EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Compensation payments in respect of certain World War 2 internments) (DEWR) Determination 2007
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretaries of the Department of Employment and Workplace Relations (DEWR), the Department of Families, Community Services and Indigenous Affairs and the Department of Education, Science and Training to determine that an amount, or class of amounts, is an exempt lump sum for the purpose of the Act. This instrument determines that, for the purpose of social security payments for which the Minister for Employment and Workplace Relations is responsible, a compensation payment in respect of certain World War 2 internments (‘compensation payment’) is an exempt lump sum under paragraph 8(11)(d) of the Social Security Act 1991 (the Act). The compensation payment is a one-off payment of $25,000, made to a person or a person’s partner where the person was a former prisoner of war of the Axis forces during World War 2 on behalf of the Commonwealth by the Australian Government Department of Veterans’ Affairs under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007 (2007 Budget Measure). The compensation payment is in recognition of the hardship and suffering endured by former prisoners of war, or to their widows or widowers.
The effect of this instrument is that a compensation payment under the 2007 Budget Measure will not be regarded as income under the Act. Consequently, if a person receives a compensation payment under the 2007 Budget Measure, 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 under the 2007 Budget Measure is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.
The effect of this instrument is that for persons receiving a compensation payment under the 2007 Budget Measure, the grant will not be assessed as income under the social security law.
Explanation of Provisions
Part 1
Section 1 of the determination states the name of the determination.
Section 2 states that the determination commences on the day after registration.
Section 3 contains interpretation provisions. The term compensation payment is defined as a one-off payment of $25,000 made by the Australian Government Department of Veterans’ Affairs under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act.
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 determination.
Consultation
The Department of Families, Community Services and Indigenous Affairs and the Department of Education, Science and Training 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 customers because it exempts from the income test a compensation payment under the 2007 Budget Measure made by the Department of Veterans’ Affairs. 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 payments in respect of certain World War 2 internments) (DEWR) Determination 2007 was enacted to address a specific gap in the Social Security Act 1991 by exempting certain compensation payments from being considered as income under social security law. This instrument was introduced to recognise the hardship and suffering endured by former prisoners of war during World War 2 or to their widows or widowers by providing a one-off payment of $25,000. This compensation payment, administered by the Australian Government Department of Veterans’ Affairs under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act, is intended to be free from the income test for social security purposes. The objective of this determination, overseen by the Secretaries of relevant departments including DEWR, is to ensure that these payments are not assessed as income, thereby not affecting eligibility for social security benefits.
Scope and Application
The Social Security Exempt Lump Sum (Compensation payments in respect of certain World War 2 internments) (DEWR) Determination 2007 applies to individuals who have been recognised as former prisoners of war of the Axis forces during World War 2, or their widows or widowers, and are recipients of a compensation payment under the Social Security and Veterans' Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act. This instrument classifies a one-off payment of $25,000 as an exempt lump sum for the purposes of the Social Security Act 1991, thereby ensuring that such payments are not considered as income when determining eligibility for social security benefits under the Act. The exemption is designed to acknowledge the hardship and suffering endured by the affected individuals without impacting their social security entitlements. The determination is applicable on a Commonwealth level and does not require any subordinate instruments to extend or restrict its application. Public consultation was deemed unnecessary due to the specific nature of the compensation payments and the non-regulatory impact on business activities.
Key Provisions
The main operative sections of this legislation (F2007L01610) are found in Part 2, specifically subsections 4(1) and 4(2). Subsection 4(1) states that paragraph 8(11)(d) of the Social Security Act 1991 (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) then 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 further specifies that a compensation payment received by a person, as 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 determination.
This Act imposes obligations and requirements primarily on the Secretary of the Department of Employment and Workplace Relations, the Department of Families, Community Services and Indigenous Affairs, and the Department of Education, Science and Training. The key obligation is to ensure that compensation payments made under the Social Security and Veterans’ Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act are treated as exempt lump sums for the purposes of social security law. This means that these payments are not counted as income and therefore do not affect eligibility for social security benefits.
There are no specific offences, penalties, or civil or criminal consequences for breach outlined in this determination. However, the implications of treating the compensation payments as exempt lump sums are significant. If a compensation payment is not correctly identified as an exempt lump sum, it could potentially affect a person’s eligibility for social security benefits, leading to compliance issues. The legislation is designed to avoid such complications by clearly stipulating the treatment of these payments under social security law.
The determination ensures that the compensation payment, which is a one-off payment of $25,000 made to former prisoners of war of the Axis forces during World War 2 or to their widows or widowers, is not regarded as income under the Social Security Act 1991. This means that recipients of such payments will not be subject to the income test under social security law. The effect is that these payments are exempt from the income assessment, thereby ensuring that they do not impact the recipient's eligibility for social security benefits.
The instrument is intended to provide clarity and consistency in the treatment of these one-off payments across various social security schemes. By classifying the compensation payments as exempt lump sums, the legislation aims to honour the recognition of the hardships endured by former prisoners of war and their families without interfering with their social security entitlements.