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

Administered by Department of Social Services

Legislation au F2009L00828 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Social Security (Administration) (Deductible portion section 123XPA) Specification 2009

The Social Security (Administration) (Deductible portion — section 123XPA) Specification 2009 (the Specification) 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 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 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.  Amongst other things, in order to be able to enter into a voluntary income management agreement, the person must be an eligible recipient of a relevant welfare payment, and their usual place of residence must be in a declared voluntary income management area.  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 other 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.  In the Social Security (Administration) (Deductible portion section 123XPA) Specification 2008 (the 2008 Specification), the Minister specified the higher percentage of 100% in relation to 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 other than the standard 70%, for the purposes of paragraph 123XPA(3)(b) of the Act, for the following three category I welfare payments: 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.  Section 5 specifies, for these three payments, the higher percentage of 100% (100 per cent).

The effect of the Specification is that, for the purposes of subsection 123XPA(2) of the Act, the deductible portion of an instalment of baby bonus, ABSTUDY LA or ABSTUDY PES 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, ABSTUDY LA or ABSTUDY PES.

The Specification also revokes the 2008 Specification.  As mentioned above, the 2008 Specification specified a higher percentage only in relation to 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 to ensure a co-ordinated approach in respect of welfare payments for which that Department has 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 123XPA) Specification 2009, enacted in 2009, is a legislative instrument designed to address the need for a specific percentage deduction from certain welfare payments within the income management regime established under Part 3B of the Social Security (Administration) Act 1999. This instrument was introduced by the Minister for Families, Housing, Community Services and Indigenous Affairs, in conjunction with the Minister for Education and the Minister for Employment and Workplace Relations, aiming to provide a clear and specific deduction percentage for certain welfare payments. The policy objective is to ensure that the deductible portion from specified welfare payments such as baby bonus, ABSTUDY Living Allowance, and ABSTUDY Pensioner Education Supplement is set at 100%, thereby maximising the funds directed towards meeting the priority needs of recipients or their dependants. This specification streamlines the income management process by removing ambiguity regarding the percentage deductions applicable to these particular payments.

Scope and Application

The Social Security (Administration) (Deductible portion — section 123XPA) Specification 2009 applies to persons who are subject to the income management regime under the Social Security (Administration) Act 1999 and are recipients of certain welfare payments, specifically baby bonus, ABSTUDY LA, and ABSTUDY PES. The Act establishes an income management regime that mandates deductions from welfare payments to credit an income management account for priority needs of the recipient or their dependants. The Specification applies to instalments of the specified welfare payments and specifies that the deductible portion of these payments is 100%, differing from the standard 70% deduction. This Specification revokes the previous 2008 Specification, which had set a higher percentage only for baby bonus. The Act has a national jurisdictional reach across Australia and is made under the authority of the Commonwealth government. There are no specific exclusions mentioned, but the regime applies only to eligible recipients in declared voluntary income management areas, which currently includes certain areas in Western Australia. The Specification is a legislative instrument and came into effect on 7 March 2009.

Key Provisions

The Social Security (Administration) (Deductible portion — section 123XPA) Specification 2009 specifies the percentage of certain welfare payments that must be deducted under the income management regime established in Part 3B of the Social Security (Administration) Act 1999. Section 123XPA(3) of the Act provides that the Secretary must deduct a certain percentage from an instalment of a category I welfare payment, which is referred to as the 'deductible portion'. This percentage is 70% or another percentage specified in a legislative instrument (subsection 123XPA(3)(b)). The Specification specifies a percentage of 100% for three category I welfare payments: baby bonus (subsection 5(1)), a payment under the ABSTUDY scheme that includes an amount identified as living allowance (ABSTUDY LA) (subsection 5(2)), and a payment under the ABSTUDY scheme that includes an amount identified as pensioner education supplement (ABSTUDY PES) (subsection 5(3)). This means that 100% of the net amount of an instalment of these payments must be deducted and credited to the person's income management account (subsection 5(4)). The Specification imposes obligations on the Secretary to deduct the specified percentage from the prescribed welfare payments of a person subject to the income management regime. The Specification also requires the Secretary to credit the deducted amounts to the person's income management account for the purpose of meeting the priority needs of the person or their dependants. The Specification applies to each instalment of baby bonus, ABSTUDY LA, and ABSTUDY PES. The Act does not impose any specific offences, penalties, or civil/criminal consequences for breach of the Specification. However, the Secretary is required to take actions directed to meeting the priority needs of the person or their dependants by crediting the deducted amounts to the person's income management account. Failure to do so may result in legal action being taken against the Secretary for breach of their obligations under the Act. The Specification revokes the 2008 Specification, which specified a higher percentage only in relation to baby bonus. The Specification applies to each instalment of baby bonus, ABSTUDY LA, and ABSTUDY PES.

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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.