EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Family Day Care Start Up Payment) (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, the Department of Employment and Workplace Relations (DEWR) and the Department of Families, Community Services and Indigenous Affairs 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 Education, Science and Training is responsible, a Family Day Care Start Up Payment (a one-off payment of up to $1,500 per recipient) made on behalf of the Commonwealth by the Department of Families, Community Services and Indigenous Affairs to persons under the 2005 Welfare to Work Budget Package is an exempt lump sum under paragraph 8(11)(d) of the Act.
The effect of this instrument is that a Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package will not be regarded as income under the Act. Consequently, if a recipient of a DEST administered social security payment receives a Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package, 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 for the purposes of calculating the amount of benefit a person may receive under the social security law. 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 Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package 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 Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package, the grant will not be assessed as income under the social security law. Accordingly, customers receiving this payment will not be subject to a reduction in the amount of their DEST administered social security payment as a result of receiving a Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package.
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 the day on which it is registered on the Federal Register of Legislative Instruments.
Section 3 contains interpretation provisions. In particular, the term Family Day Care Start Up Payment is defined as a payment (up to $1,500) made to a person on behalf of the Commonwealth by the Department of Families, Community Services and Indigenous Affairs under the 2005 Welfare to Work Budget Package in order to assist that person purchase goods and services directly related to the establishment of a Family Day Care business.
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 Family Day Care Start Up Payment from the Commonwealth Department of Families, Community Services and Indigenous Affairs and they are also in receipt of a social security payment, then the Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package received by the person is an exempt lump sum.
Section 5 specifies that a Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package received by a person referred to in section 4 will be regarded as an exempt lump sum from the date that the amount was received by the person, provided that date is a day on or after the commencement of this determination.
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 customers because it exempts from the income test a Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package made by the Department of Families, Community Services and Indigenous 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.