Special disability trust eligibility, and what the trust can pay for

Two questions come before everything else when a family looks at a special disability trust (SDT). First, does our son, daughter, sibling or grandchild qualify? Second, once the money is in, what can it actually be spent on? Get the first wrong and the trust never gets its concessions. Get the second wrong and it can lose them.

This guide answers both, using the Department of Social Services' own guidance as at October 2026. For how the trust is structured and set up, start with our guide to special disability trusts. For pensions, gifting and tax, see the tax and Centrelink guide.

Who is eligible to be the beneficiary of a special disability trust?

The person the trust is for is called the principal beneficiary. They must be assessed by Services Australia (or DVA) as having a severe disability before the trust can be treated as an SDT. There are two tests, depending on age.

Aged 16 or over: all three of these

All three must be met. Plenty of people on the DSP live independently without the level of care in test 2, and they won't qualify.

The work test in practice

The question is likelihood of working more than 7 hours a week at or above the relevant minimum wage. It isn't a ban on all work. Someone who does a few hours a week, or works in supported employment, may still pass. But hours and pay rates matter, and assessors look at the individual case. If your family member works regularly, tell us their hours and how their pay is set before anyone drafts a deed.

Under 16: a separate test

For a child under 16, all of these must apply:

• the child has a severe disability or a severe medical condition
• the child's carer has a qualifying rating of "intense" under the Disability Care Load Assessment (Child) Determination 2020
• a treating health professional has certified in writing that, because of the disability or condition, the child will need personal care for six months or more.

When a beneficiary who qualified as a child turns 16, plan for the adult tests. Many young people move onto the DSP at that age, and having the adult evidence ready avoids a gap.

It doesn't depend on which payment they get

Eligibility isn't tied to the beneficiary's current payment. A person can qualify while receiving no income support at all, for example during a preclusion period. The concessions also continue if they later move to another payment, such as the Age Pension.

Does the DSP or an NDIS plan make someone eligible?

Not on its own. Here's how the common situations usually play out.

What to send us

• the beneficiary's Centrelink or DVA payment details and any existing assessment letters
• details of any Carer Payment or Carer Allowance paid to a family member for them
• the NDIS plan, if they have one
• a short note of their living arrangements and any work (hours, pay, supported employment)
• names of the GP or specialists who know them best.

Who can put money into a special disability trust?

Almost anyone can give to an SDT: family, friends, an organisation or a company. There are a few hard limits, and a separate question of who gets the Centrelink gifting concession.

The beneficiary's own inheritance. There's one exception for the beneficiary. If they receive a bequest or a super death benefit directly, they can contribute it to their SDT within three years of receiving it. If a parent's will accidentally left money straight to their child, this is the way to fix it. Don't let the three years slip.

Compensation can't go in. Compensation paid to or for the beneficiary, such as a personal injury payout, can't be put into an SDT by anyone.

The $500,000 gifting concession itself, and how it's shared between family members, is covered in our tax and Centrelink guide.

What can a special disability trust pay for?

During the beneficiary's lifetime, the trust's primary purpose is their reasonable care and accommodation needs. Spending must be reasonable in all the circumstances, which includes looking at the beneficiary's needs and how much the trust holds. Think of every payment as falling into one of four groups.

1. Care

Care needs arise from the beneficiary's disability. The DSS guidance lists, among others:

• medical and dental costs, including health insurance, ambulance cover, medicines, surgery, and GP and specialist services
• daily care fees and itemised fees for approved residential care or certain supported accommodation
• professional care and case management related to the disability
• therapy, including alternative therapy, approved in writing by a medical practitioner
• specialised food a doctor specifies as essential to their health
• mobility, positioning, sleeping and sensory aids, prostheses, and personal care, pressure care and continence aids
• communication devices, including computers, that are essential or modified because of the disability
• a modified vehicle or vehicle modifications, and transport needed because of the disability
• training in independent or transitional living skills.

Care must be met in Australia. There's no yearly dollar cap on care spending.

2. Accommodation

• buying the beneficiary's home, or paying rent, as long as the seller or landlord isn't an immediate family member
• an accommodation bond or itemised accommodation fees in residential care, paid to someone outside the family
• modifications to the home that arise from the disability
• rates and taxes on property the trust owns and the beneficiary lives in (or rents out at market value, with the rent used for them)
• maintenance of trust property: repairs, servicing, periodic painting, gardening, gutter cleaning. Replacing something is only maintenance if a specialist confirms in writing it can't be repaired, and a like-for-like replacement is used.

3. Trust costs

Reasonable administration costs and taxes, and costs that are ancillary to the trust's purpose, such as the legal costs of buying the beneficiary's home.

4. Discretionary spending, up to the yearly cap

Everything else for the beneficiary's benefit comes from a capped discretionary amount.

What is the discretionary spending limit?

For 2026–27 the limit is $15,250. It's indexed to CPI each 1 July and applies per financial year.

The spending must benefit the beneficiary and should support their health, wellbeing, recreation, independence and social inclusion. Receipts go into the yearly financial statements.

Items the DSS guidance says come from the discretionary amount, because they aren't care needs:

• food, household items and toiletries
• utilities, building and contents insurance, and household cleaning
• clothing and footwear not required because of the disability
• recreation and leisure, and life skills or social inclusion workshops
• a car's maintenance, registration, insurance and petrol, where not required because of the disability
• computers and communication devices not essential or modified for the disability
• therapy not required because of the disability, or not approved in writing by a doctor
• home improvements that don't arise from the disability.

Watch out: Building insurance and utilities catch a lot of trustees out. Rates and maintenance on the trust's home are accommodation costs. Insurance and power bills are discretionary, and they add up quickly against a $15,250 cap.

What can't a special disability trust pay for?

Some things are off limits whichever group you try to put them in.

• Paying an immediate family member for care or services. No wages, carer fees or payments to a parent, partner, sibling or other immediate family member for care, cleaning, maintenance or repairs. Use an arm's-length provider.
• Buying or renting from immediate family. The trust can't buy or lease property from the beneficiary's parent, step-parent, legal guardian, grandparent, sibling or child, even at market value. Family can give property to the trust.
• Dealing with related parties. The trust can't lend to, or give financial help to, a related party, can't hold shares in a related entity (other than widely held listed shares), and can't employ or pay a related party as a contractor or professional. Related parties include non-professional trustees, donors, appointors, the beneficiary's close family and their partners and descendants, and entities they control.
• Uncommercial dealings, such as letting a relative live in trust property in exchange for work.
• Care outside Australia.
• Benefits to other people, unless the benefit is non-cash, minor and infrequent. A sibling riding in the trust's car to an appointment is fine. Paying their phone bill isn't.

Is this expense allowed? A quick reference

Worked example: a year of spending

Hypothetical, rounded, 2026–27.

Say Mia, 30, lives in a unit owned by her SDT. The trust also holds $400,000 of investments. Her brother and her aunt are trustees through a trustee company. In 2026–27 the trustees pay:

Discretionary spending totals $13,400, under the $15,250 cap with room for one more outing. Care and accommodation have no cap. If the trustees had paid Mia's brother to do the gardening, or treated the insurance as an accommodation cost, the 31 March declaration would be wrong.

Keeping records the way Services Australia expects

• Pay from the trust's own account, directly to the provider, wherever you can.
• Keep every invoice, and a doctor's written approval for therapies.
• Run a simple ledger with the four groups, and a running total of discretionary spending that resets each 1 July.
• Note anything unusual (a replacement rather than a repair, a vehicle purchase) with the reason at the time.

How BPAG helps

We check eligibility evidence with you before a deed is drafted, set up the trust's books in the four groups, and prepare the yearly financial statements, trust tax return and 31 March package as independent qualified accountants. The work can sit inside your family's fixed-price arrangement; see our pricing. Our trust deed agent summarises the deed's spending and related-party clauses for the trustees, and our transaction coding agent suggests which group each bank line belongs to. Your accountant reviews every classification before the accounts are finalised, and nothing is lodged without a person approving it.

The deed itself is prepared by your solicitor. If your family also needs a broader plan, see our succession and estate planning service and the estate planning checklist. Where a family member doesn't meet the tests, a testamentary trust is often the next option to look at.

General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.