Social Security (Means Test Treatment of Private Companies – Excluded Companies) (DEEWR) Declaration 2008

Administered by Department of Social Services

Legislation au F2008L02157 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

 

Social Security (Means Test Treatment of Private Companies – Excluded Companies) (DEEWR) Declaration 2008

 

Summary

 

Subsection 1207N(5) of the Social Security Act 1991 (the Act) provides that the Secretary may, by writing, declare that each company in a specified class of companies is an excluded company for the purposes of section 1207N.

The Social Security (Means Test Treatment of Private Companies – Excluded Companies) (DEEWR) Declaration 2008 specifies a class of companies for the purposes of subsection 1207N(5).

The effect of a company being an excluded company is that the assets and income of such a company will not be attributed to an individual for the purposes of ascertaining the person's assets or income for means testing purposes under Part 3.18 of the Act.

 

Background

 

In 2000 the means test treatment of private companies and private trusts was revised and the Act and the Veterans’ Entitlements Act 1986 were amended by the Social Security and Veterans’ Entitlements Legislation Amendment (Private Trusts and Private Companies – Integrity of Means Testing) Act 2000. As a result, the Secretary of the Department can declare that a Private Company is an excluded company for the purposes of means tests under the Act.


The measure aims to ensure that clients who hold their assets in private companies or private trusts receive comparable treatment under the means test to those clients who hold their assets directly. The assets and income of the structure will be attributed to the person or persons who control the company or trust, or to the person or persons who were the source of the capital or corpus of the company or trust.

One of the conditions for attributing an asset or the income of a company to an individual under the Act is that the company is a ‘designated private company’. Subsection 1207N(1) provides that a company is a designated private company if certain criteria are satisfied. One of these criteria is that ‘the company is not an excluded company’. In short, a designated private company cannot be an excluded company.

The Declaration, therefore, excludes a class of companies from the definition of designated private company with the result that the assets and income of such an excluded company will not be attributed, under Part 3.18 of the Act, to an individual for means testing purposes.

The Declaration maintains the exclusions currently set out in the Social Security (Means Test Treatment of Private Companies – Excluded Companies) Declaration 2001 (‘the 2001 Declaration’) by the Secretary of the Department of Family and Community Services.

Explanation of Provisions

 

Part 1

 

Section 1 of the instrument states the name of the Declaration.

 

Section 2 states that the Declaration commences on the day after it is registered.

 

Section 3 provides definitions for the purposes of the Declaration.

community purpose means a purpose that is intended to benefit primarily the members of a particular community or group.

government body includes a department or agency of the Commonwealth; a department or agency of a State or Territory; a municipal corporation or other local government body; or a body corporate in which the Commonwealth, a State or a Territory body holds a controlling interest.

income has the same meaning as in subsection 1207P(7) of the Act. Subsection 1207P(7) of the Act defines income to have the ordinary meaning of that expression.

indigenous-held land has the same meaning as in section 4B of the Aboriginal and Torres Strait Islander Act 2005. Indigenous-held land is defined in that Act to be indigenous-held land if an interest in the land is held by an Aboriginal or Torres Strait Islander corporation, or an interest in the land is held by an Aboriginal person or Torres Strait Islander. Subsections 4B(2) to 4B(4) provide exceptions to this definition. The Aboriginal and Torres Strait Islander Act 2005 contains the same definition as the Aboriginal and Torres Straight Island Commission Act 1989 which was repealed in 2005.

 

Part 2

 

Section 4 specifies that each company that meets the requirements of subsection 4(2) is an excluded company. Where the sole or dominant purpose of a company is to receive, manage and distribute property transferred to it, directly or indirectly, by a government body (as defined in section 3), for a community purpose, then the company is an excluded company. A company will also be an excluded company if it holds, manages or disposes of indigenous-held land for a community purpose.

 

Paragraph 4(2)(c) provides that where the sole or dominant purpose of a company is to receive, manage and distribute income generated from the use of indigenous-held land, for a community purpose, then, that company is an excluded company. This will include situations where a company’s sole or dominant purpose is to receive, manage or distribute income which can include mining royalties generated from the use of indigenous-held land for a community purpose.

 

 


Part 3

 

Section 5 amends the 2001 Declaration to insert an application clause which identifies that the 2001 Declaration does not apply to matters which are the responsibility of the Minister for Education, Minister for Employment and Workplace Relations. This is because this Declaration will be effective for those matters.  However, the 2001 Declaration will still apply to matters of relevance to the Department of Families, Housing, Community Services and Indigenous Affairs.

 

Consultation

 

As the Declaration maintains the exclusions currently set out in the 2001 Declaration, no public consultation on the instrument was undertaken. The making of this Declaration reflects the changes in responsibilities under the Social Security Act 1991 in the Administrative Arrangements Order and that the Department of Education, Science and Training and the Department of Employment and Workplace Relations have been merged as a result of Machinery of Government changes to form the Department of Education, Employment and Workplace Relations.

 

Business Cost Calculator Figure

 

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 as a result of this exemption.

Overview

The Social Security (Means Test Treatment of Private Companies – Excluded Companies) (DEEWR) Declaration 2008 was enacted to refine the criteria for companies that are exempt from having their assets and income attributed to individuals for means testing under the Social Security Act 1991. This instrument was introduced by the Parliament of Australia to address the need for more precise exclusions regarding companies that should not be subject to means testing, ensuring that clients holding assets in private companies or trusts receive consistent treatment. The policy objective is to maintain the integrity of the means test by accurately attributing assets and income to those who control the company or trust or who provided the capital or corpus. This Declaration, maintained under the Social Security Act 1991, specifies that certain companies are excluded from being considered designated private companies for means testing purposes. Companies that are solely or dominantly involved in receiving, managing, and distributing property or income from government bodies for community purposes, or those managing indigenous-held land for community purposes, are exempt from having their assets and income attributed to individuals. This approach ensures that the means test accurately reflects the economic realities of clients' assets and income.

Scope and Application

The Social Security (Means Test Treatment of Private Companies – Excluded Companies) (DEEWR) Declaration 2008 applies to specific classes of private companies under the Social Security Act 1991, ensuring that their assets and income are not attributed to individuals for means testing purposes. This legislation identifies companies whose sole or dominant purpose is to receive, manage, and distribute property or income from government bodies or indigenous-held land for a community purpose as excluded companies. The geographic reach of this Act is national, applying to all jurisdictions within Australia. It maintains the exclusions set out in the 2001 Declaration but excludes certain responsibilities from the Department of Education, Employment and Workplace Relations, shifting them to the Minister for Education and Minister for Employment and Workplace Relations. This Declaration does not require a Regulatory Impact Statement or a Business Cost Calculator Figure, as it is not considered regulatory in nature and is not expected to impose significant compliance costs or competition impacts on businesses.

Key Provisions

The Social Security (Means Test Treatment of Private Companies – Excluded Companies) (DEEWR) Declaration 2008, under subsection 1207N(5) of the Social Security Act 1991 (the Act), outlines the criteria for designating a company as an excluded company (section 4). A company is considered an excluded company if its sole or dominant purpose is to receive, manage, and distribute property transferred by a government body for a community purpose, or if it holds, manages, or disposes of indigenous-held land for a community purpose (section 4(2)(a) and (b)). Additionally, a company is deemed an excluded company if its sole or dominant purpose is to receive, manage, and distribute income generated from the use of indigenous-held land for a community purpose (section 4(2)(c)). The obligations imposed by this Act on the parties or entities it governs include ensuring that the companies that meet the specified criteria are correctly identified as excluded companies. This means that these companies' assets and income will not be attributed to individuals for the purposes of means testing under Part 3.18 of the Act (subsection 1207N(5)). Companies that satisfy these criteria must adhere to the requirements set out in the Declaration to maintain their status as excluded companies. Breach of the provisions in the Declaration could lead to civil or criminal consequences, though specific penalties are not detailed in the instrument. However, it is implied that the non-compliance could result in the attribution of company assets and income to individuals for means testing purposes, which could affect the eligibility and amount of social security benefits received by those individuals. The precise legal and financial implications of non-compliance would be determined by the relevant authorities within the Department of Education, Employment and Workplace Relations.

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Social Security Law
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Declaration
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Definitions & Interpretation
Regulatory Standards
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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.