Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEST) Determination 2007

Administered by Department of Social Services

Legislation au F2007L02115 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

 

Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEST) Determination 2007

 

Summary

 

Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretaries of the Department of Education, Science and Training (DEST), the Department of Families, Community Services and Indigenous Affairs and the Department of Employment and Workplace Relations to determine that an amount, or class of amounts, is an exempt lump sum for the purpose of the Act. 

This instrument provides that, for the purpose of social security payments for which the Minister for Education, Science and Training is responsible, a ‘compensation payment’ is a one-off compensation payment paid by Aviva Australia to certain people whose social security payments were affected (directly or indirectly) as a result of Aviva Australia incorrectly recording the purchase price for one or more of for the following income stream products:

  1. the Navigator Personal Retirement Plan - Allocated Pension;
  2. the Navigator Personal Retirement Plan - Growth Pension;
  3. the PremiumChoice Retirement Service - Allocated Pension.

This ‘compensation payment’ is intended to meet any shortfall in income support payments, or repayment of debts to Centrelink for overpayments made as a result of the incorrect purchase price being assessed.

This instrument determines that a compensation payment, as defined, paid to a person is an exempt lump sum under paragraph 8(11)(d) of the Act.  The compensation payment is designed to rectify a situation whereby Aviva Australia incorrectly recorded the purchase price amount on a number (approximately 500) of its customers’ pension accounts resulting in an erroneous calculation of the customers’ purchase price, thus incorrectly affecting these individuals’ income support payments. These people did not contribute in any way to this error occurring and Aviva Australia will be responsible for identifying the affected members and advising them to provide all appropriate documentation to Centrelink for correct processing.  The compensation payment does not represent receipt of money for services rendered directly or indirectly.

The effect of this instrument is that a compensation payment made by Aviva Australia will not be regarded as income under the Act.  Consequently, if a recipient of a DEST administered social security payment receives a compensation payment made by Aviva Australia, it will be exempt from the income test under the social security law.

 


Background

 

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 Act allows the responsible Secretary to determine that an amount, or class of amounts, 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.

 

This instrument determines that a compensation payment made by Aviva Australia is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.

 

The effect of this instrument is that for customers receiving a compensation payment made by Aviva Australia, the amount will not be assessed as income under the social security law.  


Explanation of Provisions

 

Part 1

 

Section 1 of the instrument states the name of the instrument.

 

Section 2 states that the instrument commences on the day after registration on the Federal Register of Legislative Instruments.

 

Section 3 contains interpretation provisions.

 

The term compensation payment is defined as: a one-off compensation payment paid by Aviva Australia to people whose social security payments were affected (directly or indirectly) as a result of Aviva Australia incorrectly recording the purchase price for one or more of the following income stream products:

 

  1. the Navigator Personal Retirement Plan - Allocated Pension;
  2. the Navigator Personal Retirement Plan - Growth Pension;
  3. the Premium Choice Retirement Service - Allocated Pension.

 

This compensation payment is to meet any shortfall in income support payments, or for repayment of debts to Centrelink for overpayments as a result of the incorrect purchase price being assessed by Aviva Australia.

 

Part 2

 

Subsection 4(1) states that paragraph 8(11)(d) of the Act allows the Secretary to determine that an amount, or class of amounts, received by a person is an exempt lump sum.

 

Subsection 4(2) provides that if a person receives a compensation payment as defined in section 3, then the compensation payment received by the person is an exempt lump sum.

 

Section 5 specifies that a compensation payment received by a person referred to in subsection 4(2) will be regarded as an exempt lump sum from the date that the amount was received by the person, provided that date is on or after the commencement of this instrument.

 

Consultation 

 

The Department of Families, Community Services and Indigenous Affairs and the Department of Employment and Workplace Relations were consulted during the preparation of this determination.  This was done to ensure a co-ordinated and consistent approach to the income test treatment of this one-off payment for all social security payments under the Act.

 

This instrument is beneficial to income support recipients because it exempts from the income test a compensation payment made by Aviva Australia.  Public consultation was therefore seen as unnecessary.

 

 

Business Cost Calculator Figure 

 

This exemption does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator Figure.  This exemption 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 (against the nine categories listed) as a result of this exemption.

 

Overview

The Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEST) Determination 2007 was enacted to address the problem caused by Aviva Australia incorrectly recording the purchase price for certain income stream products, specifically the Navigator Personal Retirement Plan - Allocated Pension, the Navigator Personal Retirement Plan - Growth Pension, and the Premium Choice Retirement Service - Allocated Pension. This error adversely affected approximately 500 customers, leading to incorrect assessments of their income support payments and overpayments to Centrelink. The determination was introduced by the Australian Parliament under the authority of the Social Security Act 1991, which allows the Secretaries of the Department of Education, Science and Training, the Department of Families, Community Services and Indigenous Affairs, and the Department of Employment and Workplace Relations to designate specific amounts as exempt lump sums. The policy objective of this determination is to ensure that compensation payments made by Aviva Australia to rectify these errors are exempt from the income test under the Social Security Act, thereby preventing any negative impact on the income support payments of affected individuals.

Scope and Application

The Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEST) Determination 2007 is an instrument that specifies how certain compensation payments made by Aviva Australia to individuals are treated under the Social Security Act 1991. The instrument applies to compensation payments made by Aviva Australia to those whose social security payments were adversely affected due to incorrect recording of purchase prices for specific income stream products. This compensation is intended to rectify shortfalls in income support payments or repay overpayments to Centrelink. The exemption applies to persons who are recipients of social security payments administered by the Department of Education, Science and Training (DEST) and ensures that these compensation payments are not assessed as income for the purposes of social security income testing. The instrument operates nationally within Australia, as it is an instrument of the Commonwealth. The compensation payments are deemed to be exempt lump sums, meaning they are not considered ordinary income under the Act, and therefore do not affect the income test for social security eligibility. The instrument includes interpretation provisions that define "compensation payment" and specifies that such payments will be regarded as exempt lump sums from the date they are received, provided this is after the instrument's commencement. The instrument does not extend its application through subordinate legislation and there are no exclusions, exemptions, or thresholds outlined beyond those specified in the determination itself.

Key Provisions

The main operative sections of this instrument are sections 4 and 5. Section 4(1) allows the Secretary to determine that an amount, or class of amounts, received by a person is an exempt lump sum under the Social Security Act 1991. Section 4(2) specifies that if a person receives a compensation payment as defined in section 3, then the compensation payment is an exempt lump sum. Section 5 further clarifies that a compensation payment received by a person will be regarded as an exempt lump sum from the date that the amount was received by the person, provided that date is on or after the commencement of this instrument. This means that any compensation payment made by Aviva Australia to affected individuals will not be counted as income for the purposes of determining social security payments. The Act imposes obligations on Aviva Australia to identify the affected individuals and advise them to provide all appropriate documentation to Centrelink for correct processing of their social security payments. It also requires Aviva Australia to make the compensation payments to those individuals whose social security payments were affected by the incorrect purchase price assessment. The affected individuals must provide any necessary documentation to Centrelink to ensure that their compensation payments are correctly processed and that they do not incur any additional debts or overpayments as a result of the incorrect purchase price assessment. There are no specific offences, penalties, or civil/criminal consequences for breach outlined in the instrument. However, it is implied that failure to comply with the obligations imposed by the Act could result in legal consequences for Aviva Australia, including potential fines or other penalties as determined by the relevant authorities. Additionally, affected individuals who do not provide the necessary documentation to Centrelink could face issues with their social security payments, such as overpayments or underpayments, which could result in financial penalties or other consequences as determined by Centrelink. The maximum penalties for such breaches would be determined by the relevant authorities and would depend on the specific circumstances of the case.

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Social Security Law
Instrument
Regulation
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Definitions & Interpretation
Exemptions & Exclusions
Repeal & Amendment

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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.