EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Murray-Darling Basin Small Block Irrigators Grant) (FaHCSIA) Determination 2008
Summary
The Social Security Exempt Lump Sum (Murray-Darling Basin Small Block Irrigators Grant) (FaHCSIA) Determination 2008 is made under paragraph 8(11)(d) of the Social Security Act 1991 (the Act). The effect of this determination is that if a recipient of a FaHCSIA-administered social security payment receives a payment under the Murray-Darling Basin Small Block Irrigators Grant, it will be exempt from the income test under the social security law. This determination has effect in relation to the provisions of the Act in so far as they relate to matters for which the Minister for Families, Housing, Community Services and Indigenous Affairs has responsibility under the Administrative Arrangements Order.
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 income amounts specifically exempted under the social security law. 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 section 8 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 Determination provides that a Murray-Darling Basin Small Block Irrigators Grant paid to an individual as part of the Water for the Future plan is an exempt lump sum for the purposes of paragraph 8(11)(d). The Grant is not a periodic amount within the meaning of subsection 8(11A) of the Act; the Grant is not a leave payment within the meaning of point 1067G-H20, 1067L-D16 and 1068-G7AR; and the Grant is not income from remunerative work undertaken by the person, satisfying paragraphs 8(11)(a) to (c) of the Act.
The effect of this Determination is that customers receiving a Murray-Darling Basin Small Block Irrigators Grant will not be subject to a reduction in the amount of their FaHCSIA-administered social security payment due to the operation of the social security income test and as a result of receiving that grant.
This Determination is a legislative instrument. The Department of Education, Employment and Workplace Relations will make a complementary Determination in relation to those matters that the Minister for Education and the Minister for Employment and Workplace Relations have responsibility for under the Administrative Arrangements Order to ensure that a Murray-Darling Basin Small Block Irrigators Grant received by a recipient of a DEEWR-administered social security payment will also be exempt from the income test under the social security law.
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 it is registered.
Section 3 contains interpretation provisions. In particular, the term Murray-Darling Basin Small Block Irrigators Grant is defined as a one-off payment, to eligible irrigators on blocks of 15 hectares or less, that is part of an exit package to assist small block irrigators to remain in the community while selling their water entitlements to the Commonwealth and to leave irrigation farming for at least five years.
Part 2
Section 4 provides that if a person receives a Murray-Darling Basin Small Block Irrigators Grant, any amount of that Grant is an exempt lump sum in respect of the person for the purposes of the income test.
Consultation
The Department of Agriculture, Fisheries and Forestry and the Department of Education, 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 social security income test, a Murray-Darling Basin Small Block Irrigators Grant made by the Department of Agriculture, Fisheries and Forestry and the Department of the Environment, Water, Heritage and the Arts. Public consultation was therefore seen as unnecessary.
Regulatory Impact Analysis
The Determination does not require a Regulatory Impact Statement or a 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. It is not expected that any compliance costs will be incurred by business, as a result of this Determination, against the nine categories listed in the Business Compliance Cost Checklist contained in the Best Practice Regulation Handbook prepared by the Office of Best Practice Regulation.