 52ZZB(4) and 52ZZB(7)). The obligations imposed by the Instrument require trustees of trusts falling within the specified classes to ensure their trust remains within the criteria of an excluded trust. For community trusts, the primary obligation is that the trust must have a sole or dominant purpose of managing and distributing property received from a government or government-type body for a community purpose, or income from indigenous-held land (section 5). For court-ordered trusts, the obligation is to maintain the trust as originally ordered by the court in personal injury matters (section 6). For certain fixed trusts, the obligation is to ensure that the trust remains unchanged since its creation before the "reference time" and that no significant variations or transfers of property have occurred post this time (section 7). Failure to comply with the criteria for an excluded trust can have significant consequences. While the Instrument does not explicitly outline offences or penalties, the Act generally provides that any misrepresentation or failure to disclose information correctly can lead to financial penalties, recovery of benefits, and potential legal action. Under the Social Security Act 1991, penalties can include fines and imprisonment for serious breaches, reflecting the seriousness with which the government treats non-compliance with means-testing provisions (section 180).