EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum - Compensation Payments in respect of certain War related Internments) 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 2001, 2004 and 2007 a total of five determinations (the determinations) were made that provided that a compensation payment to a person who was interned by the Japanese during World War Two under the Compensation (Japanese Internment) Act 2001; or to a person interned by North Korea under Part 2 of the Veterans’ Entitlement (Clarke Review) Act 2004; or to a person who was interned by Axis forces during World War Two under Schedule 5 of the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act, is an exempt lump sum under paragraph 8(11)(d).
Five determinations were necessary as the administration of social security payments under the Act was split between three Commonwealth departments in the case of the three 2007 determinations.
Some of the people receiving a compensation payment may also be in receipt of a social security payment. The effect of the determinations was that a compensation payment was not to be regarded as income under the Act. Accordingly, if a social security customer receives such a payment, it will be exempt from the social security income test.
This instrument remakes the determinations. Had the determinations not been re-made, they would automatically be repealed on 1 April 2017 and 1 October 2017. The Department of Social Services has reviewed the determinations and determined that an exemption for these payments is still required. Accordingly, this instrument re-makes the determinations in a single determination. Only one determination is required as the Department of Social Services now has sole responsibility for payments subject to the income test in the Act.
Aside from this change of name and some other minor updates and streamlining, this instrument has the same legal effect as the five determinations it replaces.
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 previous determinations made in 2001, 2004 and 2007, by the then Department of Family and Community Services, the then Department of Family, Community Services and Indigenous Affairs, the then Department of Employment and Workplace Relations and the then Department of Education, Science and Training.
Section 5 contains definitions of certain terms used in the Determination. The terms “Act” and “compensation payment” are defined.
Section 6 specifies that a compensation payment made to a person 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
The Department of Veterans’ Affairs was consulted during the preparation of this determination.
This determination remakes the current determinations that would otherwise have been automatically repealed on 1 April 2017 and 1 October 2017. It will be beneficial to persons affected as it exempts compensation payments from the social security income test. As a result, public consultation was seen as unnecessary.
Regulatory Impact Analysis
The Determination remakes current determinations 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 - Compensation Payments in respect of certain War related Internments) Determination 2017
The effect of the Determination is that a person who receives a compensation payment as defined 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 compensation payment as defined will not be taken into account when assessing a person’s eligibility or rate of social security entitlements under the social security income test. If the compensation payment is not exempted, a person in receipt of that payment may not be eligible for a social security 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.
The exemption of the compensation payment as defined from the income test does 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.