EXPLANATORY STATEMENT
Department of Families, Housing, Community Services and Indigenous Affairs
Social Security Exempt Lump Sum (Disability Sporting Grants) (FaHCSIA) Determination 2009
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to determine that an amount received by a person is an exempt lump sum for the purposes of the social security income test. The effect of this Determination is that, for disability support pension recipients, the receipt of a one-off payment, for the purpose of athlete support, where made by the Australian Sports Commission (ASC), Australian Paralympic Committee (APC), Australian Commonwealth Games Association (ACGA) or a national sporting organisation (NSO) using funds provided by the ASC, is an exempt lump sum.
Background
Under the social security law, all income earned, derived or received for a person’s own use or benefit, is generally assessable as income. However, some amounts, that would otherwise be income, are specifically exempted from the social security income test. Paragraph 8(11)(d) of the Act allows the 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 excluded from the definition of “ordinary income” under subsection 8(1) of the Act. As a result, any such amount is not to be taken into account under the social security income test.
There is a variety of payments available to eligible athletes for the purpose of athlete support, using funds provided by the ASC. The Direct Athlete Support (DAS) and Australian Government Sport Training Grant (AGSTG) payments are examples of such payments. The DAS payment is administered by the APC. Payments made under these schemes are one-off payments, targeted at athletes based on their medal potential at a major sporting event, such as the Olympics or Paralympics, and their individual need. These payments are intended to support the athletes to prepare for a major sporting event or events. The AGSTG scheme is a similar and more general scheme administered by the ASC.
Explanation of Provisions
Part 1
Section 1 of the Determination states the name of the Determination and shows how it is to be cited.
Section 2 states that the Determination commences on the day after registration with the Federal Register of Legislative Instruments.
Section 3 contains definition provisions.
Part 2
Section 4 provides that if a person who is receiving a disability support pension in respect of a day also receives a disability sporting grant on the same day, the disability sporting grant will be an exempt lump sum in respect of that person for the purpose of the Act.
Example 1: If a person is receiving a disability support pension in respect of 10 January 2010, and also receives a disability sporting grant on 10 January 2010, the disability sporting grant is an exempt lump sum with respect to that person.
Example 2: If a person receives a disability sporting grant on 10 January 2010, and starts to receive a disability support pension on 11 January 2010, the disability sporting grant is not an exempt lump sum with respect to that person.
Consultation
As this Determination is beneficial to customer and only intended to affect persons who receive the disability support pension, which falls wholly within the portfolio responsibility of FaHCSIA, it was decided that consultation was not necessary for this matter.
Regulatory Impact Analysis
This Determination does not require a Regulatory Impact Statement or Business Cost Calculator Figure. The Determination 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, as a result of this Determination, against the nine categories listed in the Business Compliance Cost Checklist contained in the Best Practice Regulation handbook prepared by the Office of Best Practice Regulation.
Overview
The Social Security Exempt Lump Sum (Disability Sporting Grants) (FaHCSIA) Determination 2009 was enacted to address the issue of excluding certain disability sporting grants from the social security income test for disability support pension recipients. This Determination was made under paragraph 8(11)(d) of the Social Security Act 1991, allowing the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to specify that certain amounts are exempt lump sums. The policy objective is to ensure that disability sporting grants, which are intended to support athletes in preparing for major sporting events, do not negatively impact the social security benefits of recipients. This Determination applies to grants provided by the Australian Sports Commission, Australian Paralympic Committee, Australian Commonwealth Games Association, or national sporting organisations using funds provided by the Australian Sports Commission.
Scope and Application
The Social Security Exempt Lump Sum (Disability Sporting Grants) (FaHCSIA) Determination 2009 applies to individuals who are recipients of a disability support pension under the Social Security Act 1991. Specifically, it provides that a one-off payment made by the Australian Sports Commission, Australian Paralympic Committee, Australian Commonwealth Games Association, or a national sporting organisation using funds provided by the ASC for the purpose of athlete support, is exempt from being considered as ordinary income for the purposes of the social security income test. This applies to those who receive the disability sporting grant on the same day they receive their disability support pension. The Determination operates nationally across Australia as it is an instrument under the Commonwealth’s legislative power. There are no stated exclusions or exemptions within the Determination itself, although it does rely on the broader definitions and provisions of the Social Security Act 1991. The scope of the Determination may be extended or clarified through subordinate instruments, though the current text does not specify any such instruments.
Key Provisions
The main operative sections of the Social Security Exempt Lump Sum (Disability Sporting Grants) (FaHCSIA) Determination 2009 (the Determination) are set out in Section 4 (subsections 8(11)(d) of the Social Security Act 1991). This section specifies that a one-off payment made by the Australian Sports Commission (ASC), Australian Paralympic Committee (APC), Australian Commonwealth Games Association (ACGA), or a national sporting organisation (NSO) using funds provided by the ASC, which is received by a person who is also receiving a disability support pension on the same day, will be considered an exempt lump sum for the purposes of the social security income test. This means that such payments are excluded from the definition of "ordinary income" under the Social Security Act, and therefore, they do not affect the recipient's eligibility for or amount of disability support pension.
The Determination imposes obligations on the parties involved, primarily the Australian Sports Commission, Australian Paralympic Committee, Australian Commonwealth Games Association, and national sporting organisations, to ensure that any one-off payments made to eligible athletes who are also receiving a disability support pension are accurately identified as exempt lump sums. This is to ensure that the recipients are not disadvantaged in terms of their social security income test. The Determination also requires that the recipients of such payments, who are also receiving a disability support pension, must inform the relevant authorities of their receipt of these payments to ensure that they are correctly classified and do not affect their pension eligibility.
There are no specific offences, penalties, or civil/criminal consequences outlined in the Determination for breaches of its provisions. However, any failure to correctly identify or report the exempt lump sums as required by the Determination could potentially lead to incorrect assessments of social security benefits, which may result in overpayments or underpayments of disability support pensions. Such errors could be subject to review and correction by the relevant authorities, and in some cases, may result in the need for recipients to repay any overpayments received. It is important for all parties involved to adhere to the Determination's provisions to ensure the accurate administration of social security benefits for eligible disability support pension recipients who also receive disability sporting grants.