EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Restructuring Grants under the Tobacco Grower Adjustment Assistance Package 2006) (FaCSIA) Determination 2007
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretaries of the Department of Families, Community Services and Indigenous Affairs (FaCSIA), the Department of Employment and Workplace Relations and the Department of Education, Science and Training to determine that an amount, or class of amounts, is an exempt lump sum for the purpose of the Act. This instrument determines that, for the purpose of social security payments for which the Minister for Families, Community Services and Indigenous Affairs is responsible, a Restructuring Grant ( a one-off payment of up to $150,000 per recipient) made by the Department of Agriculture, Fisheries and Forestry to persons under the Tobacco Grower Adjustment Assistance Package 2006 is an exempt lump sum under paragraph 8(11)(d) of the Act.
The effect of this instrument is that a Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006 will not be regarded as income under the Act. Consequently, if a recipient of a FaCSIA administered social security payment receives a Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006, the Grant will not affect their social security payment
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 items specifically exempted under the social security law. Paragraph 8(11)(d) of the Act allows Secretaries 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 a Restructuring Grant made under the Tobacco Grower Adjustment Assistance Package 2006 is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.
The effect of this instrument is that for customers receiving a Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006, the grant will not be assessed as income under the social security law. Accordingly, customers receiving this payment will not be subject to a reduction in the amount of their FaCSIA administered social security payment as a result of receiving a Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006.
Explanation of Provisions
Part 1
Section 1 of the instrument states the name of the instrument.
Section 2 states that the instrument commences on 23 February 2007. The 23 February 2007 is the first date that a person may lodge a claim under the Tobacco Grower Adjustment Assistance Package 2006.
Section 3 contains interpretation provisions. In particular, the term Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006 is defined as a payment (up to $150,000) made to a person by the Australian Government Department of Agriculture, Fisheries and Forestry under the Tobacco Grower Adjustment Assistance Package 2006 in order to assist that person to readjust into economic activities other than tobacco growing.
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 a Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006 from the Commonwealth Department of Agriculture, Fisheries and Forestry and they are also in receipt of a social security payment, then the Restructuring Grant made under the Tobacco Grower Adjustment Assistance Package 2006 received by the person is an exempt lump sum.
Section 5 specifies that a Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006 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 Employment and Workplace Relations and the Department of Education, Science and Training 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 income test a Restructuring Grant under the Tobacco Grower Adjustment Assistance Package 2006 made by the Department of Agriculture, Fisheries and Forestry. Public consultation was therefore seen as unnecessary.
Business Cost Calculator
This exemption does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator. 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.