EXPLANATORY STATEMENT
Department of Employment and Workplace Relations
Social Security Exempt Lump Sum (F-111 Deseal/Reseal) (DEWR) Determination 2005
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows Secretaries of the Department of Employment and Workplace Relations, the Department of Family and Community Services and the Department of Education, Science and Training to determine that an amount, or class of amounts, is an exempt lump sum for the purposes of the Act. This instrument determines that an ex gratia payment made by the Australian Government to a person in recognition of exposure experienced by that person as a result of working on, or in close proximity to, F-111 reseal or deseal work, is an exempt lump sum under paragraph 8(11)(d).
The effect of this instrument is that such an ex gratia payment will not be regarded as income under the Act, so that if a social security customer receives such a payment, it will be exempt from the social security income test.
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 Secretaries 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 an ex gratia payment made by the Australian Government to a person in recognition of exposure experienced by that person as a result of working on, or in close proximity to, F-111 reseal or deseal work, at any time between 1973 and 2000, is an exempt lump sum for the purposes of paragraph 8(11)(d).
Between 1973 and 2000, certain people worked on reseal or deseal work on F-111 aircraft, or in the same hangar in close proximity to such work. As a result, these people experienced a higher than normal level of exposure to an environmental hazard. The ex gratia payment is made in recognition of that exposure. Payment of the amount is not conditional on a person having a specific disease or condition. Some of the people receiving the ex gratia payment may also be in receipt of a social security payment. The effect of this instrument is that these customers will not have their social security payments reduced because of the ex gratia payment that they receive, because these payments will not be regarded as income for the purposes of the social security income test.
Explanation of the provisions
Part 1
Section 1 of the instrument states the name of the instrument.
Section 2 states that the instrument commences on the day on which it is signed.
Section 3 contains interpretation provisions. In particular, the term “ex gratia payment” is defined as a payment made to a person in recognition of exposure experienced by that person as a result of working on F-111 reseal or deseal work or in close proximity to such work, at any time between 1973 and 2000.
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 has received an “ex gratia payment” as defined in section 3 of the instrument, and they are also in receipt of a social security payment, then any amount received by the person as an ex gratia payment is an exempt lump sum.
Section 5 specifies that an amount, or class of amounts, received by a person referred to in subsection 4(2) is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act. Such an amount or class of amounts will be regarded as an exempt lump sum from the date that the amount was received by the person. Any ex gratia payment received by a person to whom this instrument applies will be exempt from the social security income test from the date that the payment is received by the person, provided that this is after the commencement of this instrument (ie. on or after the day on which this instrument is signed).
Consultation
This instrument was made at the request of the Department of Veterans’ Affairs.
The Department of Family and Community Services and the Department of Education, Science and Training were also consulted to ensure a co-ordinated and consistent approach to the administration of these ex gratia payments for all social security payments under the Act.
This instrument is beneficial to customers because it exempts ex gratia payments from the social security income test. As a result, public consultation was seen as unnecessary.