Veterans’ Entitlements (Special Disability Trust—Limit on Expenditure for Other Purposes) Determination 2024

Administered by Department of Veterans' Affairs

Legislation au F2024L00822 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

Veterans’ Entitlements (Special Disability Trust – Limit on Expenditure for Other Purposes) Determination 2024

 

Empowering provision

Subsection 52ZZZWEA(3) of the Veterans’ Entitlements Act 1986 (the VEA).

 

Purpose

The Veterans’ Entitlements (Special Disability Trust—Limit on Expenditure for Other Purposes) Determination 2024 (the Determination) is made under subsection 52ZZZWEA(3) of the VEA.

The Determination revokes and replaces the Veterans’ Entitlements (Special Disability Trust – Discretionary Spending) Determination 2022 (the earlier determination).

The purpose of the Determination is to set out the maximum amount of the income and assets of a special disability trust that can be spent for purposes that are primarily for the benefit of the principal beneficiary (other than for the primary purposes of a special disability trust which are to meet reasonable care and accommodation needs of the beneficiary).

A special disability trust is a private trust, established by family members, to provide primarily for the reasonable care and accommodation needs of a family member with a severe disability.

The Determination sets a limit on the amount of trust income and assets (the discretionary spending limit) to be used for the benefit of the principal beneficiary for purposes other than the primary purposes of the trust, while retaining the “special disability trust” status.

The Determination raises the discretionary spending limit from $13,000 for the 2022-2023 financial year, to $14,500 to take effect from 1 July 2024. This increase is a consequence of two increases to CPI over the past two years.

The authority to revoke the earlier determination is provided for in subsection 33(3) of the Acts Interpretation Act 1901. The subsection provides that where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

Rule-maker

Subsection 52ZZZWEA(3) of the VEA confers on the Repatriation Commission the power to determine, by legislative instrument, the discretionary spending limit (the determining power). Under Instrument of Delegation No. R1 of 2019 made under section 213 of the VEA, the Repatriation Commission has delegated the determining power to an APS employee performing duties at Executive Level 1 or higher in the Department of Veterans’ Affairs (the Department). The person who made the Determination was an APS employee performing duties in a position at Senior Executive Band 1 in the Department, namely Acting Assistant Secretary of Benefits Policy Branch, Policy Division.


Consultation

Section 17 of the Legislation Act 2003 requires a rule-maker to be satisfied, before making a legislative instrument that any consultation the rule-maker considered appropriate and reasonably practicable, has been undertaken.

The Department of Social Services (DSS) and the Department have virtually identical legislative instruments in place relating to special disability trusts. The Payment Structures and Seniors Branch at DSS was consulted during this exercise to ensure a consistent approach in the preparation of the instrument to set the discretionary spending amount. The nature of consultation with DSS was by way of email correspondence.

In these circumstances, it is considered that the requirements of section 17 of the Legislation Act 2003 have been met.

 

Retrospectivity

The Determination does not have any retrospective application.

 

Documents incorporated by reference

The Determination does not incorporate any document by reference.

 

Regulatory impact

A Regulation Impact Statement is not required for this Determination, which is made on an annual basis, because the OBPR has previously advised that this Determination is not regulatory in nature, will not impact on business activity, and will have no, or minimal, compliance costs or competition impact.

 

Further explanation of provisions

 

See Attachment A.

 

 

 

 

Approved by:

 

Brian Eastman

Acting Assistant Secretary, Benefits Policy Branch

Policy Division

Department of Veterans’ Affairs

Rule-Maker


STATEMENT OF COMPATIBILITY

prepared under

subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011

Overview

The Veterans’ Entitlements (Special Disability Trust—Limit on Expenditure for Other Purposes) Determination 2024 (the Determination) is a legislative instrument made under subsection 52ZZZWEA(3) of the Veterans’ Entitlements Act 1986.

The purpose of the Determination is to set out the maximum amount of the income and assets of a special disability trust that can be spent for purposes that are primarily for the benefit of the principal beneficiary (other than the primary purposes of a special disability trust which are to meet reasonable care and accommodation needs of the beneficiary).

The maximum amount for the 2024-2025 tax year is $14,500.

Human rights implications

The Determination engages the following human rights:

         the right to social security as recognised in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR); and

         the right to an adequate standard of living as recognised in Article 11 of ICESCR and Article 28 of the Convention on the Rights of Persons with Disabilities.

The Determination promotes the right to social security and the right to an adequate standard of living for those people whose entitlements under the VEA are affected by receiving income from a special disability trust. The rights are promoted by providing for an amount of $14,500 as the limit for the discretionary use of special disability trust funds before the trust loses its status as a ‘special disability trust’.

Conclusion

The attached Determination is compatible with human rights because it promotes the right to social security and the right to an adequate standard of living.


Attachment A

 

 

FURTHER EXPLANATION OF PROVISIONS

 

Section 1

This section sets out the name of the instrument—the Veterans’ Entitlements (Special Disability Trust—Limit on Expenditure for Other Purposes) Determination 2024.

Section 2

This section provides the Determination commences on the day after the day it is registered.

Section 3

This section provides that the authority for making the instrument is subsection 52ZZZWEA(3) of the VEA.

Section 4

This section defines the terms used in the Determination.

Section 5

The section is a standard provision giving effect to the terms of Schedule 1. In the Determination, Schedule 1 repeals the Veterans’ Entitlements (Special Disability Trust – Discretionary Spending) Determination 2022.

Section 6

This section imposes a limit of $14,500 on expenditure for other purposes for the 2024-2025 tax year.

Schedule 1

This section provides that the instrument for the 2022-2023 financial year, the Veterans’ Entitlements (Special Disability Trust – Discretionary Spending) Determination 2022, is revoked on the commencement of this instrument.

Overview

The Veterans’ Entitlements (Special Disability Trust—Limit on Expenditure for Other Purposes) Determination 2024 was enacted to address the need for setting a clear limit on the amount of income and assets from special disability trusts that can be spent for purposes other than the primary objectives of the trust, without causing the trust to lose its status. This determination was made under subsection 52ZZZWEA(3) of the Veterans’ Entitlements Act 1986 (VEA) and was enacted by the Repatriation Commission, which has delegated its powers to an authorised official in the Department of Veterans’ Affairs. The policy objective of this determination is to ensure that special disability trusts, which are established to provide for the reasonable care and accommodation needs of family members with severe disabilities, can retain their special status while allowing for a reasonable amount of discretionary spending for the benefit of the principal beneficiary. The determination raises the discretionary spending limit from $13,000 to $14,500 for the 2024-2025 financial year, reflecting two consecutive years of CPI increases. This determination is compatible with human rights, as it promotes the right to social security and the right to an adequate standard of living for individuals affected by the special disability trust provisions. By setting a discretionary spending limit, the determination ensures that the core purpose of the trust is maintained, while also acknowledging the need for some flexibility in the use of trust funds. The increase in the discretionary spending limit is intended to provide additional support to the principal beneficiary while preventing the trust from being misclassified and losing its special status.

Scope and Application

The Veterans’ Entitlements (Special Disability Trust – Limit on Expenditure for Other Purposes) Determination 2024 applies to special disability trusts established to provide for the care and accommodation needs of a beneficiary with severe disabilities. This legislation operates under the authority of subsection 52ZZZWEA(3) of the Veterans’ Entitlements Act 1986 and sets a limit on the amount of trust income and assets that can be used for purposes other than the primary objectives of the trust, ensuring that the trust retains its status as a ‘special disability trust’. The determination is made by an Acting Assistant Secretary within the Department of Veterans’ Affairs, who has the power to make such determinations as delegated by the Repatriation Commission. The Determination raises the discretionary spending limit from $13,000 for the 2022-2023 financial year to $14,500 effective from 1 July 2024, reflecting adjustments based on the Consumer Price Index. The instrument does not have retrospective application and does not incorporate any documents by reference. The legislation engages human rights by promoting the right to social security and an adequate standard of living for beneficiaries of special disability trusts.

Key Provisions

The Veterans’ Entitlements (Special Disability Trust – Limit on Expenditure for Other Purposes) Determination 2024 sets out the maximum amount that can be spent from a special disability trust for purposes other than the primary purposes of meeting the reasonable care and accommodation needs of the beneficiary. This amount has been set at $14,500 for the 2024-2025 financial year (Section 6). The Determination revokes the previous limit set by the Veterans’ Entitlements (Special Disability Trust – Discretionary Spending) Determination 2022 (Schedule 1). This legislation is made under the authority of subsection 52ZZZWEA(3) of the Veterans’ Entitlements Act 1986 (VEA) (Section 3). The terms used in the Determination are defined in Section 4. The Determination imposes specific obligations on parties involved with special disability trusts. Trustees of such trusts must ensure that any expenditure for purposes other than the primary purposes of the trust does not exceed the $14,500 limit for the specified financial year (Section 6). This limit is crucial for maintaining the special disability trust status, which provides certain tax benefits and entitlements. Trustees must also be vigilant in monitoring and reporting any such expenditures to relevant authorities as required by the VEA. The Repatriation Commission, through delegation under Instrument of Delegation No. R1 of 2019, retains the power to set these discretionary spending limits (Section 5). Breaches of the discretionary spending limit could result in the special disability trust losing its status, which in turn could impact the tax benefits and entitlements available to the beneficiary. While the Determination itself does not specify particular offences, penalties, or consequences for breaches, any non-compliance with the VEA, including exceeding the discretionary spending limit, could lead to legal repercussions. The VEA provides for various penalties and enforcement actions that could be applied in such cases. These may include fines or other sanctions that are designed to ensure compliance with the provisions of the Act. The Determination was made in consultation with the Department of Social Services to ensure consistency in approach regarding special disability trusts. The Repatriation Commission, in exercising its determining power, must be satisfied that appropriate and reasonably practicable consultation has taken place, as required by section 17 of the Legislation Act 2003. This consultation was conducted through email correspondence with the Payment Structures and Seniors Branch at the Department of Social Services. The Determination does not have retrospective effect and does not incorporate any documents by reference. Furthermore, a Regulation Impact Statement is not required as this Determination is considered not to be regulatory in nature and is made on an annual basis.

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