EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Redress WA) (FaHCSIA) Determination 2008
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, is an exempt lump sum for the purpose of the Act. This instrument provides 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 Western Australia under the scheme known as Redress WA will be exempt lump sums.
To be eligible for Redress WA applicants must:
- be over 18 years of age OR the legal guardian of a person aged over 18 years with a legal disability;
AND
- for payments up to $10 000 (Option 1) be able to show reasonable likelihood that she or he has experienced abuse and/or neglect while in State care, either institutional or non-institutional;
- for payments up to $80 000 (Option 2) provide medical and/or psychological evidence that she or he has been abused and/or neglected while in State care, either institutional or non-institutional.
The State of Western Australia will determine who is eligible for an ex-gratia payment in accordance with its own criteria, including the criteria noted above. In accordance with the criteria set down by the State of Western Australia, the maximum total payment available to an individual under Redress WA is $80,000.00. The payment is not intended to provide compensation for any harm experienced.
This instrument determines that a payment made by the State of Western Australia under Redress WA to a person or their partner is an exempt lump sum under paragraph 8(11)(d) of the Act. The purpose of the ex-gratia payment is to assist individuals with the healing process; the payment is part of a range of support services offered by the State of Western Australia, including financial and psychological counselling, legal advice as well as the offer of an apology. The ex-gratia payment does not represent a receipt of money for services rendered directly or indirectly.
Background
On 17 December 2007, the State of Western Australia announced a scheme, to be known as Redress WA for individuals who, as children, were abused while in State care. Redress WA will provide ex-gratia payments from 1 May 2008 to eligible individuals. It is estimated that there are approximately 10,000 individuals who may be eligible to apply for payments under Redress WA.
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 Act allows the responsible 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 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 instrument determines that an gratia payment made by the State of Western Australia under the scheme known as Redress WA is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.
The effect of this instrument is that an ex-gratia payment made by the State of Western Australia under the scheme known as Redress WA will not be regarded as income under the Act. Consequently, if a person of a FaHCSIA administered social security payment or their partner receives an ex-gratia payment made by the State of Western Australia under the scheme known as Redress WA, it will be exempt from the income test under the social security law.
Explanation of Provisions
Part 1
Section 1 of the instrument states the name of the instrument.
Section 2 states that the instrument commences on 1 May 2008.
Section 3 contains interpretation provisions.
The term ex-gratia payment is defined as a one-off payment up to a maximum amount of $80,000.00 made by the State of Western Australia under the scheme known as Redress WA. The criteria and eligibility are determined by the State of Western Australia.
Part 2
Subsection 4(1) states that paragraph 8(11)(d) of the Act allows the Secretary to determine that an amount, or class of amounts, received by a person is an exempt lump sum.
Subsection 4(2) provides that if a person receives an ex-gratia payment as defined in section 3, then any amount of such a payment received by the person is an exempt lump sum.
Section 5 specifies that an ex-gratia payment received by a person referred to in subsection 4(2) will be regarded as an exempt lump sum from the date that the amount was received by the person, provided that date is on or after the commencement of this instrument.
Consultation
The Department of Education, Employment and Workplace Relations and the Department of Veterans’ Affairs 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 income support customers because it exempts from the income test a payment made by the State of Western Australia under the scheme known as Redress WA. Public consultation was therefore seen as unnecessary.
Regulatory Impact Analysis
This exemption does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator Figure. This exemption 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 (against the nine categories listed) as a result of this exemption.