EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum - Comparable Foreign Payment Arrears) Determination 2017
Summary
Under the social security law all income earned, derived or received for a person’s own use or benefit, is counted as income. The only exceptions are items specifically exempted under the social security law. Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Social Services to determine that an amount or class of amounts received by a person is an exempt lump sum for the purposes of the Act. An exempt lump sum is not included in the definition of “ordinary income” under subsection 8(1) of the Act, so any such amount would not be taken into account under the social security income test.
In 2004, a determination was made that provided that where section 1228A of the Act applied and a payment of arrears of a comparable foreign payment is made to a person or to a person’s partner if the person was a member of a couple, it is an exempt lump sum under paragraph 8(11)(d).
Some of the people receiving a payment of arrears of a comparable foreign payment may also be in receipt of a social security payment. A payment of arrears of a comparable foreign payment is assessed under section 1228A of the Act for the arrears period. The effect of the 2004 determination was to ensure that payment of arrears of a comparable foreign payment was not also assessed as income for social security benefit payments in the fortnight of receipt. Accordingly, if a social security customer receives such a payment, it will only be assessed once, under section 1228A of the Act.
This instrument remakes the 2004 determination. Had the 2004 determination not been re-made, it would automatically be repealed on 1 April 2017. The Department of Social Services has reviewed the 2004 determination and determined that an exemption for this payment is still required.
Aside from this change of name and some other minor updates and streamlining, this instrument has the same legal effect as the determination it replaces.
Explanation of Provisions
Section 1 of the Determination states the name of the Determination.
Section 2 provides that the Determination commences on the day after it is registered.
Section 3 provides that the authority for making this Determination is paragraph 8(11)(d) of the Act.
Section 4 revokes the previous determination made in 2004, made by the then Department of Family and Community Services.
Section 5 contains definitions of certain terms used in the Determination. The terms “Act” and “comparable foreign payment” are defined.
Section 6 specifies that a payment of arrears of a comparable foreign payment is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Social Security Act 1991. Such an amount will be regarded as an exempt lump sum from the date the payment is received by the person.
Consultation
This determination was remade as it would otherwise have been automatically repealed on 1 April 2017.
This determination remakes a current determination and will be beneficial to persons affected as it ensures arrears of a comparable foreign payment will only be assessed once, under section 1228A of the Act. As a result, public consultation was seen as unnecessary.
Regulatory Impact Analysis
The Determination remakes a current determination and does not require a Regulatory Impact Statement. The Determination is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Social Security (Exempt Lump Sum Comparable Foreign Payment Arrears) Determination 2017
The effect of the Determination is that a person who receives a payment of arrears of a comparable foreign payment will not have that payment assessed as income under the social security law.
Human rights implications
The Determination engages the right to social security under Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR). The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.
The Determination will operate beneficially as a payment of arrears of a comparable foreign payment will only be assessed once, under section 1228A of the Act. If the payment of arrears of a comparable foreign payment was also assessed as income for social security benefit payments in the fortnight of receipt, a person in receipt of that payment may not be eligible for a social security benefit payment or, if they are eligible, their rate of payment might be reduced. The Determination is therefore consistent with the promotion of the right to social security.
These arrangements do not mean that any ongoing income generated by the lump sum is exempt from the income test, nor does it mean that any asset produced from the lump sum is exempt from the social security assets test. This is consistent with the treatment of other lump sum payments exempted under paragraph 8(11)(d) of the Act.
Conclusion
This Determination supports a person’s human right to social security.
Anita Davis, Acting Branch Manager, International and Means Test Policy Branch, as a delegate of the Secretary of the Department of Social Services.