EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Payments to former residents in South Australian State care) (DEEWR) Determination 2010
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretaries of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and the Department of Employment, Education, and Workplace Relations (DEEWR) to determine that an amount or class of amounts 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 is responsible, an ex-gratia payment made by the State of South Australia under the Victims of Crime Act 2001 to former residents in State care who have suffered sexual abuse 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.
On 29 January 2010, the State of South Australia announced a scheme to make ex-gratia payments under the Victims of Crime Act 2001 for individuals who, as children, were abused while in State care.
To be eligible for the ex-gratia payment applicants must:
- be over 18 years of age;
- have suffered sexual abuse as a child; and
- have been in State care at the time of suffering sexual abuse.
The Attorney-General of South Australia will determine who is eligible for an ex-gratia payment and the amount of the payment (up to $50,000) and the one off payment of up to $750 to pay for legal fees incurred in obtaining legal advice for the purposes of signing the deed of Settlement and Release.
This instrument determines that an ex-gratia payment made by the State of South Australia under the Victims of Crime Act 2001 to individuals who have suffered sexual abuse as children while they were in State care, will not be regarded as income under the Act. Consequently, if a recipient of a DEEWR administered social security payment receives an ex-gratia payment made by the State of South Australia under the Victims of Crime Act 2001 for sexual abuse suffered by them as a child whilst in State care, it will be exempt from the income test under the social security law.
This Determination is a legislative instrument. FaHCSIA is making a similar Determination in relation to social security payments that the Minister for Families, Housing, Community Services and Indigenous Affairs has responsibility for under the Administrative Arrangements Order.
The Department of Veterans’ Affairs is also making a similar instrument in relation to the payments that the Minister for Veterans’ Affairs has responsibility for under the Administrative Arrangements Order.
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Explanation of Provisions
Section 1 of the Determination states the name of the Determination and how it is to be cited.
Section 2 states that the Determination commences on the day after it is registered.
Section 3 specifies that this Determination applies to an ex-gratia payment made to a person before, on or after the commencement of this Determination.
Although this provision has a retrospective application, the application is beneficial to the person involved. This section ensures that any payment received under the Victims of Crime Act 2001 by former residents of South Australian State care is not treated as income for social security purposes irrespective of when the payment was actually received. It also ensures that people who received an ex-gratia payment under the Victims of Crime Act 2001 before this Determination commenced are treated in the same way as people who receive an ex-gratia payment after the commencement of this Determination.
Section 4 contains the definitions.
The term ex-gratia payment is a payment that is made under the Victims of Crime Act 2001 and includes:
- a one off payment of up to $50,000 to former residents in South Australian State care who have experienced sexual abuse as children, and
- a one off payment of up to $750 to pay for legal fees incurred in obtaining legal advice for the purposes of signing the deed of Settlement and Release.
The decision about whether or not to make an ex-gratia payment and the amount of the payment is with the Attorney-General of South Australia.
Section 5 states that for paragraph 8(11)(d) of the Act an ex gratia payment, as defined, is an exempt lump sum.
Consultation
The Department of Veteran's Affairs, the Department of Families, Housing, Community Services and Indigenous Affairs and Centrelink were consulted 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.