EXPLANATORY STATEMENT
Veterans’ Entitlements (Special Disability
Trust — Discretionary Spending) Determination 2011
Summary
The Veterans’ Entitlements (Special Disability Trust — Discretionary Spending) Determination 2011 is made under subsection 52ZZZWEA(3) of the Veterans’ Entitlements Act 1986 (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 Division 11B of Part IIIB of the Act by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Budget and Other Measures) Bill 2011and 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. 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 52ZZZWEA(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 (which consulted the Department of Education, Employment and Workplace Relations) was consulted (by e-mail) 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 Veterans' Entitlements (Special Disability Trust — Discretionary Spending) Determination 2011 was enacted to address a gap in the legislative framework concerning the spending of funds from special disability trusts for the benefit of principal beneficiaries. This Determination was introduced under subsection 52ZZZWEA(3) of the Veterans' Entitlements Act 1986 by the Commonwealth Parliament. Its primary objective is to establish the maximum allowable spending for discretionary purposes by a special disability trust, ensuring these funds are primarily for the benefit of the principal beneficiary. The Determination came into effect on 1 January 2011, aligning with legislative amendments made by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Budget and Other Measures) Bill 2011, which expanded the permissible purposes of the trust from a sole purpose to a primary purpose, and introduced a new allowance for discretionary spending. This retrospective commencement was designed to ensure that it did not disadvantage or impose liabilities on individuals for actions taken prior to the Determination's registration.
Scope and Application
The Veterans’ Entitlements (Special Disability Trust — Discretionary Spending) Determination 2011 applies to special disability trusts established under the Veterans’ Entitlements Act 1986, particularly those trusts created for the benefit of veterans with disabilities. The Determination sets out the maximum amounts of a special disability trust's income and assets that can be spent for purposes other than the primary objectives of the trust, which are primarily for the benefit of the principal beneficiary. This legislative instrument, which came into effect retrospectively from 1 January 2011, responds to legislative amendments introduced by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Budget and Other Measures) Bill 2011. The amendments expanded the scope of allowable spending from a sole purpose to a primary purpose, and introduced a new category of discretionary spending for the principal beneficiary’s benefit. The Determination does not adversely affect any rights or impose liabilities for actions taken before its registration. The maximum allowable amounts are specified for the 2010-2011 and 2011-2012 financial years. The making of this Determination involved consultation with relevant departments to ensure a coordinated approach. Given the nature of the measure, no Regulation Impact Statement was required, as it is not expected to have a substantial effect on business or competition.
Key Provisions
The Veterans’ Entitlements (Special Disability Trust — Discretionary Spending) Determination 2011, established under section 52ZZZWEA(3) of the Veterans’ Entitlements Act 1986, sets out the maximum allowable amounts of a special disability trust’s income and assets that can be spent on purposes primarily for the benefit of the principal beneficiary. Section 4 of the Determination specifies these maximum values for the 2010-2011 and 2011-2012 financial years, which are $10,000 and $10,250 respectively. This Determination allows for discretionary spending beyond the primary purposes of the trust, aligning with legislative changes introduced by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Budget and Other Measures) Bill 2011.
Entities governed by this Act, particularly those managing special disability trusts, must adhere to the specified limits on discretionary spending as outlined in Section 4. These entities are required to ensure that any expenditure from the trust’s income and assets for purposes other than the primary ones does not exceed the prescribed amounts. The trust managers must maintain records and possibly report on the use of these funds to comply with the Act’s requirements.
Failure to comply with the spending limits set out in the Determination could result in legal consequences. Although the Determination does not explicitly list specific offences or penalties, breaches of the Veterans’ Entitlements Act 1986 could lead to civil or criminal penalties as outlined in the Act. Such penalties may include fines or imprisonment, depending on the severity and intent of the breach. It is important for trustees and other relevant parties to understand and adhere to these provisions to avoid any legal repercussions.