EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum) (Payments to former residents in South Australian State care) (FaHCSIA) Determination 2010
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 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 Social Security Act 1991.
The effect of this Determination is that for the purpose of social security payments for which the Minister for Families, Housing, Community Services and Indigenous Affairs is responsible, an ex-gratia payment made by the State of South Australia under the Victims of Crime Act 2001 (SA) to former residents who have suffered sexual abuse while in State care is an exempt lump sum under paragraph 8(11)(d) of the Social Security Act 1991.
Background
On 29 January 2010, the Attorney-General of the State of South Australia announced a scheme to make ex-gratia payments under the Victims of Crime Act 2001 (SA) for individuals who, as children, were abused while in State care.
Under 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 Social Security Act 1991 allows the Secretary to determine that an amount, or class of amounts, is an ‘exempt lump sum’ for the purposes of the Social Security Act 1991. An exempt lump sum is excluded from the definition of “ordinary income” under subsection 8(1) of the Social Security Act 1991. As a result, any such amount is not to be taken into account under the social security income test.
This instrument determines that an ex-gratia payment made by the South Australian Attorney-General under the Victims of Crime Act 2001 (SA) to individuals who have suffered sexual abuse as children while they were in State care will not be regarded as ordinary income under the Social Security Act 1991. An ex-gratia payment is also available for legal fees incurred in obtaining legal advice for the purposes of signing a deed of Settlement and Release. Consequently, if a recipient of a FaHCSIA-administered social security payment receives such an ex-gratia payment, that payment will be exempt from the income test under social security law.
This Determination is a legislative instrument. DEEWR and the Department of Veterans’ Affairs are making similar instruments in relation to their payments.
Eligibility
To be eligible for an 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.
An ex-gratia payment to cover certain legal fees incurred by the applicant may also be made.
Payment
The Attorney-General of South Australia will determine who is eligible for an ex-gratia payment and the amount of the payment.
This instrument determines that an ex-gratia payment made by the Attorney-General of South Australia to a person who suffered sexual abuse as a child whilst in State care is an exempt lump sum under paragraph 8(11)(d) of the Social Security Act 1991. The purpose of the ex-gratia payment is to give former residents in State care the opportunity, as an alternative to legal action, to apply for a payment to acknowledge their pain and suffering and to help their recovery.
Explanation of Provisions
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 specifies that the Determination applies to an ex-gratia payment made to a person before, on or after the commencement of the Determination.
Although this provision has retrospective application, the effect is beneficial to the person involved. This section ensures that any ex-gratia payment received under the Victims of Crime Act 2001 (SA) by a former resident 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 a person who received an ex-gratia payment under the Victims of Crime Act 2001 (SA) before this Determination commenced is treated in the same way as a person who receives an ex-gratia payment after the commencement of this Determination.
Section 4 defines an ex-gratia payment for the purposes of the Determination.
The term ex-gratia payment is a payment that is made under the Victims of Crime Act 2001 (SA) and includes:
- a one off payment of up to $50,000 to a former resident in South Australian State care who experienced sexual abuse as a child, 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 decisions about whether or not to make an ex-gratia payment and the amount of the payment are the responsibility of the Attorney-General of South Australia.
Section 5 states that, for the purposes of paragraph 8(11)(d) of the Social Security Act 1991, an ex‑gratia payment is an exempt lump sum.
Consultation
The Department of Veterans’ Affairs, DEEWR 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.