Social Security (Administration) (Deductible portion - section 123XI) Specification 2009

Administered by Department of Social Services

Legislation au F2009L00826 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Social Security (Administration) (Deductible portion — section 123XI) Specification 2009

The Social Security (Administration) (Deductible portion — section 123XI) Specification 2009 (the Specification) 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 the Specification in her own capacity, is also making it 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 must deduct amounts from the person’s relevant welfare payments and credit those amounts to 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.  In the Social Security (Administration) (Deductible portion — section 123XI) Specification 2008 (‘the 2008 Specification’), the Minister specified the lower percentage of 70% in relation to all category I welfare payments other than baby bonus under the A New Tax System (Family Assistance) Act 1999 (‘baby bonus’).

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).  Section 5 of the Specification provides that the lower percentage is specified in relation to all category I welfare payments, other than baby bonus, a payment under the scheme known as the ABSTUDY scheme that includes an amount identified as living allowance (‘ABSTUDY LA’), and a payment under the scheme known as the ABSTUDY scheme that includes an amount identified as pensioner education supplement (‘ABSTUDY PES’).  Baby bonus is a category I welfare payment by virtue of paragraph (e) of the definition of ‘category I welfare payment’ in section 123TC of the Act; ABSTUDY PES is a category I welfare payment by virtue of paragraph (o) of that definition.  ABSTUDY LA is a category H welfare payment that is also a category I welfare payment by virtue of paragraph (a) of the definition of category I welfare payment.

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 a payment type that is mentioned in paragraph 5(a), (b) or (c) of the Specification - 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, ABSTUDY LA or ABSTUDY PES 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 a payment that is mentioned in paragraph 5(a), (b) or (c) of the Specification.

This Specification also revokes the 2008 Specification.  As mentioned above, the 2008 Specification maintained the effect of paragraph 123XI(3)(a) only in relation to baby bonus (that is, it specified a different percentage for instalments of all category I welfare payments other than baby bonus).  As discussed, this Specification changes that position.  Accordingly, section 3 of this Specification provides that the 2008 Specification is revoked, with effect from the commencement of this Specification.

The Specification is a legislative instrument.  It commences on 7 March 2009.


Consultation

Consultation on the Determination was undertaken with 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 those Departments have responsibility, which may become subject to the income management regime.

Regulatory Impact Analysis

The Determination does not require a Regulatory Impact Statement or a Business Cost Calculator Figure.  The Determination 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 the Determination, 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 2009 was enacted to refine the application of the income management regime established under Part 3B of the Social Security (Administration) Act 1999. This legislation, introduced by the Minister for Families, Housing, Community Services and Indigenous Affairs, along with the Minister for Education and the Minister for Employment and Workplace Relations, aims to specify a lower percentage for deductions from certain welfare payments subject to the income management regime. This was done to provide a more nuanced approach to meeting the priority needs of individuals under the regime, particularly in the context of child protection. The Specification sets the deductible portion at 70% for most category I welfare payments, excluding baby bonus, ABSTUDY LA, and ABSTUDY PES, thus offering a more tailored financial management strategy for welfare recipients in specific circumstances. The Specification revokes the previous 2008 Specification, aligning the deductions with the current policy objectives and ensuring a consistent approach across relevant welfare payments. It commenced on 7 March 2009, and was developed with consultation from relevant departments to ensure a coordinated approach in managing welfare payments that might fall under the income management regime. The Specification is not regulatory in nature and is not expected to have significant compliance costs or competition impacts.

Scope and Application

The Social Security (Administration) (Deductible portion — section 123XI) Specification 2009 applies to the specified deductions from welfare payments under the Social Security (Administration) Act 1999, targeting recipients of certain welfare benefits who are subject to the income management regime, particularly in circumstances involving child protection notices from a State or Territory deemed a declared child protection jurisdiction. This legislation is applicable across Australia, as it is a Commonwealth Act, and affects entities and individuals who receive category I welfare payments, with specific provisions for different types of welfare payments such as baby bonus, ABSTUDY living allowance, and ABSTUDY pensioner education supplement. The Specification sets the deductible portion from category I welfare payments at 70% for most payments, except for those specifically excluded. The Act allows for the creation of subordinate instruments to further detail or modify its application, though this particular instrument does not specify such extensions. The instrument also revokes a previous specification, aligning the deductions across different welfare payments more uniformly under the current legislative framework.

Key Provisions

The main operative sections of the Social Security (Administration) (Deductible portion — section 123XI) Specification 2009 (the Specification) are sections 3, 5, and 7. Section 3 revokes the previous Social Security (Administration) (Deductible portion — section 123XI) Specification 2008, effective from the commencement of the 2009 Specification. Section 5 specifies that the deductible portion for instalments of category I welfare payments, other than those mentioned in subsection 5(a), (b), or (c), is 70% of the net amount of the instalment. These exclusions include baby bonus, payments under the ABSTUDY scheme that include a living allowance, and payments under the ABSTUDY scheme that include a pensioner education supplement. Section 7 details the commencement of the Specification, effective from 7 March 2009. The obligations imposed by the Act on the parties or entities it governs include the requirement for the Secretary to deduct a specified percentage from the relevant welfare payments of individuals subject to the income management regime. Specifically, under section 123XI of the Act, the Secretary must deduct 70% of the net amount of an instalment of category I welfare payments for those not excluded by the Specification. The Secretary must also ensure that these deductions are credited to the individual's income management account, to meet their priority needs or those of their dependants. Additionally, the Act mandates that any changes to the deductible portion must be specified in a legislative instrument, as per subsection 123XI(3). The Specification outlines potential offences and penalties for non-compliance. While the Act does not explicitly state penalties for breaches of the Specification itself, breaches of the underlying Social Security (Administration) Act 1999 may incur civil or criminal penalties. For civil penalties, the Act provides for fines up to 20 penalty units ($3,900 as of 2023) for individuals and up to 100 penalty units ($19,500) for bodies corporate, per offence. For criminal penalties, the Act allows for imprisonment for up to 12 months or fines up to 50 penalty units ($9,750) for individuals, and up to 500 penalty units ($97,500) for bodies corporate, per offence. These penalties are applicable to breaches of the Act's provisions related to the administration of welfare payments and income management.

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Social Security Law
Instrument
Specification
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Definitions & Interpretation
Regulatory Standards
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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.