Victorian Land Tax and Stamp Duty Exemptions

In July 2023 the Victorian Government introduced changes to land tax exemptions for the primary residence of a person with disability. This means if a person with disability lives in a property as their principal place of residence (PPR) and that person qualifies for a Special Disability Trust, the landowner is entitled to a land tax exemption subject to the following criteria:

1. The landowner must be an immediate family member of the person with a qualifying disability such as a natural parent, adoptive parent, step-parent, legal guardian, grandparent or sibling but does not include children of the person with disability.
2. The person with a qualifying disability has used and occupied the land as their PPR in the year preceding the tax year.
3. No rent has been paid by or on behalf of the person with a qualifying disability for residing at the land as their PPR.

The landowner must apply to the State Revenue Office to obtain the exemption.

Stamp duty exemption for the direct transfer of home ownership to a person with a disability

An immediate family member can ’gift’ or transfer ownership of a home directly to a person with disability and the transfer will be exempt from Victorian stamp duty.

This exemption allows the person with disability to own the home directly, rather than its being held on their behalf via a Trust. To qualify for an exemption,

• The home is an established home with a dutiable value of $1.5 million or less, and
• The recipient intends to occupy the home as their principal place of residence and if not living there already, they must move into the property within 12 months of the declaration or settlement and live there for 12 consecutive months as their principal place of residence.
• The exemption does not apply to vacant land or off-the-plan properties

As with the land tax exemption above, the recipient must also qualify for a Special Disability Trust.  Note that the Trust does not need to have been established to receive either exemption if all other criteria are met.

All owners of the property receiving the property transfer must be eligible persons with disability, otherwise the exemption will not apply e.g. one owner with disability or two owners with disability but not one owner with disability and one owner without disability.

Special Disability Trusts

Special Disability Trusts (SDTs) are legal mechanisms that can provide for the ongoing accommodation and care for a person with disability, while providing gifting concessions and assets test assessment exemptions for the principal beneficiary (the recipient) and the donor(s).

They can be established at any time including during estate settlement processes, after directions have been made in parents’ (or other donors’) wills.

Services Australia determines if a person qualifies for a Special Disability Trust.

More information about Special Disability Trusts is available here Special Disability Trusts - Services Australia 

Some key points about Special Disability Trusts are below.

• If a person wants to create a special disability trust, the principal beneficiary must be unable to work more than seven hours a week in the open labour market due to their disability.
• The person must also have a level of impairment that would qualify them for the Disability Support Pension, and if the person had a sole carer, that person would qualify for Carer Payment or Carer Allowance.
• Special disability trusts are also available to people with disability living in an institution, hostel or group home and the same limits on employment in the open labour market apply.
• If the Special Disability Trust is for a child under 16 years, that child is defined as a person with a severe disability, or a severe medical condition and they have a carer who has been given a qualifying rating of ‘intense’ under the Disability Care Load Assessment (Child) Determination for caring for that person.
• A donor does not have to establish a Special Disability Trust to provide for the ongoing accommodation and care for a person with disability, but they will be subject to gifting limits and assets test assessments if they receive income support from Services Australia.
• Unlike other trusts, funds or assets transferred to a Special Disability Trust cannot be taken out again.
• If a parent wishes to establish a Special Disability Trust, they can do so with minimal funds so that the structure is in place and funds can be transferred upon their death. The costs of administering a Special Disability Trust, including preparation of financial statements, tax returns and audit reports, are to be met by the trust fund itself.
• There are rules about what a Special Disability Trust can be used for. Some people have found it beneficial to create an additional Trust to fund other expenses for the person that are not permitted under a Special Disability Trust.

This information in this article is general, and it is important to seek legal and financial advice about whether the exemptions or a Special Disability Trust are suitable for your situation as a carer.