EXPLANATORY STATEMENT

Veterans’ Entitlements (Special Disability Trust — Trust Deed, Reporting and Audit Requirements) Determination 2013

Summary

The Veterans’ Entitlements (Special Disability Trust — Trust Deed, Reporting and Audit Requirements) Determination 2013 (the Determination) is made under subsections 52ZZZWC (2), 52ZZZWF (4) and 52ZZZWG(7) of the Veterans’ Entitlements Act 1986 (Act) and provides for the revocation, under subsection 33(3) of the Acts interpretation Act 1901, of the Veterans’ Entitlements (Special Disability Trust — Trust Deed, Reporting and Audit Requirements) Determination 2011.

The revocation of the Veterans’ Entitlements (Special Disability Trust — Trust Deed, Reporting and Audit Requirements) Determination 2011 does not affect the validity of the trust deeds, annual financial reports or audits made in compliance with that Determination.

The attached Determination has three purposes.  Firstly, it allows the Repatriation Commission (Commission) to specify certain matters in regard to the form and provisions to be used in a trust deed for it to qualify as a special disability trust.  Secondly, it sets out certain matters in regard to the annual financial reports of a trust and, thirdly, it sets out certain matters in regard to the auditing of special disability trusts.

The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Part 1—Preliminary

Section 1.1 sets out the name of the Determination. 

Section 1.2 provides that the Determination commences on the day after registration.

Section 1.3 defines various terms that are used in the Determination. 

Changes to definitions in the revoked Veterans’ Entitlements (Special Disability Trust — Trust Deed, Reporting and Audit Requirements) Determination 2011.

The definitions of the terms Australian Accounting Standards and Australian Auditing Standards have been revised.  The word ‘adopted’ has been removed from both definitions as the word ‘issued’ is sufficient.  In addition the incorrect reference to ‘Australian Accounting Standards’ has been removed from the definition of Australian Auditing Standards.

Section 1.4 provides that the attached Determination applies to special disability trusts that were established before, on or after commencement of the Determination.  That is, the Determination is intended to apply to existing trusts, including trusts that were special disability trusts before this Determination commenced.

Part 2 – Trust Deed Requirements

Section 2.1 provides that for the purposes of paragraph 52ZZZWC(2)(a) of the Act, a trust deed for a special disability trust must be in the form of the ‘model trust deed’.  Generally this means that a trust deed must have the same structure and order as the ‘model trust deed’, but does not need to be exactly the same as it.

Section 2.2 provides a list of provisions, as set out in the ‘model trust deed’, that must be included in a trust deed for a special disability trust (for paragraph 52ZZZWC(2)(b) of the Act).  These provisions must be used in the form set out in the ‘model trust deed’ (paragraph 52ZZZWC(2)(c)).

Section 2.3 provides that, for the purposes of paragraph 52ZZZWC(2)(d) of the Act, a trust deed of a special disability trust cannot contain any clause that is inconsistent, or overrides, the operation of any of the clauses listed in the table in subsection 2.2(1).

Part 3 – Reporting requirements

Section 3.1 provides that, for the purposes of paragraph 52ZZZWF(2)(a) of the Act, the financial statements of a special disability trust must be prepared by a person who is a member of CPA Australia, the Institute of Chartered Accountants in Australia or the National Institute of Accountants, or is an employee of a trustee corporation and who is engaged to work as an accountant or financial planner.  The person preparing the statements is not to be an immediate family member of the principal or residuary beneficiary or a trustee of the trust.

Section 3.2 provides that, for subsection 52ZZZWF(3), the financial statements about the trust must include, for the relevant financial year, a profit and loss statement, a balance sheet (with applicable notes) and, if necessary, a depreciation schedule for each class of assets held by the trust.  The financial statements must comply with relevant Australian Accounting Standards and give a true and fair view of the trust’s position as at 30 June in the relevant year.  The financial statements must include a statement that all amounts paid out of the trust (other than those paid for reasonable administration expenses and taxation) were to meet the reasonable care and accommodation needs of the principal beneficiary (or for other purposes ancillary to meeting those needs) or for other purposes that are primarily for the benefit of the principal beneficiary and no amount was paid out for purposes other than those noted above or for services provided to the principal beneficiary by an immediate family member.

Section 3.3 provides that, subject to subsection (2), when the Commission is provided with the trust’s financial statements each year, a certified copy of the trust’s income tax return, in relation to this same period, must also be provided.  However, a certified copy of the trust’s income tax return is not required, if section 95AB of the Income Tax Assessment Act 1936 applies to the trust’s income.

Section 3.4 provides that when the Commission is provided with the trust’s financial statements each year, the trustees of the trust must also provide a Statutory Declaration to the effect that all the information that has been presented to the Commission, in accordance with section 52ZZZWF of the Act, is true and correct in all material particulars.

Part 4 – Auditing requirements

Section 4.1 provides that for the purposes of paragraph 52ZZZWG(2)(b) of the Act, where a person has requested an audit under subsection 52ZZZWG(3) of the Act, the period of the audit will be the period specified by the person requesting the audit, being a period of 1 to 5 financial years during the last 5 completed financial years prior the audit request.

Section 4.2 provides that, for the purposes of paragraph 52ZZZWG(5)(a) of the Act, the auditing of a special disability trust must be conducted by a person who is a member of CPA Australia, the Institute of Chartered Accountants in Australia of the National Institute of Accountants.  The person conducting the audit cannot be an immediate family member of the principal or residuary beneficiary or a trustee of the trust.  The auditor also cannot be any person who prepared, or is preparing, the financial statements of the trust for the financial year to be audited.

Section 4.3 provides that, for subsection 52ZZZWG(6) of the Act, the audit must comply with relevant Australian Accounting Standards and provide a statement that the trust’s financial statement give a true and fair view of the trust’s position and performance as at 30 June in the relevant year.  The audit must also include a statement as to whether the trust has complied with specified provisions of the trust deed (or all of the provisions of the trust deed), if the person requesting the audit has asked for this matter to be audited.

Consultation

The Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) (which consulted the Department of Education, Employment and Workplace Relations) was consulted (by e-mail) in the making of the attached Determination.  Both of the agencies mentioned proposed a virtual identical instrument to the one attached and DVA consulted FaHCSIA (the leading agency in the exercise) from the viewpoint of ensuring a co-ordinated approach in terms of the content and timing of the relevant instruments. 

Only slight issues arose in the course of the consultation, with FaHCSIA, the lead agency in this matter saying:

[FaHCSIA] have discussed these differences (to the Statement of compatibility with Human Rights) with [DEEWR] (the DEEWR statements are similar) and possible further small amendments by DEEWR to the ES for the Trust Deed, Reporting and Audit Requirements Determination.   FaHCSIA has no concerns with the ES for each determination lodged and registered being slightly different to the ones to be lodged and registered by your Department and possibly DEEWR and DVA.”.

Incorporated Document

The document entitled ‘Model Trust Deed for Special Disability Trusts’ published by the Department of Families, Housing, Community Services and Indigenous Affairs, as existing on 1 January 2011.

For the purposes of section 14 of the Legislative Instruments Act 2003, the attached instrument does not purport to incorporate this document as it may change from time to time.  The version of the document in existence on 1 January 2011 is the version incorporated into the attached instrument.

Note   The ‘Model Trust Deed for Special Disability Trusts’ is available on the Internet — see www.fahcsia.gov.au.

Regulation Impact Statement

A Regulation Impact Statement is not required for this Determination because it is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.
Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

The Determination is compatible with the human rights and freedoms recognized or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Determination makes minor technical amendments to the Veterans’ Entitlements (Special Disability Trust — Trust Deed, Reporting and Audit Requirements) Determination 2011 (The 2011 Determination).

The 2011 Determination was made due to legislative changes which were made to the special disability trust provisions in the Veterans’ Entitlements Act 1986 and the  social security law, by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Budget and Other Measures) Act 2011.

The minor technical amendments involve changes to the definition of “Australian Accounting Standards” and “Australian Auditing Standards” used in the Determination to better reflect the terms used.

Human rights implications

The Determination engages the following human rights:

• the right to social security as recognized in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR); and
• the right to an adequate standard of living in Article 11 of ICESCR and Article 28 of the Convention on the Rights of Persons with Disabilities.

The Determination promotes these rights by providing the structure of a “Special Disability Trust” under the Veterans’ Entitlements Law.

The effect of a trust being considered a “Special Disability Trust” under the Veterans’ Entitlements Law is that a certain amount of income from the trust can be used for the benefit of the principal beneficiary (but for purposes other than the primary purposes of the trust which is to meet reasonable care and accommodation needs of the beneficiary) while not being considered ordinary income for veterans’ entitlements assessment purposes.  This means that the beneficiary of the trust will potentially have more income to meet their needs before it affects their veterans’ entitlement.

Conclusion

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

Repatriation Commission

Rule Maker