EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum) (River Red Gum Structural Adjustment Package Payment) (DEEWR) Determination 2010
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Education, Employment and Workplace Relations (DEEWR) to determine that an amount received by a person is an exempt lump sum for the purposes of the social security law. The effect of this Determination is that for the purpose of social security payments for which the Minister for Education, Employment and Workplace Relations is responsible, a payment made under the River Red Gum Structural Adjustment Package (Adjustment Package) 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.
The NSW Government made an announcement on 2 March 2010 to establish protection over significant river red gum plantations. The Adjustment Package provides one-off payments to eligible workers in the forestry industry who are employed by, providing services under contract to, or in the case of a Working Principal, engaged in the day to day operations of, sawmills deciding to close as a result of the 2 March announcement. Worker Assistance would only apply to eligible workers as at 7 August 2009 who have been eligible workers for a continuous period of at least 6 months prior to 7 August 2009 until made redundant or had their contract or work terminated as a result of the 2 March announcement and who have made a formal application for assistance by 30 June 2011.
The effect of this instrument is that a payment made to an eligible worker under the Adjustment Package will not be assessed as income under the social security law.
This Determination is a legislative instrument. The Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) will make a complementary Determination in relation to those matters that the Minister for Families, Housing, Community Services and Indigenous Affairs has responsibility for under the Administrative Arrangements Order. This will ensure that a payment made under the Adjustment Package received by a recipient of a FaHCSIA-administered social security payment will also be an exempt lump sum for the purposes of the Act.
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.
Subsection 3(1) states that for the purposes of paragraph 8(11)(d) of the Act a River Red Gum Structural Adjustment Package Payment is an exempt lump sum.
Subsection 3(2) provides that a River Red Gum Structural Adjustment Package Payment is a Special Redundancy Payment, Training Allowance or Relocation Allowance provided under the Package administered by Industry and Investment NSW.
Consultation
The Department has consulted with FaHCSIA 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.