4.14.3.35 Special disability trusts - discretionary spending

Summary

From 1 January 2011, the trust can undertake a level of discretionary spending that is not directly related to the care and accommodation needs of the beneficiary. The discretionary spending must be for the benefit of the beneficiary. The limit was initially set at $10,000 on 1 January 2011 and is indexed on 1 July each year to the CPI. The discretionary amount can be expended in a financial year. This allows special disability trusts greater flexibility to meet additional costs relating to the beneficiary's health, wellbeing, recreation, independence and social inclusion.

The following are some examples of what the trust can pay for from the discretionary amount as they are not considered reasonable care needs:

• food
• household items for the beneficiary
• toiletries such as toothpaste, toilet paper, soap, shampoo, sanitary pads and tampons
• vehicle maintenance and vehicle-related expenses other than those required for, or because of, the principal beneficiary's disability
• vehicle registration and insurance
• petrol for vehicle
• recreation and leisure activities
• computer, except if the computer is essential for communication because of the principal beneficiary's disability
• communication devices unless modified because of the principal beneficiary's disability
• therapy that is not required for, or because of, the principal beneficiary's disability or that is not approved in writing by a medical practitioner
• capital improvements to the principal beneficiary's place of residence not arising from his or her disability
• building and content insurance
• payment of utilities charges in connection with the principal beneficiary's place of residence
• household cleaning services
• clothing and footwear that is not required for, or because of, the principle beneficiary's disability, and
• life skills and social inclusion workshops.

Receipts of expenditure will need to be included in the yearly financial statements.

The following table shows the historical discretionary spending limit per financial year.

Prohibition on payment of immediate family members

The trustee cannot pay any immediate family member for providing care or for services provided to the principal beneficiary. Any paid care or service must be provided by an arms-length employee of the special disability trust, for example, nurse, physiotherapist, cleaning, mechanical services etc.

Incidental benefit from expenditure

Where another party (not the principal beneficiary) benefits from expenditure that was incurred for the principal beneficiary, the expenditure is allowable where the other party's benefit was of a non-cash nature, minor and provided on a basis that is infrequent and irregular.