Social Security (Exempt Lump Sum - Comparable Foreign Payment Arrears) Determination 2017

Administered by Department of Social Services

Legislation au F2017L00058 In force Legislative Instrument

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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  Had the 2004 determination not been re-made, it would automatically be repealed on 1 April 2017.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.

Overview

The Social Security (Exempt Lump Sum Comparable Foreign Payment Arrears) Determination 2017, enacted to address the need for streamlined assessment of arrears of comparable foreign payments under the social security system, was introduced by the Department of Social Services, acting under the authority granted by the Social Security Act 1991. The determination was essential to ensure that such payments would not be doubly assessed as income, thereby preventing potential ineligibility for social security benefits or reductions in benefit rates. This legislative instrument maintains the exemption established in 2004, ensuring that affected individuals receive consistent and fair treatment under the social security law. The objective of the determination is to uphold the right to social security by ensuring that these payments are assessed only once, under the relevant section of the Act, thereby supporting the minimum essential benefits required to meet basic needs.

Scope and Application

The Social Security (Exempt Lump Sum - Comparable Foreign Payment Arrears) Determination 2017 applies to individuals who receive payments of arrears of a comparable foreign payment and are also recipients of social security benefits in Australia. The Act ensures that such arrears payments are classified as exempt lump sums under the Social Security Act 1991, thereby preventing them from being counted as ordinary income for the purposes of the social security income test. This means that the receipt of these arrears payments will not impact the eligibility or rate of a person's social security benefits. The application of the Act is limited to Commonwealth jurisdiction, as it operates under the Social Security Act 1991, which is a federal law. The Act does not extend its application through subordinate instruments but relies on its provisions as stated. The primary exclusion pertains to any ongoing income or assets generated from the lump sum, which are subject to the standard income and assets tests under the social security law.

Key Provisions

The Social Security (Exempt Lump Sum Comparable Foreign Payment Arrears) Determination 2017, under section 6, designates that a payment of arrears of a comparable foreign payment is treated as an exempt lump sum under the Social Security Act 1991 (the Act). This means that such payments will not be included in the calculation of a person's ordinary income, thereby exempting them from the social security income test. This exemption applies from the moment the payment is received by the individual (section 6). The determination specifically targets payments that are arrears of comparable foreign payments, ensuring that these payments are assessed only once under section 1228A of the Act, which deals with the arrears period. The Act imposes obligations on the Department of Social Services to ensure that payments of arrears of comparable foreign payments are correctly identified and exempted from income assessment for social security purposes. The determination streamlines this process, ensuring consistency in the application of the exemption and providing clarity for both the Department and the recipients of such payments. The Act requires that these payments are not double-counted, which helps maintain the integrity of the social security system by preventing over-assessment of income. In terms of compliance, the determination ensures that any breach of its provisions could lead to incorrect assessments of social security benefits. While the determination itself does not explicitly list specific offences, penalties, or consequences for breach, the Act generally provides for penalties for providing false or misleading information in relation to social security matters. These penalties can include fines, imprisonment, or both, depending on the severity and intent of the breach. The maximum penalties for such offences can vary, but they are typically significant enough to deter non-compliance. The determination ensures that the right to social security, as outlined in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), is upheld by ensuring that eligible individuals do not lose their entitlement to social security benefits due to the incorrect assessment of lump sum payments. By clearly defining the scope of the exemption and ensuring that arrears of comparable foreign payments are only assessed once, the determination supports the right to social security by maintaining the financial eligibility of those who rely on these benefits.

Legal classification tags

Area of Law
Social Security Law
Instrument
Determination
Concepts
Definitions & Interpretation
Exempt Lump Sum Provisions
Human Rights Compatibility

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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.