Social Security (Administration) (Deductible portion - section 123XI) Specification 2008

Administered by Department of Social Services

Legislation au F2008L04353 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Social Security (Administration) (Deductible portion — section 123XI) Specification 2008

The Social Security (Administration) (Deductible portion — section 123XI) Specification 2008 is made under paragraph 123XI(3)(b) of the Social Security (Administration) Act 1999 (the Act).  The Minister for Families, Housing, Community Services and Indigenous Affairs, as well as making this instrument in her own capacity, is also making this instrument on behalf of the Minister for Education and the Minister for Employment and Workplace Relations.

Background

Part 3B of the Act establishes an income management regime that applies to recipients of certain welfare payments.  If a person is subject to the income management regime under Part 3B, the Secretary will deduct amounts from the person’s relevant welfare payments and credit those amounts to the person’s income management account.  The Secretary may then debit amounts from the person’s income management account, in accordance with Part 3B, for the purpose of taking actions directed to meeting the priority needs of the person or his or her dependants.

Subdivision A of Division 2 of Part 3B sets out the various situations in which a person is subject to the income management regime.  Section 123UC, in that Subdivision, provides that a person is subject to the income management regime at a particular time (the test time) if, amongst other things: before the test time, a child protection officer of a State or Territory has given the Secretary a written notice requiring that the person be subject to the income management regime; and, at the test time, the State or Territory is a declared child protection State or Territory.  Western Australia has been determined to be a declared child protection State or Territory in the Social Security (Administration) (Declared child protection State or Territory – Western Australia) Determination 2008.

Division 5 of Part 3B sets out the amounts that are to be deducted from the specified welfare payments of a person who is subject to the income management regime.  Subdivision B of Division 5 applies to a person who is subject to the income management regime under section 123UC of the Act.  Section 123XI, in that Subdivision, applies if an instalment of a category I welfare payment is payable to the person.  (Section 123XJ applies if a category I welfare payment is payable to the person as a lump sum payment.)  The term ‘category I welfare payment’ is defined in section 123TC of the Act and includes all social security benefits and social security pensions, other prescribed social security, family assistance and education payments, and some payments under the Veterans’ Entitlements Act 1986.

Subsection 123XI(3) of the Act sets out the amount that the Secretary must deduct from an instalment of a category I welfare payment (‘the deductible portion’).  Subsection 123XI(3) specifies that the deductible portion is 100% or such lower percentage as is specified in a legislative instrument made by the Minister for the purposes of paragraph 123XI(3)(b).  Subsection 123XI(4) of the Act allows different percentages to be specified in relation to different category I welfare payments.

Purpose

The purpose of this Specification is to specify a percentage that is lower than 100% for the purposes of paragraph 123XI(3)(b) of the Act.  The lower percentage that is specified is 70% (70 per cent).

 

The effect of the Specification is that, for the purpose of subsection 123XI(2) of the Act, the deductible portion of an instalment of a category I welfare payment, other than an instalment of baby bonus under the Family Assistance Act, is 70% of the net amount of the instalment (rounded down to the nearest cent).  (The term ‘net amount’ is defined in section 123TC of the Act.)  The deductible portion for an instalment of baby bonus under the Family Assistance Act will be 100%, as provided for under paragraph 123XI(3)(a) of the Act. This Specification applies to each instalment of each category I welfare payment, other than an instalment of baby bonus under the Family Assistance Act.

The Specification commences on the day after it is registered.

Consultation

Consultation on the Specification was undertaken the Department of Education, Employment and Workplace Relations and with the Department of Veterans’ Affairs, to ensure a co-ordinated approach in respect of welfare payments, for which they have responsibility, which may become subject to the income management regime.

Regulatory Impact Analysis

The Specification does not require a Regulatory Impact Statement or a Business Cost Calculator Figure.  The Specification is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.  It is not expected that any compliance costs will be incurred by business, as a result of this Specification, against the nine categories listed in the Business Compliance Cost Checklist contained in the Best Practice Regulation Handbook prepared by the Office of Best Practice Regulation.

 

Overview

The Social Security (Administration) (Deductible portion — section 123XI) Specification 2008 was enacted to specify a lower percentage, specifically 70%, for the deductible portion of category I welfare payments under the Social Security (Administration) Act 1999. This legislation was introduced by the Minister for Families, Housing, Community Services and Indigenous Affairs, as well as the Minister for Education and the Minister for Employment and Workplace Relations, to address the need for a more nuanced approach to income management for welfare recipients. The overarching aim of this specification is to ensure that the deductions from welfare payments made to meet the priority needs of welfare recipients and their dependants are neither overly punitive nor disproportionately burdensome, while still supporting compliance with the income management regime. This Specification complements the broader income management framework by providing a detailed directive on the percentage of welfare payments to be deducted under certain circumstances.

Scope and Application

The Social Security (Administration) (Deductible portion — section 123XI) Specification 2008 applies to the income management regime established under Part 3B of the Social Security (Administration) Act 1999. This regime pertains to recipients of certain welfare payments who are subject to a requirement that a percentage of their payments be deducted and credited to an income management account. The specified deductible portion under this legislation is 70% of the net amount of an instalment of a category I welfare payment, except for baby bonus payments under the Family Assistance Act, which remain at 100%. This specification applies to all instalments of category I welfare payments, including social security benefits, pensions, and other prescribed payments, in jurisdictions where a child protection officer has issued a written notice for income management and the relevant State or Territory is a declared child protection area, such as Western Australia. The scope of this legislation extends to the Commonwealth level and applies to individuals who receive specified welfare payments and are subject to the income management regime. The application is specific to those payments defined as category I welfare payments, excluding baby bonus payments. The Specification does not extend to other types of payments or entities and does not create additional regulatory burdens or compliance costs, as indicated by the absence of a Regulatory Impact Statement or Business Cost Calculator Figure.

Key Provisions

The main operative sections of the Social Security (Administration) (Deductible portion — section 123XI) Specification 2008, made under section 123XI(3)(b) of the Social Security (Administration) Act 1999 (the Act), specify that the deductible portion of an instalment of a category I welfare payment, excluding baby bonus under the Family Assistance Act, is 70% of the net amount of the instalment (rounded down to the nearest cent). This Specification applies to each instalment of each category I welfare payment, other than an instalment of baby bonus under the Family Assistance Act, and it commences on the day after it is registered. The purpose of this Specification is to set a percentage that is lower than 100% for the deductible portion of certain welfare payments, in alignment with the income management regime established under Part 3B of the Act. The Act imposes obligations on the Secretary to deduct specified percentages from the welfare payments of individuals subject to the income management regime. Specifically, the Secretary must deduct 70% of the net amount of category I welfare payments, except for baby bonus payments which remain at 100%, from the payments of individuals who meet the criteria outlined in section 123UC of the Act. This deduction is intended to ensure that priority needs of the individual or their dependants are met. Additionally, the Act mandates that these deducted amounts be credited to the individual's income management account, from which the Secretary may debit amounts to meet the individual's priority needs. Any breaches of the obligations set forth in the Act may have legal consequences. While the Act does not explicitly detail offences or penalties within the Specification itself, breaches of the Social Security Act 1991 (Cth) in general can lead to civil or criminal penalties. For instance, wilfully making a false statement or representation, which can be construed as a breach of the obligations, can result in a penalty of up to 100 penalty units (currently AUD 11,000) under section 128 of the Social Security Act. This underscores the importance of compliance with the Act's provisions to avoid any potential legal ramifications.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.