Financial Planning for Australians with Disability or Chronic Illness

The National Disability Insurance Scheme funds reasonable and necessary supports for eligible Australians under 65 with a permanent and significant disability. NDIS funding is substantial - and underutilised by many participants who don't understand what they can claim.

• Three budget categories: Core Supports (day-to-day assistance, consumables, transport, social participation), Capacity Building (therapy, skills development, employment support, improved daily living), and Capital (assistive technology, home modifications, SDA housing). Each category has different flexibility rules - Core is most flexible, Capital is least.
• Plan management options: Self-managed (you pay providers and claim from NDIS - highest flexibility), plan-managed (a plan management provider handles invoicing - more choice than agency-managed), or NDIA-managed (NDIS pays registered providers directly - least flexibility). Most participants benefit from plan-managed or self-managed.
• Financial counselling is fundable: 'Improved Life Choices' supports under Capacity Building include financial counselling and financial planning assistance specifically connected to your disability - a provision many participants and even planners don't know about.
• Assistive technology: Funded under Capital. Can include communication devices, mobility aids, home automation, and accessible vehicles. Claims require evidence (OT report, AT specialist quote). High-cost items require a quote from a registered AT supplier.
• Home modifications: Major modifications (bathroom, ramps, hoists) funded under Capital, requires OT report. Minor modifications may be fundable under Core. Renters need landlord consent - NDIS cannot fund modifications a landlord refuses.
• NDIS and employment: Supports in Employment is a subcategory of Capacity Building that funds job coaching, employment support workers, and workplace modifications not covered by the employer. Coordinate with Disability Employment Services (DES) - they receive separate government funding.

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Government income support is the financial foundation for many Australians with disability. Understanding eligibility, the assets and income tests, and how to optimise within the rules is essential.

• DSP eligibility: The Disability Support Pension requires a permanent physical, intellectual, or psychiatric impairment that prevents you from working 15+ hours/week at award wages. The impairment must score 20 points under the Impairment Tables - a medical assessment process. Many initial applications are rejected; a strong medical evidence file is critical.
• DSP rate (2025-26): Single: $1,144.40/fortnight. Couple (each): $862.60/fortnight. Supplement and energy supplement add approximately $75–$90/fortnight.
• DSP assets test: Same thresholds as Age Pension. Homeowners: $314,000 assets before taper (as at 2025-26). Non-homeowners: $566,000. Every $1,000 over the threshold reduces payment by $3/fortnight.
• Work incentives: DSP recipients can earn up to $180/fortnight (the 'income free area') without affecting payment. Above this, DSP reduces by 50 cents per dollar. The Supported Wage System and work capacity provisions allow some DSP recipients to work in supported environments without losing full pension.
• Carer Payment: For those providing full-time care to someone with disability or severe illness - subject to income/assets tests and a care load assessment. Rate is equivalent to DSP. Different from Carer Allowance ($153.50/fortnight - not means-tested, paid to carers regardless of income).
• Mobility Allowance: A non-means-tested payment ($113.40 or $179.20/fortnight depending on rate) for people with disability who cannot use public transport and need to travel for work, study, or training. Often unclaimed.

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The Australian tax system provides several concessions for people with disability and their carers. Combined, these can meaningfully reduce tax burden.

• Invalid and Invalid Carer Tax Offset (IICTO): A tax offset for people who maintain or care for a person who is permanently unable to work. Up to $2,833 for the invalid, and a separate amount for the carer. Eligibility requires a medical certificate.
• Net Medical Expenses Tax Offset: This offset was abolished for most purposes, but disability-related medical expenses (aids, attendant care) may still form part of deductible work-related or medical expenditure depending on how incurred.
• GST exemptions: Certain disability supports - NDIS-funded services, assistive technology, and some medical aids - are GST-free. If you're self-managing your NDIS plan and purchasing from non-registered providers, understand which goods/services attract GST and which don't.
• Superannuation: total and permanent disability (TPD): If you cannot work due to permanent disability, you may qualify for early super release under the 'permanent incapacity' condition of release. Tax on benefits paid before age 60 depends on your age and the tax-free/taxable components - seek advice before accessing.
• Income protection insurance: If you had income protection insurance before becoming ill or disabled, you may be receiving regular IP payments. These are assessable income for tax purposes - but deductible premiums you paid previously can offset some of this.
• Home office and medical deductions: People with disability who work from home or incur specific medical expenses required for work (e.g., an attendant to travel to work) may be able to claim deductions not available to the general workforce. These are assessed individually.

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For families with a member who has disability, estate planning requires specialised structures. Leaving assets to a person with disability without proper planning can accidentally disqualify them from means-tested government payments.

• Special Disability Trust (SDT): A trust established to provide for the current and future care needs of a person with severe disability. Assets held in an SDT up to $812,750 (2025-26, indexed) are exempt from the Centrelink assets test. This allows families to provide substantial financial support without affecting DSP entitlements.
• SDT eligibility: The beneficiary must have a disability meeting the SDT criteria (different from NDIS eligibility). The trust must be established by a close relative or legal guardian. Strict rules govern how funds can be spent - primarily on care and accommodation.
• SDT contribution concession: Contributing to an SDT - by immediate family members - up to $500,000 during your lifetime is exempt from Centrelink's gifting rules. This is a powerful wealth transfer tool for families planning ahead.
• Testamentary trust for disability: A testamentary trust (created in your will) can distribute income to a beneficiary with disability at adult tax rates - beneficial if the person has investment income. Combined with an SDT, sophisticated estate planning can provide for a person with disability for decades.
• Guardianship and EPoA: Many people with disability will never have the capacity to hold their own EPoA. Guardianship orders from the relevant state tribunal (NCAT, VCAT, QCAT) appoint a person to make personal/financial decisions. Plan this while the caring person is still healthy.
• NDIS and inheritance: An inheritance paid directly to an NDIS participant does not affect NDIS funding (which is not means-tested). However, it does affect DSP assets and income tests - a large inheritance can eliminate DSP eligibility. Structuring through an SDT or testamentary trust is often the answer.

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Financial planning for disability involves the intersection of NDIS, Centrelink, tax law, estate planning, and insurance - few advisers are expert in all of these simultaneously. Look for advisers with experience in NDIS planning, SDT establishment, and DSP optimisation. The Financial Counselling Australia network (financialcounsellingaustralia.org.au) can refer you to free or low-cost specialist financial counsellors who work with disability communities.

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