Commonwealth: Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Act 2006 (Cth)

Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Act 2006 No. 82, 2006 An Act to amend the law relating to social security, veterans' affairs, family assistance, family law, child support and taxation, and for related purposes Contents 1 Short title 2 Commencement 3 Schedule(s) Schedule 1—FTB Part A income free area A New Tax System (Family Assistance) Act 1999 Family Assistance, Social Security and Veterans' Affairs Legislation Amendment (2005 Budget and Other Measures) Act 2006 Schedule 2—Large family supplement A New Tax System (Family Assistance) Act 1999 Schedule 3—Extension of eligibility for utilities allowance Social Security Act 1991 Schedule 4—Australian Government Disaster Recovery Payment Part 1—Main amendments Social Security Act 1991 Part 2—Other amendments Income Tax Assessment Act 1997 Social Security Act 1991 Social Security (Administration) Act 1999 Schedule 5—Maintenance income credit balances Part 1—Amendments A New Tax System (Family Assistance) Act 1999 Part 2—Application and transitional provisions Schedule 6—Extension of carer payment for carers of severely disabled children Social Security Act 1991 Schedule 7—Special disability trusts Part 1—Amendment of the Social Security Act 1991 Part 2—Amendment of the Veterans' Entitlements Act 1986 Schedule 8—Australian Institute of Family Studies Part 1—Amendments Family Law Act 1975 Part 2—Transitional provisions Division 1—Preliminary Division 2—Assets, liabilities and legal proceedings Division 3—Reference to, and things done by or in relation to, old Institute Division 4—Miscellaneous Schedule 9—FTB Part B quarantining A New Tax System (Family Assistance) Act 1999 Schedule 10—Technical amendments relating to income estimates A New Tax System (Family Assistance) (Administration) Act 1999 Schedule 11—Definition A New Tax System (Family Assistance) (Administration) Act 1999 Schedule 12—Shared parental responsibility A New Tax System (Family Assistance) Act 1999 Child Support (Assessment) Act 1989 Schedule 13—Other amendments Social Security Act 1991 Social Security (Administration) Act 1999 Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Act 2006 No. 82, 2006 An Act to amend the law relating to social security, veterans' affairs, family assistance, family law, child support and taxation, and for related purposes [Assented to 30 June 2006] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Act 2006. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 30 June 2006 2. Schedule 1, items 1 to 4 1 July 2006. 1 July 2006 3. Schedule 1, item 5 The day on which this Act receives the Royal Assent. 30 June 2006 4. Schedules 2 and 3 1 July 2006. 1 July 2006 5. Schedule 4 1 December 2006. 1 December 2006 6. Schedules 5 and 6 1 July 2006. 1 July 2006 7. Schedule 7 20 September 2006. 20 September 2006 8. Schedule 8 1 July 2006. 1 July 2006 9. Schedule 9 1 July 2005. 1 July 2005 10. Schedule 10 1 July 2006. 1 July 2006 11. Schedule 11 1 July 2002. 1 July 2002 12. Schedule 12, item 1 Immediately after the commencement of Schedule 9 to the Family Law Amendment (Shared Parental Responsibility) Act 2006. 1 July 2006 13. Schedule 12, item 2 Immediately after the commencement of items 3 to 104 of Schedule 8 to the Family Law Amendment (Shared Parental Responsibility) Act 2006. 1 July 2006 14. Schedule 12, item 3 Immediately after the commencement of Schedule 9 to the Family Law Amendment (Shared Parental Responsibility) Act 2006. 1 July 2006 15. Schedule 13 The day on which this Act receives the Royal Assent. 30 June 2006 Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—FTB Part A income free area A New Tax System (Family Assistance) Act 1999 1 Clause 19 of Schedule 1 Omit "$28,200", substitute "$40,000". 2 Subclause 3(1) of Schedule 4 (table item 13) Omit "1999", substitute "2005". 3 Application (1) The amendment made by item 1 applies in relation to family tax benefit for the 2006‑2007 income year and later income years. (2) The amendment made by item 2 applies in relation to family tax benefit for the 2007‑2008 income year and later income years. 4 Transitional The amount referred to in column 1 of item 13 of the table in subclause 3(1) of Schedule 4 to the A New Tax System (Family Assistance) Act 1999, as amended by this Schedule, is not to be indexed on 1 July 2006. Family Assistance, Social Security and Veterans' Affairs Legislation Amendment (2005 Budget and Other Measures) Act 2006 5 Schedule 1 Repeal the Schedule. Schedule 2—Large family supplement A New Tax System (Family Assistance) Act 1999 1 Clause 34 of Schedule 1 Omit "4 or more", substitute "3 or more". 2 Clause 35 of Schedule 1 (formula) Omit "3", substitute "2". Schedule 3—Extension of eligibility for utilities allowance Social Security Act 1991 1 Paragraphs 1061T(a) and (b) Repeal the paragraphs, substitute: (a) either: (i) has reached pension age and is receiving an income support payment; or (ii) is receiving a widow allowance, a mature age allowance or a partner allowance; and Schedule 4—Australian Government Disaster Recovery Payment Part 1—Main amendments Social Security Act 1991 1 Subsection 23(1) Insert: adversely affected, in relation to a major disaster, has the meaning given by section 1061L. 2 Subsection 23(1) Insert: AGDRP: see Australian Government Disaster Recovery Payment. 3 Subsection 23(1) Insert: Australian Government Disaster Recovery Payment or AGDRP means a payment under Part 2.24. 4 Section 36 Repeal the section, substitute: 36 Major disaster (1) The Minister may determine in writing that an event is a major disaster if the Minister is satisfied that the event is a disaster that has such a significant impact on individuals that a government response is required. (2) Without limiting the matters to which the Minister may have regard in considering the impact of the event on individuals, the Minister must have regard to: (a) the number of individuals affected; and (b) the extent to which the nature or extent of the disaster is unusual. (3) The event: (a) may be one that occurs naturally or otherwise; and (b) may be one that occurs in Australia or outside Australia. (4) If the same event has an impact in 2 or more locations, the Minister may: (a) make a single declaration under this section relating to some or all of the locations; or (b) make 2 or more declarations under this section, each relating to one or more of the locations (whether or not the declarations cover all of the locations). However, the Minister must not make a determination that relates both to a location in Australia and a location outside Australia. (5) A determination made under this section is not a legislative instrument. 5 Part 2.24 of Chapter 2 Repeal the Part, substitute: Part 2.24—Australian Government Disaster Recovery Payment Division 1—Qualification for Australian Government Disaster Recovery Payment 1061K Qualification for Australian Government Disaster Recovery Payment (1) A person is qualified for an Australian Government Disaster Recovery Payment if: (a) the person is at least 16 years old, or is receiving a social security payment; and (b) the person: (i) is an Australian resident; or (ii) is the holder of a visa that is in a class of visas determined by the Minister for the purposes of subparagraph 729(2)(f)(v); or (iii) is receiving a social security payment; or (iv) is an Australian citizen who is not an Australian resident and who is covered by a determination under subsection (3); and (c) the person is adversely affected by a major disaster. Note 1: For Australian resident see section 7. Note 2: For adversely affected see section 1061L. Note 3: For major disaster see section 36. (2) The Minister may determine in writing that a specified class of Australian citizens who are not Australian residents can qualify for an AGDRP. Note: For Australian resident see section 7. (3) A determination made under subsection (2) is a legislative instrument, but section 42 of the Legislative Instruments Act 2003 does not apply to the determination. (4) A person cannot be qualified for more than one AGDRP in relation to the same major disaster. 1061L Meaning of adversely affected (1) For the purposes of this Act, a person is adversely affected by a major disaster if the person is affected by the disaster in a way determined by the Minister in relation to the disaster. (2) The Minister may determine in writing, in relation to a major disaster, the circumstances in which persons are to be taken to be adversely affected by the disaster. (3) A determination made under this section is a legislative instrument, but section 42 of the Legislative Instruments Act 2003 does not apply to the determination. Division 2—Amount of Australian Government Disaster Recovery Payment 1061M Amount of payment for disasters in Australia (1) The amount of an AGDRP payable to a person in relation to a major disaster that occurs in Australia is the sum of: (a) the adult rate for the financial year in which the major disaster is declared under section 36; and (b) if the person is the principal carer of one or more children—the amount worked out by multiplying the child rate for that financial year by the number of children for whom the person is the principal carer. Note 1: For major disaster see section 36. Note 2: For principal carer see subsections 5(15) to (24). (2) For the purposes of this Division, the adult rate for a financial year is: (a) the amount that the Minister determines under subsection 1061P(1) to be the adult rate for the financial year; or (b) if the Minister has not determined an adult rate for the financial year—the amount that the Minister last determined to be the adult rate for a previous financial year; or (c) if the Minister has never determined an adult rate for any financial year—$1,000. (3) For the purposes of this Division, the child rate for a financial year is: (a) the amount that the Minister determines under subsection 1061P(2) to be the child rate for the financial year; or (b) if the Minister has not determined a child rate for the financial year—the amount that the Minister last determined to be the child rate for a previous financial year; or (c) if the Minister has never determined a child rate for any financial year—$400. 1061N Amount of payment for disasters outside Australia The amount of an AGDRP payable to a person in relation to a major disaster that occurs outside Australia is the sum of: (a) the amount that the Minister determines under subsection 1061P(4) in relation to the disaster; and (b) if the person is the principal carer of one or more children—the amount worked out by multiplying the amount that the Minister determines under subsection 1061P(5) in relation to the disaster by the number of children for whom the person is the principal carer. Note 1: For major disaster see section 36. Note 2: For principal carer see subsections 5(15) to (24). 1061P Determinations of rates (1) The Minister may determine in writing for the purposes of subsection 1061M(2) the adult rate for a financial year. (2) The Minister may determine in writing for the purposes of subsection 1061M(3) the child rate for a financial year. (3) A determination under subsection (1) or (2) must be made in the financial year preceding the year to which the determination relates. (4) The Minister may determine in writing for the purposes of paragraph 1061N(a) an amount not exceeding the adult rate for the financial year in which the determination is made. (5) The Minister may determine in writing for the purposes of paragraph 1061N(b) an amount not exceeding the child rate for the financial year in which the determination is made. (6) A determination made under this section is a legislative instrument, but section 42 of the Legislative Instruments Act 2003 does not apply to the determination. Part 2—Other amendments Income Tax Assessment Act 1997 6 Section 52‑10 (after table item 2.1) Insert: 2AA.1 Australian Government Disaster Recovery Payment Exempt Exempt Not applicable Not applicable 7 Section 52‑10 (table item 8.1) Repeal the item. 8 Section 52‑40 (after table item 2) Insert: 2AA Australian Government Disaster Recovery Payment Part 2.24 Not applicable Not applicable 9 Section 52‑40 (table item 8) Repeal the item. Social Security Act 1991 10 Subsection 14A(1) (after paragraph (d) of the definition of liquid assets) Insert: (da) an amount of an AGDRP that the person received, if the Secretary is satisfied that the length of time since receiving the payment is still reasonable in the circumstances; or 11 Subsection 19B(1) (definition of liquid assets) Omit all the words after paragraph (e), substitute: but does not include: (f) an amount that is a qualifying eligible termination payment for the purposes of Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act; or (g) an amount of an AGDRP that the person received, if the Secretary is satisfied that the length of time since receiving the payment is still reasonable in the circumstances. 12 Subsection 746(2) Omit "Subject to Part 2.24 (major disaster), the", substitute "The". 13 Subsection 746(2) (note) Repeal the note. 14 Subsection 771KE(2) Omit "Subject to Part 2.24 (major disaster), the", substitute "The". 15 Subsection 771KE(2) (note) Repeal the note. 16 Section 1061JJ Before "A crisis payment", insert "(1)". 17 Section 1061JJ Omit "a disaster relief payment", substitute "an AGDRP or other disaster relief payment". 18 At the end of section 1061JJ Add: (2) However, this section does not affect a person's entitlement to a crisis payment in respect of an extreme circumstance if: (a) the person has claimed the crisis payment; and (b) the person subsequently qualifies for an AGDRP or other disaster relief payment in respect of the same extreme circumstance. Social Security (Administration) Act 1999 19 Subsection 16(6) Repeal the subsection, substitute: (6) The Secretary may approve a place or person outside Australia for the purposes of subsection (4) for the lodgment of: (a) claims made under a scheduled international social security agreement; or (b) claims for AGDRP in relation to a major disaster that occurred outside Australia. 20 After Subdivision F of Division 1 of Part 3 Insert: Subdivision FA—Time limit for claims for AGDRP 27A Time limit for claim (1) A claim for an AGDRP relating to a major disaster must be lodged within 6 months after the determination of the disaster under section 36 of the 1991 Act. (2) However, the claim may be lodged more than 6 months after the declaration if the Secretary is satisfied that: (a) there are special circumstances applying to the person's claim that justify a late lodgment; and (b) the claim is lodged within a reasonable period having regard to those circumstances. 21 Before subsection 31(2) Insert: (1) Section 29 does not apply to a claim for an AGDRP if the claim relates to a major disaster that occurred outside Australia. 22 After section 46 Insert: 46A Payment of AGDRP (1) Unless the Secretary makes a determination under subsection (2), a person's AGDRP is to be paid in accordance with section 47. (2) If the Secretary considers that it is appropriate for a person's AGDRP to be paid by instalments, the Secretary may determine that the person's AGDRP is to be so paid. 23 Subsection 47(1) (after paragraph (a) of the definition of lump sum benefit) Insert: (aa) AGDRP, except where the Secretary has made a determination under subsection 46A(2); or 24 Subsection 47(1) (paragraph (c) of the definition of lump sum benefit) Repeal the paragraph. 25 Paragraph 13(a) of Schedule 2 Omit "a disaster relief payment", substitute "an AGDRP". Note: The heading to clause 13 of Schedule 2 is altered by omitting "disaster relief payment" and substituting "AGDRP". 26 After paragraph 13(b) of Schedule 2 Insert: (ba) is in Australia when making that claim; and 27 Clause 13 of Schedule 2 Omit "the disaster relief payment", substitute "the AGDRP". Schedule 5—Maintenance income credit balances Part 1—Amendments A New Tax System (Family Assistance) Act 1999 1 Subsection 3(1) Insert: maintenance income credit balance has the meaning given by clause 24A of Schedule 1. 2 Subsection 3(1) Insert: registered entitlement, of an individual, means the individual's entitlement to receive maintenance income from a particular payer, if the payer's liability to pay that maintenance income is an enforceable maintenance liability within the meaning of the Child Support (Registration and Collection) Act 1988. 3 Before clause 19A of Schedule 1 Insert: Subdivision A—Maintenance income test 4 Clause 20 of Schedule 1 Before "This is", insert "(1)". 5 Clause 20 of Schedule 1 (method statement, paragraph (b) of step 1) Omit "paragraph (a).", substitute "paragraph (a); and". 6 Clause 20 of Schedule 1 (method statement, at the end of step 1) Add: (c) disregard any amount that, for the income year for which the individual's reduction for maintenance income is being worked out, is required under clause 24E to be depleted from a maintenance income credit balance of the individual and, if the individual is a member of a couple, from a maintenance income credit balance of the individual's partner. 7 At the end of clause 20 of Schedule 1 Add: (2) Paragraph (c) of step 1 of the method statement in subclause (1) does not apply unless and until the individual has satisfied the FTB reconciliation conditions in section 32B of the Family Assistance Administration Act for all of the same‑rate benefit periods (within the meaning of that section) that are included in the income year for which the individual's reduction for maintenance income is being worked out. 8 At the end of Division 5 of Part 2 of Schedule 1 Add: Subdivision B—Maintenance income credit balances 24A Maintenance income credit balances (1) A maintenance income credit balance, for a registered entitlement of an individual, is, at any particular time, the balance at that time of the accruals under clause 24B and the depletions under clause 24E in relation to that entitlement. (2) Despite subclause (1), a maintenance income credit balance for a registered entitlement at any particular time cannot exceed the total arrears owing from that registered entitlement for all income years for which the entitlement has existed. (3) If: (a) but for the condition in subclause 24B(3) not being met in relation to an income year, there would be an accrual to a maintenance income credit balance of an individual for a day in that income year; and (b) after there has been an accrual under clause 24C for a day in a later income year or a depletion under clause 24E for a later income year, that condition is met in relation to the earlier income year; the maintenance income credit balance is recalculated, taking into account the accrual for the day in the earlier income year before taking into account the accrual or depletion mentioned in paragraph (b). (4) This Subdivision continues to apply in relation to a maintenance income credit balance of an individual whether or not the individual or the individual's partner continues to be eligible for family tax benefit. 24B Accruals to a maintenance income credit balance Accrual if conditions are satisfied (1) There is an accrual to a maintenance income credit balance for a registered entitlement of an individual, for a day in an income year, of the amount worked out under clause 24C for that day, if all the conditions in this clause are satisfied. Conditions that must be satisfied (2) Either or both of the following must apply: (a) the individual is eligible for family tax benefit for the day; (b) if the individual is a member of a couple on the day—the individual's partner is eligible for family tax benefit for the day. (3) The eligible person must have satisfied the FTB reconciliation conditions in section 32B of the Family Assistance Administration Act for all of the same‑rate benefit periods (within the meaning of that section) that are included in the income year. (4) The annualised amount of the maintenance income of the eligible person for the day must be less than the maintenance income free area that applied to the eligible person for that day. (5) The maintenance income that the individual received in the income year from the registered entitlement must be less than the amount due in the income year from the registered entitlement. 24C Amount of accrual to a maintenance income credit balance (1) This is how to work out the amount of the accrual under clause 24B, for a day in an income year, to a maintenance income credit balance for a registered entitlement of an individual who is, or is the partner of, an eligible person under subclause 24B(2): Method statement Step 1. Work out the global maintenance entitlement of the eligible person for the day using clause 24D. Step 2. Identify the lower of: (a) that global maintenance entitlement; and (b) the maintenance income free area that applied to the eligible person for the day. Step 3. Subtract from the lower amount identified in step 2 the annualised amount of the maintenance income of the eligible person for the day. Step 4. Divide the result of step 3 by 365. Step 5. Unless subclause (2) applies to the individual, the amount that accrues to the maintenance income credit balance of the individual for the day is the amount worked out under step 4. If subclause (2) applies to the individual, take the amount worked out under step 4 and apply the method statement in subclause (2). (2) If either or both of the following apply: (a) the individual has more than one registered entitlement for the day in respect of which the condition in subclause 24B(5) is met; (b) if the individual is a member of a couple on the day—the individual's partner has one or more registered entitlements for the day in respect of which the condition in subclause 24B(5) is met; this is how to work out the amount of the accrual under clause 24B, for a day in an income year, to each of the maintenance income credit balances (the relevant balances) for those entitlements: Method statement Step 1. Work out the daily cap for each relevant balance. The daily cap for a relevant balance is the excess of the amount due in the income year from the registered entitlement to which the balance relates over the maintenance income received in the income year from the registered entitlement, divided by 365. Step 2. Distribute the amount worked out under step 4 of the method statement in subclause (1) equally among each relevant balance, up to the amount of the daily cap for the relevant balance. Step 3. Distribute any remaining amount equally among each relevant balance for which the daily cap has not been reached, up to the amount of the daily cap for the relevant balance. Step 4. Reapply step 3 to any remaining amount until: (a) there is no remaining amount to distribute; or (b) the daily cap for each relevant balance is reached. Step 5. The amount that accrues to each of the relevant balances for the day is the sum of the amount distributed under step 2 and any additional amounts distributed under steps 3 and 4. (3) To avoid doubt, clauses 24B and 24C apply only once for a day in relation to any relevant balance. 24D Global maintenance entitlement of an eligible person (1) For the purposes of step 1 of the method statement in subclause 24C(1), the global maintenance entitlement of the eligible person under subclause 24B(2) for the day is the sum of: (a) the amounts worked out using the formula in subclause (2) for: (i) each registered entitlement for the day of the eligible person; and (ii) if the eligible person is a member of a couple on the day—each registered entitlement for the day of the eligible person's partner; and (b) any amounts worked out under subclause (3); and (c) the annualised amount of any capitalised maintenance income of the eligible person and, if the eligible person is a member of a couple on the day, of the eligible person's partner, for the day; and (d) the annualised amount of any maintenance income of the eligible person and, if the eligible person is a member of a couple on the day, of the eligible person's partner, for the day: (i) that is not from a registered entitlement; and (ii) that is not capitalised maintenance income. (2) For the purposes of paragraph (1)(a), the formula is: (3) If: (a) in respect of: (i) a registered entitlement for the day of the eligible person; or (ii) if the eligible person is a member of a couple on the day—a registered entitlement for the day of the eligible person's partner; the maintenance income received by the eligible person or partner for the income year exceeds the amount due in the income year from the entitlement; and (b) that excess, or any part of it (the relevant excess), is not disregarded for the purposes of paragraph (c) of step 1 of the method statement in clause 20; an amount for the purposes of paragraph (1)(b) is worked out by using this formula: 24E Depletions from a maintenance income credit balance (1) There is a depletion from the maintenance income credit balance for a registered entitlement of an individual, for an income year, of the amount worked out under subclause (2), if: (a) the income year has ended; and (b) the maintenance income that the individual received in the income year from the entitlement is more than the amount due in the income year from the entitlement. (2) The amount by which the maintenance income credit balance is depleted is the lower of: (a) the excess of the maintenance income that the individual received in the income year from the entitlement over the amount due in the income year from the entitlement; and (b) the amount of the maintenance income credit balance. (3) For the purposes of paragraphs (1)(b) and (2)(a), in working out the maintenance income received in an income year or the amount of maintenance income due in an income year: (a) disregard any maintenance income received or due for an FTB child for whom the FTB child rate under clause 7 does not exceed the base FTB child rate (see clause 8); and (b) disregard the operation of clause 11 (sharing of family tax benefit) in applying paragraph (a). Part 2—Application and transitional provisions 9 Application (1) Paragraph (c) of step 1 of the method statement in subclause 20(1) of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 applies to family tax benefit for the 2006‑2007 income year and later income years. (2) Subdivision B of Division 5 of Part 2 of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 applies to the 2000‑2001 income year and later income years. 10 Transitional (1) In working out whether there is an accrual to a maintenance income credit balance for a day in the 2000‑2001, 2001‑2002 or 2002‑2003 income year, the condition in subclause 24B(3) of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 is taken to require that, in relation to the income year for which the accrual is being worked out, the eligible person under subclause 24B(2) of Schedule 1 to that Act does not have a non‑lodger debt. (2) For the purposes of subitem (1), an eligible person has a non‑lodger debt in relation to an income year if: (a) the conditions in subsection 28(1) of the A New Tax System (Family Assistance) (Administration) Act 1999 are satisfied for a determination that relates to the eligible person; and (b) the Secretary has varied the determination under subsection 28(2) or (6) of that Act; and (c) because of that variation, the amount of family tax benefit paid in respect of the income year has become a debt under section 71 of that Act; and (d) as at 1 July 2006, the Secretary has not varied that determination under subsection 28(3) or (4) of that Act. Schedule 6—Extension of carer payment for carers of severely disabled children Social Security Act 1991 1 Subsection 197(1) (definition of profoundly disabled child) After "(2)", insert ", (2AA)". 2 After subsection 197(2) Insert: (2AA) A child is a profoundly disabled child if: (a) the child has either: (i) a severe intellectual, psychiatric or behavioural disability; or (ii) a severe intellectual, psychiatric or behavioural medical condition; and (b) the child, because of the disability or condition, needs continuous personal care for: (i) 6 months or more; or (ii) if the child's condition is terminal and the child's life expectancy is less than 6 months—the remainder of the child's life; and (c) the child is at least 6, and under 16, years of age; and (d) because of the child's disability or condition, the child does one or more of the following: (i) repeatedly engages in dangerous behaviour that is, or that gives rise to, a significant risk (whether immediate or long‑term) to the child's health or safety and that, without carer intervention, would result in the child suffering sustained tissue or bodily damage, or death; (ii) repeatedly engages in aggressive or violent behaviour that is, or that gives rise to, a significant risk to the health or safety of others, or that results in significant property damage, as a result of which the child is regularly or permanently excluded from community programs, activities, services or facilities; (iii) repeatedly engages in severe sexually deviant or sexually inappropriate behaviour, as a result of which the child is regularly or permanently excluded from community programs, activities, services or facilities. 3 Subsection 198(8) After "profoundly disabled child", insert "within the meaning of subsection 197(2) or (2A)". 4 At the end of section 198 Insert: Carers of certain profoundly disabled children (10) If the care receiver is a profoundly disabled child within the meaning of subsection 197(2AA): (a) the person must provide continuous personal care for the child within the meaning of paragraph (b) of that subsection; and (b) the provision of that care by the person must severely restrict the person's capacity to undertake paid employment. Schedule 7—Special disability trusts Part 1—Amendment of the Social Security Act 1991 1 Subsection 23(1) Insert: immediate family member, of a person, means an individual: (a) who is a natural parent, adoptive parent or step‑parent of the person; or (b) who is, or was when the person was under 18 years of age, a legal guardian of the person; or (c) who is a grandparent of the person; or (d) who is a sibling of the person. 2 Subsection 23(1) Insert: principal beneficiary, of a special disability trust, has the meaning given by subsection 1209M(1). 3 Subsection 23(1) Insert: sibling, of a person, includes a half‑brother, half‑sister, adoptive brother, adoptive sister, stepbrother or stepsister of the person, but does not include a foster‑brother or foster‑sister of the person. 4 Subsection 23(1) Insert: special disability trust has the meaning given by section 1209L. 5 Subsection 1123(1) (note) Repeal the note, substitute: Note 1: If Part 3.14A or 3.14B applies in relation to the transfer by a person of a qualifying interest or an eligible interest in a farm or relevant farm asset, that transfer and certain transfers by the person's partner are taken not to be disposal of assets (see sections 1185D and 1185T). Note 2: Under Division 4 of Part 2.24, certain transfers of assets to special disability trusts can be taken not to be disposals of the assets (but this can be subject to a limit on the aggregate value of the transfers). 6 At the end of section 1124 Add: Note: If subsection 1209ZA(2) applies in relation to the transfer of an asset to a special disability trust, that subsection has the effect of reducing the amount of the disposal or disposition. 7 Section 1190 (after table item 34) Insert: 35. Assets value limit of special disability trust (see section 1209Y) special disability trust AVL [subsection 1209Y(3)] 8 Subsection 1191(1) (after table item 24) Insert: 25. special disability trust AVL 1 July December most recent December quarter before reference quarter $250.00 9 After subsection 1192(5) Insert: (5A) The first indexation of an amount under item 25 of the CPI Indexation Table in subsection 1191(1) is to take place on 1 July 2007. 10 After subsection 1207X(2) Insert: (2A) The only attributable stakeholder of a special disability trust is the principal beneficiary of the trust. Note 1: For special disability trust, see section 1209L. Note 2: For principal beneficiary of a special disability trust, see subsection 1209M(1). 11 At the end of subsection 1207Y(1) Add: Note: For attribution of the income of a special disability trust, see section 1209V. 12 At the end of subsection 1208E(1) Add: Note: For attribution of the assets of a special disability trust, see section 1209Y. 13 After Part 3.18 Insert: Part 3.18A—Private financial provision for certain people with disabilities Division 1—Special disability trusts 1209L What is a special disability trust? A trust is a special disability trust if the following requirements of this Division are complied with: (a) the beneficiary requirements (see section 1209M); (b) the trust purpose requirements (see section 1209N); (c) the trust deed requirements (see section 1209P); (d) the trustee requirements (see section 1209Q); (e) the trust property requirements (see section 1209R); (f) the reporting requirements (see section 1209S); (g) the audit requirements (see section 1209T). Note: The Secretary may waive one or more requirements in certain circumstances (see section 1209U). 1209M Beneficiary requirements Single beneficiary rule (1) The trust must have no more than one beneficiary (the principal beneficiary), not including any residuary beneficiary. Impairment or disability conditions (2) If the principal beneficiary has reached 16 years of age: (a) the beneficiary must: (i) have an impairment that would qualify the person for disability support pension; or (ii) be receiving invalidity service pension under Part III of the Veterans' Entitlements Act; or (iii) be receiving income support supplement granted on the ground set out in subparagraph 45A(1)(b)(iii) of the Veterans' Entitlements Act; and (b) the beneficiary must: (i) have a disability that would, if the person had a sole carer, qualify the carer for carer payment or carer allowance; or (ii) be living in an institution, hostel or group home in which care is provided for people with disabilities, and for which funding is provided (wholly or partly) under an agreement, between the Commonwealth, the States and the Territories, nominated by the Secretary under subsection (3); and (c) the beneficiary must have a disability as a result of which he or she is not working, and has no likelihood of working, for a wage that is at or above the relevant minimum wage. Note: For relevant minimum wage, see subsection 23(1). (3) The Secretary may, by legislative instrument, nominate an agreement for the purpose of subparagraph (2)(b)(ii). (4) If the principal beneficiary is under 16 years of age, he or she must be a profoundly disabled child within the meaning of section 197. Living beneficiary rule (5) A trust stops being a special disability trust when the principal beneficiary dies. Single trust rule (6) A trust is not a special disability trust for a particular principal beneficiary if, at the time of its creation, there is already another trust in existence for that person that is: (a) a special disability trust; or (b) a special disability trust within the meaning of the Veterans' Entitlements Act. 1209N Trust purpose requirements Sole purpose—care and accommodation for principal beneficiary (1) Subject to this section, the sole purpose of the trust during the lifetime of the principal beneficiary, as provided by the trust deed for the trust, must be to meet reasonable care and accommodation needs of the beneficiary. Note: The provision of care and accommodation for the principal beneficiary is also dealt with at section 1209R. (2) The trust may have purposes, ancillary to the purpose mentioned in subsection (1), that are necessary or desirable to facilitate the achievement of that purpose. Reasonable care and accommodation needs (3) If guidelines are made under subsection (4), for the purposes of this section the reasonable care and accommodation needs of a principal beneficiary of a special disability trust must be decided in accordance with the guidelines. (4) The Secretary may, by legislative instrument, make guidelines for deciding what are, and what are not, reasonable care and accommodation needs for principal beneficiaries of special disability trusts. 1209P Trust deed requirements Compliance with determination (1) If a determination is made under subsection (2), the trust deed for the trust must comply with the determination. (2) The Secretary may, by legislative instrument, determine one or more of the following: (a) the form of the trust deed required for a special disability trust; (b) provisions which must be included in the trust deed; (c) the form of those provisions; (d) provisions which cannot be included in the trust deed. Contravention of trust deed (3) A person must not contravene a provision of the trust deed that is required by this section to be included in the deed (whether or not the provision is required to be included in any particular form). 1209Q Trustee requirements (1) A trustee of the trust who is an individual must: (a) be an Australian resident; and (b) not have been convicted at any time (including a time before the commencement of this section) of any of the following offences: (i) an offence of dishonest conduct against, or arising out of, a law of the Commonwealth, a State, a Territory or a foreign country; (ii) an offence against, or arising out of, this Act, the Administration Act or the Veterans' Entitlement Act; and (c) not have been disqualified at any time (including a time before the commencement of this section) from managing corporations under the Corporations Act 2001. (2) In addition, if a trustee of the trust is a corporation, subsection (1) applies to each director of the trustee. 1209R Trust property requirements (1) The assets of the trust must not include any asset transferred to the trust by the principal beneficiary of the trust, or the principal beneficiary's partner, unless: (a) the transferred asset is all or part of a bequest, or of a superannuation death benefit; and (b) the transferor received the bequest or superannuation death benefit not more than 3 years before transferring the transferred asset. (2) The assets of the trust must not include any compensation received by or on behalf of the principal beneficiary. (3) The trust must not be used to pay an immediate family member, or a child, of the principal beneficiary for the provision to the beneficiary of: (a) care services; or (b) services for the repair or maintenance of the beneficiary's accommodation. Note: For immediate family member, see subsection 23(1). (4) The trust must not be used to purchase or lease property from an immediate family member, or a child, of the principal beneficiary, even if the property is to be used for the beneficiary's accommodation. Note: For immediate family member, see subsection 23(1). (5) In this section: child, of a principal beneficiary, means the natural child, adopted child or step‑child of the beneficiary (no matter how old the child or step‑child is). property includes: (a) a right to accommodation for life in a residence; and (b) a life interest in a residence. 1209S Reporting requirements (1) The trustees of the trust must, on or before 31 March each year, give the Secretary written financial statements about the trust in relation to the financial year ending on 30 June in the previous year. (2) The financial statements must be prepared by: (a) if a determination is made under subsection (4) that requires such financial statements to be prepared by a person with stated qualifications—such a person; or (b) whether or not such a determination is made—a person approved by the Secretary for the purpose. (3) If a determination is made under subsection (4) that requires financial statements to include information of a stated kind, the financial statements must include information of that kind. (4) The Secretary may, by legislative instrument, make determinations for the purposes of this section. 1209T Audit requirements Trustee duties (1) The trustees of the trust must, within a reasonable time after receiving a request under subsection (3): (a) cause an audit of the trust to be carried out in relation to the period mentioned in subsection (2); or (b) if, at the time of the request for the audit, an audit (the earlier requested audit) of the trust had already been carried out, or was being carried out, for the purpose of this section in relation to that period—give a copy of the report of the earlier requested audit to the person making the request. Audit period (2) The audit must relate to: (a) the financial year ending on the 30 June last preceding the request; or (b) if a determination is made under subsection (7) that provides for a different period—that period. Who may request audit (3) The following persons may request an audit of the trust for the purposes of this section: (a) the principal beneficiary; (b) an immediate family member of the principal beneficiary; (c) a person who is, under the law of the Commonwealth, a State or a Territory, the legal guardian or financial administrator of the principal beneficiary; (d) a person who is otherwise acting as the principal beneficiary's guardian on a long‑term basis; (e) the Secretary. Note: For immediate family member, see subsection 23(1). Copies of audit report (4) If an audit report for a trust is given to the trustees for the purpose of subsection (1), the trustees must, within a reasonable time, give a copy of the report to: (a) the person requesting the audit; and (b) if the guardian or administrator mentioned in paragraph (3)(c) did not request the audit—the guardian or administrator; and (c) if the Secretary did not request the audit—the Secretary. Auditor qualifications and required information (5) The audit must be prepared by: (a) if a determination is made under subsection (7) that requires such audits to be prepared by a person with stated qualifications—such a person; or (b) whether or not such a determination is made—a person approved by the Secretary for the purpose. (6) If a determination is made under subsection (7) that requires audits requested under this section to include information of a stated kind, the audit must include information of that kind. (7) The Secretary may, by legislative instrument, make determinations for the purposes of this section. 1209U Waiver of contravention of this Division (1) A contravention of a requirement of this Division concerning a particular matter, in relation to a trust that would be a special disability trust if it were not for the contravention, does not prevent the trust being a special disability trust if: (a) the Secretary, by written notice (a waiver notice) to the trustees, waives the requirement as it concerns that matter; and (b) in a case where the waiver notice requires the trustees to comply with any conditions relating to the matter—the trustees comply with those conditions within the time or times (if any) stated in the waiver notice. (2) A waiver notice has effect, subject to any conditions mentioned in paragraph (1)(b): (a) from: (i) the time of the contravention; or (ii) if the waiver notice states a time for the start of its period of effect that is after the time of the contravention—the stated time; and (b) if the waiver notice states a time for the end of its period of effect—until the stated time. (3) If guidelines are made under subsection (4), a decision in relation to giving a waiver notice to the trustees of the trust must be made in accordance with the guidelines. (4) The Secretary may, by legislative instrument, make guidelines for deciding any or all of the following: (a) whether or not to give waiver notices to trustees of trusts; (b) what conditions to include in waiver notices; (c) the periods during which waiver notices are to have effect. Division 2—Income of special disability trusts 1209V Attribution of income (1) For the purposes of this Act, an amount of income that a special disability trust derives is taken not to be income received by any individual. Note: For special disability trust, see section 1209L. (2) This section has effect despite Division 7 of Part 3.18 and any other provisions of this Act. 1209X Income amounts from special disability trusts An income amount that the principal beneficiary of a special disability trust receives is not income of the beneficiary for the purposes of this Act to the extent that consideration for the income amount was provided by a distribution from the trust. Note 1: For income amount, see section 8. Note 2: For special disability trust, see section 1209L. Division 3—Assets of special disability trusts 1209Y Attribution of assets (1) For the purposes of this Act, the assets of a special disability trust are not to be included in the assets of the principal beneficiary of the trust. Note: For special disability trust, see section 1209L. (2) However, this section does not apply to the extent that the value of the assets owned by the trust exceeds the trust's asset value limit. (3) The asset value limit of a special disability trust is $500,000. Note: This amount is indexed annually on 1 July (see sections 1191 to 1194). (4) For the purposes of subsection (2), disregard the value of any right or interest of the trust in the principal home of the principal beneficiary of the trust. Note: For principal home, see subsections 11(5) to (7). (5) This section has effect despite Division 8 of Part 3.18 and any other provisions of this Act. Division 4—Transfers to special disability trusts 1209Z Effect of certain transfers to special disability trusts (1) If a person transfers an asset (the transferred asset) to a special disability trust, the transfer is taken not to be a disposal of the asset (within the meaning of section 1123) if: (a) the person is an immediate family member of the principal beneficiary of the trust; and (b) the person, or the person's partner: (i) is receiving a social security pension and has reached pension age; or (ii) is receiving a service pension and has reached pension age within the meaning of the Veterans' Entitlements Act; or (iii) is receiving income support supplement and has reached qualifying age within the meaning of subsection 45A(2) of the Veterans' Entitlements Act; and (c) the person receives no consideration, and is not entitled to any consideration, for the transfer; and (d) the transfer is unconditional; and (e) the value of the transferred asset does not exceed $500,000; and (f) in a case where there has already been a transfer to which this section has applied (an exempt transfer), by that person or any other person, to the trust or any other special disability trust that had the same principal beneficiary—the sum of: (i) the values of all of the assets transferred, by exempt transfers that have already been made, to the trust or any other special disability trust that had the same principal beneficiary; and (ii) the value of the transferred asset; does not exceed $500,000. Note 1: For special disability trust, see section 1209L. Note 2: For immediate family member, see subsection 23(1). Note 3: For pension age (except for the purposes of subparagraph (1)(b)(ii) of this section), see subsections 23(5A) to (5D). Note 4: For social security pension, service pension and income support supplement, see subsection 23(1). (2) This section has effect subject to sections 1209ZA and 1209ZD. (3) In this section: other special disability trust includes a special disability trust within the meaning of the Veterans' Entitlements Act. value, of an asset transferred to a special disability trust, means the market value of the asset at the time of the transfer. 1209ZA The effect of exceeding the $500,000 limit (1) If section 1209Z would apply to a transfer of an asset except for the fact that the value of the transferred asset exceeds $500,000, that section does not prevent the transfer from being a disposal or disposition of the asset, but the amount of the disposal or disposition is taken to be the amount of the excess. (2) If: (a) section 1209Z would apply to a transfer of an asset but for the fact that the sum of: (i) the values of all of the exempt transfers that have already been made to the trust or any other special disability trust that had the same principal beneficiary; and (ii) the value of the transferred asset; exceeds $500,000; and (b) that sum would not exceed $500,000 if the value of the transferred asset were disregarded; that section does not prevent the transfer from being a disposal of the asset, but the amount of the disposal or disposition is taken to be the amount of the excess referred to in paragraph (a). (3) This section has effect subject to section 1209ZD. (4) In this section: other special disability trust includes a special disability trust within the meaning of the Veterans' Entitlements Act. value, of an asset transferred to a special disability trust, means the market value of the asset at the time of the transfer. 1209ZB Transfers by the immediate family members prior to reaching pension age etc. (1) If: (a) an immediate family member of the principal beneficiary of a special disability trust transfers an asset to the trust; and (b) at the time of the transfer, neither the immediate family member nor the partner of the immediate family member is a person who: (i) is receiving a social security pension and has reached pension age; or (ii) is receiving a service pension and has reached pension age within the meaning of the Veterans' Entitlements Act; or (iii) is receiving income support supplement and has reached qualifying age within the meaning of subsection 45A(2) of the Veterans' Entitlements Act; the immediate family member is taken for the purposes of this Division only to transfer the asset to the trust at the earliest time at which subparagraph (b)(i), (ii) or (iii) applies to the immediate family member or partner. Note 1: For immediate family member, see subsection 23(1). Note 2: For special disability trust, see section 1209L. Note 3: For pension age (except for the purposes of subparagraph (1)(b)(ii) of this section), see subsections 23(5A) to (5D). Note 4: For social security pension, service pension and income support supplement, see subsection 23(1). (2) However, if under subsection (1) transfers of assets to the trust by different immediate family members are taken to have been made on the same day, the transfers are taken to have been made on that day in the order in which they would have been taken to be made but for this Division. Note: For immediate family member, see subsection 23(1). (3) This section does not affect the operation of Part 3.12 or any other provision of this Act outside of this Division. 1209ZC Transfers by principal beneficiaries or partners (1) If a person transfers an asset to a special disability trust, the transfer is taken not to be a disposal of the asset (within the meaning of section 1123) if: (a) the person is the principal beneficiary of the trust, or the principal beneficiary's partner; and (b) the person receives no consideration, and is not entitled to any consideration, for the transfer; and (c) the transfer is unconditional. Note 1: For special disability trust see section 1209L. Note 2: Section 1209R limits the circumstances in which the principal beneficiary or the principal beneficiary's partner can transfer assets to the trust. (2) This section has effect subject to section 1209ZD. 1209ZD Cessation of special disability trusts (1) If: (a) a special disability trust ceases to exist or ceases to be a special disability trust; and (b) a person had transferred an asset to the trust during the period of 5 years immediately preceding the cessation; and (c) section 1209Z, 1209ZA or 1209ZC applied to the transfer; then the transfer is taken, after the cessation, to be a disposal or disposition of the asset that occurred at the time of the transfer. (2) The amount of the disposal or disposition is taken to be the amount worked out using the formula: where: asset value means: (a) if section 1209Z or 1209ZC applied to the transfer—the value of the asset at the time of the transfer; or (b) if subsection 1209ZA(1) applied to the transfer—$500,000; or (c) if subsection 1209ZA(2) applied to the transfer—the difference between the value of the asset at the time of the transfer and the amount that was taken under that subsection to be the amount of the disposal or disposition of the asset. final value of trust assets means the value of all of the assets of the trust at the time of the cessation. initial value of trust assets means the value of all of the assets of the trust at the time of the transfer. subsection 1209ZA(2) amount means the amount (if any) that was taken under subsection 1209ZA(2) to be the amount of the disposal or disposition of the asset. (3) If the special disability trust ceases to exist, or ceases to be a special disability trust, because the principal beneficiary dies, the value of the asset at the time of the transfer is taken for the purposes of this section to be the value of so much (if any) of the asset as has not been returned to the person who had transferred the asset to the trust. (4) This section does not affect the application of section 1209Z, 1209ZA or 1209ZC to the transfer prior to the cessation. 1209ZE Effect of this Division This Division (other than section 1209ZB) has effect despite Division 2 of Part 3.12 and any other provisions of this Act. 14 Transitional—trusts created before 20 September 2006 (1) For a trust created before 20 September 2006, a failure to comply with a requirement of Division 1 of Part 3.18A of the Social Security Act 1991 concerning a particular matter does not prevent the trust being a special disability trust if: (a) the Secretary, by written notice (an exemption notice) to the trustees, exempts the trust from the requirement as it concerns that matter; and (b) in a case where the exemption notice requires the trustees to comply with any conditions relating to the matter—the trustees comply with those conditions within the period (if any) stated in the exemption notice. Note: For special disability trust, see section 1209L of the Social Security Act 1991. (2) A period stated in an exemption notice for the purpose of paragraph (1)(b) must end at or before the end of 30 June 2007. (3) An exemption notice has effect, subject to any conditions mentioned in paragraph (1)(b): (a) from: (i) the start of 20 September 2006; or (ii) if the exemption notice states a time for the start of its period of effect that is after 20 September 2006—the stated time; and (b) until: (i) the end of 30 June 2007; or (ii) if the exemption notice states a time for the end of its period of effect that is before the end of 30 June 2007—the stated time. (4) If guidelines are made under subitem (5), a decision in relation to giving an exemption notice to the trustees of the trust must be made in accordance with the guidelines. (5) The Secretary may, by legislative instrument, make guidelines for deciding any or all of the following: (a) whether or not to give exemption notices to trustees of trusts; (b) what conditions to include in exemption notices; (c) the periods for compliance with conditions in exemption notices; (d) the periods during which exemption notices are to have effect. Part 2—Amendment of the Veterans' Entitlements Act 1986 15 Section 5 (index of definitions) Insert the following entry in its appropriate alphabetical position, as determined on a letter‑by‑letter basis: immediate family member 5Q(1) 16 Section 5 (index of definitions) Insert the following entry in its appropriate alphabetical position, as determined on a letter‑by‑letter basis: principal beneficiary 5Q(1) 17 Section 5 (index of definitions) Insert the following entry in its appropriate alphabetical position, as determined on a letter‑by‑letter basis: sibling 5Q(1) 18 Section 5 (index of definitions) Insert the following entry in its appropriate alphabetical position, as determined on a letter‑by‑letter basis: special disability trust 5Q(1) 19 Subsection 5Q(1) Insert: immediate family member, of a person, means an individual: (a) who is a natural parent, adoptive parent or step‑parent of the person; or (b) who is, or was when the person was under 18 years of age, a legal guardian of the person; or (c) who is a grandparent of the person; or (d) who is a sibling of the person. 20 Subsection 5Q(1) Insert: principal beneficiary, of a special disability trust, has the meaning given by subsection 52ZZZWA(1). 21 Subsection 5Q(1) Insert: sibling, of a person, except for the purposes of sections 123 to 123E, includes a half‑brother, half‑sister, adoptive brother, adoptive sister, stepbrother or stepsister of the person, but does not include a foster‑brother or foster‑sister of the person. Note: For the meaning of sibling in sections 123 to 123E, see subsection 123(1). 22 Subsection 5Q(1) Insert: special disability trust has the meaning given by section 52ZZZW. 23 Subsection 52E(1) Omit "(1)". 24 Subsection 52E(1) (note) Repeal the note, substitute: Note 1: If Division 8 or 8A applies in relation to the transfer by a person of a qualifying interest or an eligible interest in a farm or relevant farm asset, that transfer and certain transfers by the person's partner are taken not to be disposal of assets (see sections 49C and 49S). Note 2: Under Subdivision B of Division 11A of Part IIIB, certain transfers of assets to special disability trusts can be taken not to be disposals of the assets (but this can be subject to a limit on the aggregate value of the transfers). 25 At the end of section 52F Add: Note: If subsection 52ZZZWM(2) applies in relation to the transfer of an asset to a special disability trust, that subsection has the effect of reducing the amount of the disposal or disposition. 26 After subsection 52ZZJ(2) Insert: (2A) The only attributable stakeholder of a special disability trust is the principal beneficiary of the trust. Note 1: For special disability trust, see section 52ZZZW. Note 2: For principal beneficiary of a special disability trust, see subsection 52ZZZWA(1). 27 At the end of subsection 52ZZK(1) Add: Note: For attribution of the income of a special disability trust, see section 52ZZZWI. 28 At the end of subsection 52ZZR(1) Add: Note: For attribution of the assets of a special disability trust, see section 52ZZZWK. 29 After Division 11A of Part IIIB Insert: Division 11B—Private financial provision for certain people with disabilities Subdivision A—Special disability trusts 52ZZZW What is a special disability trust? A trust is a special disability trust if the following requirements of this Subdivision are complied with: (a) the beneficiary requirements (see section 52ZZZWA); (b) the trust purpose requirements (see section 52ZZZWB); (c) the trust deed requirements (see section 52ZZZWC); (d) the trustee requirements (see section 52ZZZWD); (e) the trust property requirements (see section 52ZZZWE); (f) the reporting requirements (see section 52ZZZWF); (g) the audit requirements (see section 52ZZZWG). Note: The Commission may waive one or more requirements in certain circumstances (see section 52ZZZWH). 52ZZZWA Beneficiary requirements Single beneficiary rule (1) The trust must have no more than one beneficiary (the principal beneficiary), not including any residuary beneficiary. Impairment or disability conditions (2) If