My posting below is not to be considered advice, this is my personal view only. If you do consider acting on this information you should seek your own professional advice.
As far as I was concerned “Disability Trusts” were a waste of time because of the many restrictions within the rules, particularly the limitation on the categories of allowable expenditure.
If a residence is held trust and that residence is sold, the trust is exposed to capital gains tax (CGT). This tax is not levied on the majority of the Australian population as they hold their residences in their names as their place of principal residence. This unfairly discriminated against disabled people.
Now however it is planned that if a residence, of any value, is held in a disability trust it will be treated as a place of principle residence similar to a private residence, and will be tax (CGT) free. Please refer to the extracts here. Over a life time, with a number of changes in residences this could amount to a considerable preservation of capital for the disabled person.
I have not yet been able to establish whether the 5% stamp duty can be waivered when transferring a residence held in trust for a disabled person into a disability trust for the same disabled person. If disability trusts become popular for the holding of residences, I believe we should campaign to have the stamp duty waivered if this is not already the case.
John Connell
For more information on Special Disability Trusts see the paper provided the Accountants & Lawyers who presented to the August Auxiliary meeting. There is a copy in the January Blog archive.
ReplyDeleteHi John, Thanks for sharing this info - it certainly looks like a closer look is now necessary.
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