EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum) (Farm Exit Support Grants) (FaHCSIA) Determination 2010
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 Act. The effect of this Determination is that for the purpose of social security payments for which the Minister for FaHCSIA is responsible, a Farm Exit Support Grant (FES Grant) is an exempt lump sum under paragraph 8(11)(d).
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.
The FES Grant provides a one-off payment to eligible farmers who exit their farming enterprise and undertake not to return to farming as an owner or operator for at least five years. The FES Grant is designed to expand eligibility for the Exceptional Circumstances (EC) Exit Package to include farmers in the Western Australia pilot region whose farms are not in regions previously EC declared.
The exit support grant is a one-off payment made to a person or a person’s partner who has sold their farm enterprise and who meets the Commonwealth Government Department of Agriculture, Fisheries and Forestry eligibility guidelines under the Package.
The effect of this instrument is that customers receiving a farm exit support grant, will not have this amount assessed as income under the social security law.
Explanation of Provisions
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 it is registered.
Subsection 3(1) states that for the purposes of paragraph 8(11)(d) of the Act a farm exit grant is an exempt lump sum.
Subsection 3(2) provides that a Farm Exit Support Grant is a grant that is known as either the ‘Farm Exit Support Grant’, the ‘Farm Exit Support Advice and Re-training Grant’, or the ‘Farm Exit Support Relocation Grant’, that is provided under the Farm Exit Support program administered by the Department of Agriculture, Fisheries and Forestry. The maximum value of the grants are $150,000, $10,000 and $10,000 respectively.
Consultation
The Department has consulted with the Department of Veteran's Affairs and the Department of Education, Employment and Workplace Relations regarding this exemption.
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.
Overview
The Social Security (Exempt Lump Sum) (Farm Exit Support Grants) (FaHCSIA) Determination 2010 was enacted to address the issue of how Farm Exit Support Grants are treated under the Social Security Act 1991. This Determination was introduced by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and aims to clarify that these grants are exempt lump sums for the purposes of social security payments. By designating Farm Exit Support Grants as exempt lump sums, the policy objective is to ensure that eligible farmers who exit their farming enterprise and receive such grants are not subject to the social security income test for these payments. This measure is designed to support farmers transitioning out of the industry by ensuring that the grant does not adversely affect their social security entitlements.
Scope and Application
The Social Security (Exempt Lump Sum) (Farm Exit Support Grants) (FaHCSIA) Determination 2010 applies to the Farm Exit Support Grants provided under the Farm Exit Support program administered by the Department of Agriculture, Fisheries and Forestry. It designates these grants as exempt lump sums under the Social Security Act 1991 for the purposes of social security payments managed by the Minister for FaHCSIA. This means that eligible farmers who receive a Farm Exit Support Grant and meet certain eligibility guidelines will not have this grant assessed as income under the social security income test. The Determination specifies that the Farm Exit Support Grant, along with the Farm Exit Support Advice and Re-training Grant and the Farm Exit Support Relocation Grant, are the types of grants that qualify under this exemption. Each of these grants has a specified maximum value of $150,000, $10,000, and $10,000 respectively. The Determination has a national jurisdictional reach as it pertains to social security laws managed at the Commonwealth level. There are no stated exclusions, exemptions, or thresholds beyond those specified in the Act and the Determination itself. The Determination also clarifies that it does not require a Regulatory Impact Statement or Business Cost Calculator Figure, as it is not regulatory in nature and is not expected to impact business activity or result in significant compliance costs or competition impacts.
Key Provisions
The main operative sections of the Social Security (Exempt Lump Sum) (Farm Exit Support Grants) (FaHCSIA) Determination 2010 (subsections 3(1) and 3(2)) establish that a Farm Exit Support Grant is an exempt lump sum for the purposes of the Social Security Act 1991 (subsection 8(11)(d)). This means that the grant will not be assessed as income under the social security law for the purposes of determining eligibility for social security payments. The Determination also clarifies that the Farm Exit Support Grant can be one of three types: the Farm Exit Support Grant, the Farm Exit Support Advice and Re-training Grant, or the Farm Exit Support Relocation Grant, each with respective maximum values of $150,000, $10,000, and $10,000.
This Act imposes specific obligations on the parties involved. Firstly, it requires that the grant be provided under the Farm Exit Support program administered by the Department of Agriculture, Fisheries and Forestry. Secondly, it mandates that the recipients must meet the eligibility guidelines set by the Commonwealth Government Department of Agriculture, Fisheries and Forestry. The grant is intended for individuals who have sold their farming enterprise and who undertake not to return to farming as an owner or operator for at least five years. The legislation ensures that these grants are given to eligible farmers who are exiting the farming industry and are provided to either the individual or their partner.
The Determination does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach within its text. However, the implications of misapplying the grant or failing to adhere to the eligibility guidelines could result in complications in social security assessments and potential eligibility issues for social security payments. While the Determination itself does not specify penalties, breaches of related social security laws could lead to financial penalties or other administrative actions under the Social Security Act 1991. The maximum penalties for such breaches are governed by the broader social security legislation, which could include fines and other enforcement measures.