REMOVAL OF INCOME TAX IMPEDIMENTS AFFECTING SPECIAL DISABILITY TRUSTS

The Assistant Treasurer, the Hon Bill Shorten MP, tonight announced the Government will introduce legitimation to remove further income tax barriers that will impede families from making contributions to Special Disability Trust (SDT).

"These changes will ease the financial burden on families by assisting them to provide for the care and accommodation needs of a person with severe disability," the Assistant Treasurer said.

To make SDTs more beneficial for families, the Government will:

• Provide a capital gains tax (CGT) exemption for assets transferred into an SDT for no consideration
• Backdate the application of the 2009‑10 Budget measure that provides a CGT main residence exemption for SDTs to 2006-07
• Provide a CGT exemption for the recipient of the principal beneficiary's main residence, if disposed of within two years of the principal beneficiary's death
• Ensure equivalent taxation treatment amongst SDTs established under different Acts.

These changes will apply from the 2006‑07 income year, to align with when SDTs were first able to be established.

Parliamentary Secretary for Disability and Carers, Senator Jan McLucas, said "By removing these barriers, SDTs will become more attractive for families looking to provide for the long-term care of a family member with severe disability."

The Attachment has more detail on the changes and will form the basis for the Government's four-week consultation on the policy design of these reforms.  More information on how to make a submission is available on the Treasury website.

The Government will release an exposure draft of the legislation as soon as is practicable after the consultation on the policy design, covering these changes as well as the previously announced measure to extend the CGT main residence exemption extension to SDTs.

10 May 2011

Full details are here