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

Administered by Department of Social Services

Legislation au F2008L04350 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

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

The Social Security (Administration) (Deductible portion — section 123XPA) Specification 2008 is made under paragraph 123XPA(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 123UFA, in that Subdivision, provides that a person is subject to the income management regime at a particular time if a voluntary income management agreement is in force in relation to the person. Section 123UM provides that a person may enter into a written agreement with the Secretary under which the person agrees to be voluntarily subject to the income management regime throughout the period the agreement is in force.  To be able to enter into a voluntary income management agreement: the person must be an eligible recipient of a relevant welfare payment; their usual place of residence must be in a declared voluntary income management area; if the person has a payment nominee, that payment nominee must not be an excluded nominee; and, if the person is a payment nominee in relation to another person, that other person must have provided their consent to the voluntary income management agreement. Certain areas in Western Australia have been determined to be declared voluntary income management areas in the Social Security (Administration) (Declared voluntary income management areas – Western Australia (No. 1)) Determination 2008.

Division 5 of Part 3B sets out the amounts that are to be deducted from the prescribed welfare payments of a person who is subject to the income management regime.  Subdivision DA of Division 5 applies to a person who is subject to the income management regime under section 123UFA of the Act.  Section 123XPA, in that Subdivision, applies if an instalment of a category I welfare payment is payable to the person.  (Section 123XPB 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 123XPA(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 123XPA(3) specifies that the deductible portion is 70% or such higher percentage as is specified in a legislative instrument made by the Minister for the purposes of paragraph 123XPA(3)(b).  Subsection 123XPA(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 higher than 70% for the purposes of paragraph 123XPA(3)(b) of the Act for an instalment of baby bonus under the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act).  Baby bonus under the Family Assistance Act is a category I welfare payment.  The higher percentage that is specified is 100% (100 per cent).

The effect of the Specification is that, for the purpose of subsection 123XPA(2) of the Act, the deductible portion of an instalment of baby bonus under the Family Assistance Act is 100% 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 Specification applies to each instalment of baby bonus under the Family Assistance Act.

The Specification commences on the day after it is registered.

Consultation

Consultation on the Determination was undertaken with the Department of Education, Employment and Workplace Relations and 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 123XPA) Specification 2008 was enacted to address the issue of income management for certain welfare payment recipients, particularly focusing on the percentage that should be deducted from specific payments. This legislation was introduced by the Australian Government under the authority of the Social Security (Administration) Act 1999. The primary objective of this Specification is to set the deductible portion at 100% for instalments of baby bonus under the A New Tax System (Family Assistance) Act 1999, thereby ensuring that the entire net amount of these payments is credited to the recipient's income management account. This measure aims to better align welfare payments with the priority needs of recipients and their dependants, particularly within designated areas. The Specification was developed following consultation with relevant departments to ensure a coordinated approach to welfare payments.

Scope and Application

The Social Security (Administration) (Deductible portion — section 123XPA) Specification 2008 operates under the auspices of the Social Security (Administration) Act 1999, which governs the administration of welfare payments and their associated income management regimes. This Specification is particularly relevant to individuals who are recipients of certain welfare payments and who voluntarily opt into the income management regime. Specifically, it applies to those who reside in designated voluntary income management areas and have agreed to the regime through a written agreement with the Secretary. The act mandates the deduction of specified portions from the welfare payments of these individuals, with the deducted amounts credited to their income management accounts to be used for priority needs. The Specification sets a higher deductible percentage, specifically 100%, for instalments of the baby bonus under the A New Tax System (Family Assistance) Act 1999, thereby ensuring that the entire net amount of such payments is subject to the income management regime. The legislation is applicable nationally, covering all Commonwealth areas, and it does not specify any exclusions or exemptions beyond those outlined in the primary Act. The Specification does not extend its application through subordinate instruments but rather directly implements the specified percentage for the stated welfare payment.

Key Provisions

The key provisions of the Social Security (Administration) (Deductible portion — section 123XPA) Specification 2008, made under section 123XPA(3)(b) of the Social Security (Administration) Act 1999, pertain to the percentage of a baby bonus payment that will be deducted from welfare recipients subject to the income management regime. Specifically, section 123XPA(3) of the Act mandates the deduction of a certain percentage from category I welfare payments, and the Specification determines this percentage to be 100% for baby bonus instalments under the A New Tax System (Family Assistance) Act 1999 (subsection 123XPA(3)(b)). This means that the entire amount of each instalment of baby bonus will be deducted and credited to the welfare recipient’s income management account. The Specification imposes obligations on the Secretary to deduct 100% of the net amount of each instalment of baby bonus from the welfare payments of eligible recipients. This deduction is to be made in accordance with the income management regime outlined in Part 3B of the Act, which applies to certain welfare payments. The income management regime allows for the management of welfare payments to meet the priority needs of the welfare recipients or their dependants. Breach of the requirements set forth in the Act and the Specification can lead to various civil and criminal consequences. While the Specification itself does not explicitly state penalties, breaches of the Social Security (Administration) Act 1999 can result in significant penalties. For instance, section 123XP of the Act stipulates that failure to comply with the requirements to provide information or to allow inspection can result in fines of up to 50 penalty units ($5,500 as of 2023) for individuals and 250 penalty units ($27,500) for corporations. Furthermore, section 123XQ of the Act indicates that wilful failure to provide information or wilful obstruction in the course of an inspection can lead to fines of up to 250 penalty units ($27,500) for individuals and 1,250 penalty units ($137,500) for corporations. Additionally, under section 123XR, providing false or misleading information can also result in fines of up to 250 penalty units ($27,500) for individuals and 1,250 penalty units ($137,500) for corporations. These penalties underscore the importance of compliance with the Act’s requirements.

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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.