Social Security Foreign Currency Exchange Rate Determination 2008

EXPLANATORY STATEMENT

Social Security Foreign Currency Exchange Rate Determination 2008

Purpose

Section 1100 of the Social Security Act 1991 (the Act) allows Secretaries (or their delegates) to provide for how the value of a payment received by a person in a foreign currency is to be determined.

This determination is made under subsection 1100(5) and it revokes the principal instrument, namely, the Social Security Foreign Currency Exchange Rate Determination 2006 (No. 1) which was made on 17 January 2006 and all amendment determinations made in 2006 and in 2007.

This determination was required to amend the currencies of Cyprus and Malta. The exchange rates of these currencies are now both sourced from the on-demand airmail buying rate (Part 3 of the Determination). No other changes have been made.

Background

The determination specifies various sources where an amount received in a foreign currency can have an appropriate market exchange rate applied to that currency in order to convert it to Australian dollars.

The sources are:

• the on-demand airmail buying rate from the Commonwealth Bank of Australia (Part 3, Table A);
• the miscellaneous exchange rate from the Commonwealth Bank of Australia (Part 4, Table B);
• the telegraphic transfer rate from the Commonwealth Bank of Australia (Part 5, Table C);
• the Reserve Bank of Australia rate from the Reserve Bank of Australia (Part 6, Table D);
• the Bank of America rate from the Bank of America (Part 7, Table E); and
• the Central Bank of Bosnia and Herzegovina rate from the Central Bank of Bosnia and Herzegovina (Part 8).

The determination provides that amounts received by a person in Australia from specified foreign countries are sourced from one of the Parts mentioned above to determine the appropriate market exchange rate to be applied.

Part 9 of the determination provides for some other types of payments to which subsection 1100(2) of the Act does not apply.

The payments affected by Part 9 are made manually or without using a computer system with their exchange rate updated twice a year on or after the pension CPI dates (20 March and 20 September).  In addition the exchange rate of payments made by the Istituto Nazionale della Previdenza Sociale (INPS) and available from the Istituto Centrale delle Banche Popolari Italiane in Milan are also provided for in Part 9.

Consultation

No consultation in relation to the determination was undertaken because this legislative instrument is of a minor or machinery nature that does not substantially alter existing arrangements.

Explanation of the provisions

Part 1 of the determination provides for the preliminary requirements, namely, the name of the determination (section 1.1), commencement (section 1.2), definitions (section 1.3) and revocation of all existing determinations (section 1.4).

Part 2 of the determination provides that subsection 1100(2) of the Act does not apply to the identified currencies in Part 3, 4, 5, 6, 7 and 8.

Part 3 of the determination provides for the exchange rate available from the on‑demand airmail buying rate at the Commonwealth Bank of Australia.

Part 4 of the determination provides for the exchange rate available from the miscellaneous exchange rate at the Commonwealth Bank of Australia.

Part 5 of the determination provides for the exchange rate available from the telegraphic transfer rate at the Commonwealth Bank of Australia.

Part 6 of the determination provides for the exchange rate available from the Reserve Bank of Australia.

Part 7 of the determination provides for the exchange rate available from the Bank of America.

Part 8 of the determination provides for the exchange rate available from the Central Bank of Bosnia and Herzegovina.

Part 9 of the determination provides for the exchange rate for manual payments and also for INPS payments.