EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum - Government Superannuation Co‑Contribution Payments for Low Income Earners) Determination 2017
Summary
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 Social Security Act 1991 (the Act) allows the Secretary of the Department of Social Services to determine that an amount or class of amounts received by a person 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.
In 2004, a determination was made that provided that where a payment of a Government co-contribution is made, it is an exempt lump sum under paragraph 8(11)(d).
Some of the people receiving a Government superannuation co-contribution payment may also be in receipt of a social security payment. The effect of the 2004 determination was that such a payment was not to be regarded as income under the Act. Accordingly, if a social security customer receives such a payment, it will be exempt from the social security income test.
This instrument remakes the 2004 determination. Had the 2004 determination not been re-made, it would automatically be repealed on 1 April 2017. The Department of Social Services has reviewed the 2004 determination and determined that an exemption for this payment is still required.
Aside from this change of name and some other minor updates and streamlining, this instrument has the same legal effect as the determination it replaces.
Explanation of Provisions
Section 1 of the Determination states the name of the Determination.
Section 2 provides that the Determination commences on the day after it is registered.
Section 3 provides that the authority for making this Determination is paragraph 8(11)(d) of the Act.
Section 4 revokes the previous determination made in 2004, made by the then Department of Family and Community Services.
Section 5 contains definitions of certain terms used in the Determination. The terms “Act” and “Government co-contribution” are defined.
Section 6 specifies that a payment of a Government co-contribution is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Social Security Act 1991. Such an amount will be regarded as an exempt lump sum from the date the payment is received by the person.
Consultation
This determination was remade as it would otherwise have been automatically repealed on 1 April 2017.
This determination remakes a current determination will be beneficial to persons affected as it exempts payments of a Government co-contribution from the social security income test. As a result, public consultation was seen as unnecessary.
Regulatory Impact Analysis
The Determination remakes a current determination and does not require a Regulatory Impact Statement. The Determination is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Social Security (Exempt Lump Sum – Government Superannuation Co‑Contribution Payments for Low Income Earners) Determination 2017
The effect of the Determination is that a person who receives a Government Superannuation Co-contribution payment will not have that payment assessed as income under the social security law.
Human rights implications
The Determination engages the right to social security under Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR). The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.
The Determination will operate beneficially as a Government Superannuation co-contribution payment will not be taken into account when assessing a person’s eligibility or rate of social security entitlements under the social security income test. If the Government Superannuation co-contribution payment is not exempted, a person in receipt of that payment may not be eligible for a social security payment or, if they are eligible, their rate of payment might be reduced. The Determination is therefore consistent with the promotion of the right to social security.
The exemption of the Government Superannuation co-contribution payment from the income test does not mean that any ongoing income generated by the lump sum is exempt from the income test, nor does it mean that any asset produced from the lump sum is exempt from the social security assets test. This is consistent with the treatment of other lump sum payments exempted under paragraph 8(11)(d) of the Act.
Conclusion
This Determination supports a person’s human right to social security.
Anita Davis, Acting Branch Manager, International and Means Test Policy Branch, as a delegate of the Secretary of the Department of Social Services.