EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Family Day Care Start Up Payment) (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 (FaCSIA) and the Department of Education, Science and Training (DEST) 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 Family Day Care Start Up Payment (a one-off payment of up to $1,500 per recipient) made on behalf of the Commonwealth by FaCSIA 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 FaCSIA 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 DEWR administered social security payment receives a FaCSIA 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 FaCSIA 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 FaCSIA 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 DEWR administered social security payment as a result of receiving a FaCSIA 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 per recipient) 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 in meeting the initial costs of setting up their home-based child care business through Family Day Care.
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 FaCSIA 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 FaCSIA Family Day Care Start Up Payment under the 2005 Welfare to Work Budget Package 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 a day on or after the commencement of this determination.
Consultation
FaCSIA and DEST 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 FaCSIA. 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 (Family Day Care Start Up Payment) (DEWR) Determination 2007 was enacted to address a specific gap in the Social Security Act 1991, which required the determination of certain payments as exempt lump sums for the purposes of social security payments. This determination was made by the Parliament of Australia, allowing the Secretaries of the relevant departments to classify a Family Day Care Start Up Payment as an exempt lump sum. The policy objective was to ensure that such payments would not be considered income under the Act, thereby preventing a reduction in the amount of social security payments for recipients of these grants. This approach provides financial relief to individuals setting up home-based child care businesses through Family Day Care by ensuring their start-up payments do not negatively affect their social security benefits.
Scope and Application
The Social Security Exempt Lump Sum (Family Day Care Start Up Payment) (DEWR) Determination 2007 applies to individuals who receive a Family Day Care Start Up Payment from the Department of Families, Community Services and Indigenous Affairs (FaCSIA) under the 2005 Welfare to Work Budget Package, and who are also recipients of a social security payment administered by the Department of Employment and Workplace Relations (DEWR). This instrument specifies that such payments are considered exempt lump sums for the purposes of calculating social security benefits under the Social Security Act 1991. This means that the Start Up Payment will not be treated as income and will not affect the recipient's eligibility or amount of social security benefits. The determination is effective from the date it is registered on the Federal Register of Legislative Instruments and applies nationally within the Commonwealth of Australia. There are no exclusions or exemptions specified in the determination, and it does not extend or restrict application through subordinate instruments.
Key Provisions
The primary sections of the Social Security Exempt Lump Sum (Family Day Care Start Up Payment) (DEWR) Determination 2007 (the Determination) focus on establishing the conditions under which a Family Day Care Start Up Payment is exempt from the income test for social security purposes. Section 1 of the Determination identifies the document as the Social Security Exempt Lump Sum (Family Day Care Start Up Payment) (DEWR) Determination 2007. Section 2 specifies that the Determination comes into effect the day after it is registered on the Federal Register of Legislative Instruments. Section 3 provides definitions, with a particular focus on defining the term "Family Day Care Start Up Payment" as a payment made by the Department of Families, Community Services and Indigenous Affairs (FaCSIA) to assist in covering the initial setup costs for a home-based child care business through Family Day Care, up to a maximum of $1,500 per recipient. Section 4(1) references paragraph 8(11)(d) of the Social Security Act 1991 (the Act) to confirm that the Secretary can determine an amount or class of amounts as an exempt lump sum, while Section 4(2) clarifies that if a person receives a Family Day Care Start Up Payment and is also receiving a social security payment, the Start Up Payment is an exempt lump sum. Finally, Section 5 stipulates that the Start Up Payment is considered an exempt lump sum from the date it is received, provided that this date is on or after the commencement of the Determination.
The obligations imposed by the Determination on the parties it governs primarily relate to the administration and application of the exempt lump sum provisions. The Department of Families, Community Services and Indigenous Affairs (FaCSIA) is responsible for making the Family Day Care Start Up Payment to eligible recipients and ensuring these payments are treated as exempt lump sums under the Act. Recipients of the Start Up Payment who are also receiving social security payments must ensure they report their receipt of the Start Up Payment to the Department of Employment and Workplace Relations (DEWR) to avoid any misunderstandings or discrepancies in their social security benefits. Both FaCSIA and DEWR must coordinate to ensure that the Start Up Payment is correctly identified as an exempt lump sum for the purposes of social security income assessments.
There are no explicit offences, penalties, or civil or criminal consequences detailed within the Determination for breaches of its provisions. The focus of the Determination is on establishing the conditions under which the Family Day Care Start Up Payment is exempt from the income test for social security purposes, rather than on punitive measures for non-compliance. However, any misuse or misrepresentation of the Start Up Payment in applications for social security benefits could potentially lead to investigations by the relevant authorities, which might result in the imposition of penalties under the broader social security legislation for providing false information or engaging in fraudulent activities. These potential penalties would be in accordance with the provisions of the Social Security Act 1991 and related regulations, rather than being specific to this Determination.