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4.3.2.35 Income Exempt from Assessment - s 8(11) Exempt Lump Sums

Summary

This topic provides information about lump sums exempted from the income test under SSAct section 8(11), and lists lump sums that have been specifically exempted:

  • what are section 8(11) exemptions,
  • date of effect determination,
  • section 8(11) delegation,
  • list of lump sums that have been specifically exempted under section 8(11), and
  • detailed list of lump sums exempted to assist victims of Bali bombings of 12 October 2002.

 

What are section 8(11) exemptions?

Some lump sums are NOT treated as income for social security purposes.

 

Section 8(11) determinations allows the Secretary of DSS to exempt certain lump sums that are not periodic amounts, leave payments or income from remunerative work.

 

Section 8(11) was introduced, together with amendments to section 1073, on 28 March 1998 to make a fairer and more consistent income test treatment of lump sums by aligning the allowance and pensions income test treatments.

 

Section 8(11) applies to specific lump sums where a delegate has signed the appropriate instrument.

 

The characteristics of an exempt lump sum payment are that it is unlikely to be repeated, cannot reasonably be expected to be received or necessarily anticipated, and does not represent receipt of monies for services rendered.

 

More information about income exempt from assessment can be found in 4.3.2.30 Income Exempt from Assessment - Legislated, and 4.3.2.31 Income Exempt from Assessment - Specifically Approved.

 

Date of effect of determinations

The discretion in section 8(11) to determine certain amounts as 'exempt lump sums' is effectively discharged where a delegate has made a determination that is lodged with the Federal Registrar of Legislative Instruments. A determination, once made, would be subject to disallowance by either House of Parliament. The interaction between the SSAct section 8(11) provisions and the date of effect rules in the SS(Admin)Act, mean that a rate increase decision or a resumption of payment decision resulting from the impact of section 8(11) determinations on a person's qualification or rate can only be backdated in some cases, for up to 13 weeks, from the date the section 8(11) determination causes the relevant rate increase decision or resumption decision.

 

Act reference: SSAct section 8(11) An amount received by a person is an exempt lump sum if…

SS(Admin)Act Part 3 Division 9 Date of effect of determinations

 

Section 8(11) delegation

Under current Administrative Arrangements Orders (AAOs), DSS is responsible for administering payments under the social security law. Determinations are signed by the Secretary or the relevant delegate in DSS. Delegation to sign determinations is held by the Branch Manager of Seniors and Means Test Branch in DSS.

 

Exemption of a specific lump sum (e.g. a payment such as those specifically named in the list below) for income test purposes is obtained through Means Test Policy Section in DSS.

 

List of lump sums that have been specifically exempted under section 8(11)

The following table is a list of lump sums that have been specifically exempted under section 8(11).

Determination Number

Determination Date

Details

1998

1 of 1998

3 September 1998

Farm Family Restart Scheme

- re-establishment grants paid on or after 1 July 1998.

1999

 

1 of 1999

18 January 1999

Farm Family Restart Scheme

- re-establishment grants paid before 1 July 1998 which will have any waiting periods waived from 1 July 1998.

2 of 1999

20 January 1999

Payments to Holocaust survivors

- payments from a Swiss fund for needy Holocaust survivors, paid through the Executive Council of Australian Jewry.

3 of 1999

24 June 1999

Income Stream Contracts

- certain amounts arising from alterations of income stream contracts, (conversion of annuity contracts to asset test exempt products).

4 of 1999

23 September 1999

Home Equity Conversion loans

- Home Equity Conversion loan amounts in excess of $40,000.

5 of 1999

29 September 1999

Creutzfeldt-Jakob Disease

- payments from Australian Government DoHA associated with Australian Human Pituitary Hormone Program and Creutzfeldt-Jakob Disease.

6 of 1999

9 December 1999

ATSIC Indigenous Business Incentive Programme Grants

- paid under the ATSIC guidelines in effect prior to 1 July 1999.

7 of 1999

13 December 1999

Second compensatory payment to an allowee couple made by the Queensland Government through the award wages process for Indigenous Queenslanders.

2000

 

1 of 2000

20 April 2000

ATSIC Business Development Programme Grants

- paid under the ATSIC guidelines in effect from 1 July 1999.

2 of 2000

25 May 2000

Dairy Exit Payments

- payments from AFFA.

3 of 2000

12 July 2000

Welfare Reform Pilots

- financial assistance associated with the Welfare Reform pilots and Mature Age Participation pilot.

4 of 2000

27 July 2000

Assessment and Contestability Trial for People with Disabilities

- financial assistance payments.

5 of 2000

15 September 2000

Rural Australia Medical Undergraduate Scholarship Scheme (RAMUSS) payments

- payment of $10,000 for the period 1 January 2000 to 31 December 2000 made after 15 September 2000 and before 31 December 2000.

Determination Number

Determination Date

Details

2001

1 of 2001

17 May 2001

Rules Simplification Taskforce

- financial assistance to participate in a focus group.

2 of 2001

25 May 2001

Japanese Internment Act

- one-off payment of $25,000 to Australian service personnel and civilians held as prisoners of war by the Japanese between 7 December 1941 and 29 October 1945, or their widows or widowers.

Note: The value of a person's assets is permanently reduced by $25,000, BUT if a person invests the payment, income from the investment is counted under normal income test rules. See note at end of table for more information.

3 of 2001

11 September 2001

Household, Income and Labour Dynamics in Australia (HILDA) survey

- financial assistance to complete the personal questionnaire.

2002

1 of 2002

27 March 2002

NSW Fisheries

- ex-gratia payments to compensate NSW commercial fishermen.

2 of 2002

6 November 2002

Restitution payments

- Dutch-Maror Fund payment to Jewish survivors of World War II who resided in the Netherlands during World War II or to their widow or widower or their child or children if the survivor died after V-E Day of World War II,

- French Decree 2000-657 payment to the orphans of persons who died during the deportation as part of the anti-Semitic persecutions during the German occupation of France during World War II (orphans must be under the age of 21 years at the time of deportation of their parent).

3 of 2002

6 November 2002

Financial assistance from Victorian Department of Natural Resources and Environment

- payment to forest produce licence holders to compensate for being partially or completely excluded from the Box-Ironbark forest based industry.

2003

1 of 2003

7 March 2003

Sugar industry exit assistance

- exit assistance of a one-off payment of financial assistance made by the Commonwealth of up to $45,000 for growers in the sugar industry as announced on 25 September 2002 by the Honourable Warren Truss, Minister for AFFA.

2 of 2003

(Revoked by Determination 2 of 2005

13 January 2005)

7 March 2003

Queensland Government Indigenous Wages and Savings Reparations Process

- under this process the Queensland Government offers monetary reparations to persons whose wages and salaries were controlled under the Protections Acts during the period 1897 to 1965.

3 of 2003

21 August 2003

King Island or the Furneaux Group of Islands 1 July 1990 to 30 June 2001

- ex-gratia payment, due to the Prime Minister's decision of 17 July 2003, for a person's period of residence on King Island or the Furneaux Group of Islands at anytime during the period 1 July 1990 to 30 June 2001.

4 of 2003

21 August 2003

King Island or the Furneaux Group of Islands 1 July 1990 to 30 June 1997

- increased special zone B tax offset payment from the ATO for a person resident on King Island or the Furneaux Group of Islands at anytime during the period 1 July 1990 to 30 June 1997.

5 of 2003

26 September 2003

Bali Bombings

- lump sums exempted to assist victims of the Bali Bombings of 12 October 2002 (see separate table for details of payments).

Determination Number

Determination Date

Details

2004

1 of 2004

16 March 2004

Superannuation Government co-contribution amounts paid to low income earners.

2 of 2004

4 June 2004

Comparable Foreign Payment

- any amount (of lump sum foreign pension payment) paid to a person (or to the person's partner if the person is a member of a couple) to which SSAct section 1228A applies.

Note: Some people (or their partners) receive lump sum foreign pension payments for past periods. Where this occurs the lump sum amount will be treated as a periodical payment for the past period and the amount by which the social security payment amount would have been reduced is a recoverable debt. The lump sum foreign pension amount is not counted in the fortnight of receipt.

3 of 2004

1 July 2004

Compensation payments for North Korean Internment

- one-off payment of $25,000 to veterans who were interned by the North Korean military forces between 27 June 1950 and 19 April 1956, or their surviving partner.

Note: The value of a person's assets is permanently reduced by $25,000, BUT if a person invests the payment, income from the investment is counted under normal income test rules. See note at end of table for more information.

4 of 2004

15 July 2004

Certain lump sum compensation payments made by Centrelink

- these payments compensate Centrelink recipients for loss that they have incurred in circumstances where Centrelink is required to pay compensation on the grounds of legal liability, defective administration, or moral obligation.

5 of 2004

26 July 2004

Sugarcane Farmers' Re-establishment Grants

- ex-gratia payments made by the Commonwealth to eligible sugarcane farmers and cane harvesters who leave the sugarcane industry (announced by the Prime Minister on 29 April 2004).

6 of 2004

22 September 2004

Great Barrier Reef Marine Park Authority Structural Adjustment Package's Employee Assistance of $5,000 for Master fisher licence holders and $3,000 for individual crew members (announced 30 June 2004).

7 of 2004

6 October 2004

A lump sum payment made, to the beneficiary of a market-linked income stream, within 28 days after the end of the product's term. The payment is the residual account balance at the end of the product's term.

8 of 2004

(Note A)

15 December 2004

Tasmanian Child Abuse Payment

Tasmanian Government ex-gratia payment for child abuse suffered by a person while in Tasmanian State care. (Report of the Tasmanian Ombudsman 'Listen to the Children' Review of Claims of Abuse from Adults in State Care as Children).

Determination Number

Determination Date

Details

2005

1 of 2005

(Note A)

13 January 2005

South Australian Fishery Payment

South Australian Government ex-gratia payment to eligible commercial fishery licence holders to exit the River Murray fishery.

2 of 2005

(Note A)

13 January 2005

Queensland Indigenous Reparation Payment

Determination 2 of 2005 revokes Determination 2 of 2003 and makes a new Determination covering the whole period from 1897 to 1986. Under the Indigenous Wages and Savings Reparations Process the Queensland Government offers monetary reparations to persons whose wages and salaries were controlled under the Protections Acts during the period 1897 to 1986.

Refer to Note A

27 June 2005

South Australian Energy Concession Bonus

The South Australian Government pays a lump sum amount to assist certain people with their electricity bills.

Refer to Note A

3 August 2005

F-111 Deseal/Reseal Program announced by the Minister for Veterans' Affairs on 19 August 2005, individuals doing F-111 Deseal/Reseal work or in close proximity to that work in the same hangar will be paid a one-off lump sum 'sorry' payment for exposure. Payment made to an active participant in the F-111 Deseal/Reseal Program who was a serving member or veteran between 1 June 1973 and 28 January 2000; or public servant or civilian contractor between 11 November 1991 and 27 August 1993.

Payment can be made to the estate of a deceased participant if they died after 8 September 2001.

Refer to Note A

13 September 2005

Australian Capital Territory Government's Community Inclusion and Household Debt Pilot Project to people eligible from 23 March 2005. Chief Minister announced commencement on 31 January 2005.

Refer to Note A

8 September 2005

New South Wales Aboriginal Trust Fund Repayment Scheme for payments made from 30 June 2005. Scheme announced 15 December 2004 for wages and other monies paid into trust funds between 1900 and 1968 and never repaid.

Determination Number

Determination Date

Details

2006

Refer to Note A

17 March 2006

Fisheries Adjustment Package (Securing Our Fishing Future) 2005 Workers Assistance Grant. Package announced 23 November 2005. Grant of $3,000 to crew members and $5,000 to skippers announced 14 December. People able to apply from July 2006.

Refer to Note A

28 December 2006, 13 weeks prior to registration of the Secretarial instruments on 29 March 2007

Pastoral Care and Assistance Scheme Anglican Church Diocese of Sydney and ANGLICARE Diocese of Sydney which commenced in July 2005 to assist victims of child abuse or sexual misconduct by a church worker.

2007

Refer to Note A

23 February 2007

Restructuring Grants under the Tobacco Grower Adjustment Assistance Package. Package announced 26 October 2006 to assist tobacco growers in North Queensland, South Queensland and Victoria with a one-off restructuring grant of up to $150,000.

Refer to Note A

25 May 2007

Family Day Care Start Up Payment: a payment (up to $1,500 per recipient) made to a person on behalf of FaCSIA in order to assist that person in meeting the initial costs of setting up their home-based child care business through Family Day Care.

Refer to Note A

7 June 2007

Compensation payments in respect of certain World War II internments:

- one-off, ex-gratia payment of $25,000 received by a person or a person's partner for Australian prisoners of war in Europe during World War II.

Note: The value of a person's assets are permanently reduced by $25,000, BUT if a person invests the payment, the investment is subject to the normal income test deeming rules. See Note at end of table for more information.

Refer to Note A

4 July 2007

One-off compensation payment paid by Aviva Australia to certain people whose social security payments were affected (directly or indirectly) as a result of Aviva Australia incorrectly recording the purchase price of several of their income stream products.

Refer to Note A

27 July 2007

Remote Area Family Day Care Start Up Payment: a payment (up to $5,000 per recipient) made to a person on behalf of FaCSIA to assist potential Family Day Care (FDC) carers to assist with the cost of establishing their home-based FDC business. The payment will only be made to potential FDC carers living on a property in remote and very remote areas.

Refer to Note A

19 September 2007

Queensland Government Redress Scheme: a payment (up to $40,000 per recipient) made by the Queensland Government to people who experienced abuse and neglect as children in Queensland institutions. For full details of this payment see Redress Scheme website.

Determination Number

Determination Date

Details

2008

Refer to Note A

7 March 2008

Exceptional Circumstances Exit Grant (announced on 25 September 2007 by the Prime Minister) payment available is a maximum of $150,000.

Refer to Note A

1 May 2008

Western Australian Government Redress Scheme: a payment (up to $80,000 per recipient) made by the Western Australian Government to people who experienced abuse and/or neglect as children while in State care. For full details of this payment, see WA Redress Scheme website.

Refer to Note A

7 May 2008

Tasmanian Government Stolen Generations of Aboriginal Children ex-gratia payments made to members of the Aboriginal community who were confirmed as members of the stolen generations.

Refer to Note A

1 July 2008

Climate Change Adjustment Program Re-establishment Grant announced in the Budget on 13 May 2008. A component of the Australia's Farming Future Initiative 2008. Payments are made from 1 July 2008 and the maximum value of the grant is $150,000.

Refer to Note A

from 16 December 2008

Murray-Darling Basin Small Block Irrigators Grant announced on 20 September 2008. Part of the Water for the Future plan. Maximum value of the grant is $150,000.

2009

Refer to Note A

from 24 September 2009

DVA Dependant Pension Lump Sum Payment and Closure. Dependant pension cancelled from 22 September 2009.

Refer to Note A

from 23 October 2009

Disability sporting grants for people receiving DSP. Payments made by Australian Paralympic Committee (APC), Australian Commonwealth Games Association (ACGA), Australian national sporting association, including a national sporting organisation (NSO) recognised by the Australian Sports Commission (ASC) using funds provided by the ASC for the purpose of athlete support.

2010

Refer to Note A

from 6 July 2010

Farm Exit Support Grant (maximum $150,000) and the Farm Exit Support Advice and Retraining Grant (maximum $10,000) and the Farm Exit Support Relocation Grant (maximum $10,000). Announced on 5 May 2010 by the Minister for Agriculture, Fisheries and Forestry, a one-off payment to eligible farmers exiting farming for at least 5 years.

Refer to Note A

from 7 July 2010 DEEWR

from 3 August 2010 FaHCSIA

New South Wales Government River Red Gum Structural Adjustment Package announced 2 March 2010. Payment of Special Redundancy Payment of up to $81,360, Training Allowance of up to $10,000 and Relocation Allowance of up to $20,000.

from 23 December 2010 FaHCSIA

from 28 January 2011 DEEWR

Attorney-General's Department, Government of South Australia's ex gratia payments for former residents in South Australian state care.

Eligible applicants to the Scheme can receive ex gratia payments up to a maximum of $50,000.

2012

Refer to Note A

from 16 May 2012 FaHCSIA

from 30 May 2012 DEEWR

from 24 May 2012 DIICCSRTE

One-off lump sum amount from the Officers' Superannuation Fund (OSF) (Commonwealth Bank Officers Superannuation Corporation Pty Limited as trustee) and the Commonwealth Bank of Australia. Payment known as the OSF DB Rectification Project Payment.

Refer to Note A

from 16 May 2012 FaHCSIA

from 30 May 2012 DEEWR

from 24 May 2012 DIICCSRTE

One-off lump sum ex gratia payments of $2,000 paid by the Western Australian Department of Indigenous Affairs under the Stolen Wages Reparation Scheme WA which was announced by the Government of Western Australia on 7 March 2012.

2013

Refer to Note A

from 19 June 2013 FaHCSIA

from 27 June 2013 DEEWR

from 22 June 2013 DIICCSRTE

One-off lump sum Defence Abuse Reparation Payments paid by the Department of Defence under the Defence Abuse Reparation Scheme, which was announced by the Australian Government on 14 March 2013.

Miscellaneous

 

Other individual exempt payments, where people will hold an 8(11) Determination signed by the relevant departmental delegate.

 

Note A: Determinations are now called by a unique name rather than a number.

 

Note: The initial exemption of a lump sum amount from the income test does NOT mean that any on-going income generated by the lump sum is exempt, nor does it mean that the asset the lump sum turns into is exempt. Once the lump sum amount is invested or used to purchase goods or services, the usual income and assets rules will apply. For example, if the lump sum amount is used to buy a car, the car would be counted as an asset under the assets test. If the lump sum amount is spent on a holiday or on bills there would generally be no ongoing income or asset to be assessed. If the lump sum amount is placed in a financial investment (such as a bank account) the funds have then become a financial asset that would be assessable as an asset and subject to the income test deeming rules (refer to SSAct section 9(1) for all the types of financial assets).

 

Act reference: SSAct section 9(1) Financial assets and income streams definitions

 

Detailed list of lump sums exempted to assist victims of Bali bombings of 12 October 2002

The following payments or value of assistance to victims of Bali bombings of 12 October 2002 are exempt lump sums under Determination 5 of 2003:

Assistance required

Assistance offered

Home, vehicle and workplace modifications

Commonwealth, State or Territory Government assistance with home, vehicle and workplace modifications and associated costs to a person injured in the Bali bombings.

Emergency assistance or out of pocket expenses

Commonwealth Government emergency assistance or assistance with out of pocket expenses to a person affected by the Bali bombings.

Red Cross assistance

Assistance from the Australian Red Cross Bali Appeal Fund to a person affected by the Bali bombings or received by another person on behalf of that person.

Travel assistance

Commonwealth Government assistance associated with travel to a person affected by the Bali bombings or received by another person on behalf of that person.

 

Act reference: SSAct section 8(11) An amount received by a person is an exempt lump sum if..., section 9(1) Financial assets and income streams definitions, section 1228A Comparable foreign payment debt recovery

Policy reference: SS Guide 1.1.H.70 Home equity conversion agreement, 4.3.2.30 Income Exempt from Assessment - Legislated, 4.3.2.31 Income Exempt from Assessment - Specifically Approved, 4.3.5.10 How Income from DVA is Assessed, 4.4.1.30 Scope of Deeming, 4.6.2.10 General Provisions for Exempt Assets

_______________________________________________________

Last reviewed: 11 November 2013


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