The Law Handbook 2024

Chapter 5.1: Dealing with social security 337 Incentive Allowance can be paid for up to 26 weeks for persons with unlimited portability. The portability period can be extended only for: • a serious accident involving the person or a family member of the person in the country in which the person is located; • a serious illness of the person or a family member of the person in the country in which the person is located; • hospitalisation of the person or a family member in the country in which the person is located; • death of a family member in the country in which the person is located; • custody proceedings in the country in which the person is located; • a legal requirement to attend court in the country in which the person is located because of criminal proceedings; • a serious crime committed against the person or a family member in the country in which the person is located; • a natural disaster in the country in which the person is located; • political/social unrest or war in the country in which the person is located; or • industrial action in the country in which the person is located. Portability is calculated using the ‘portability rate calculator’ that is contained in section 1221 of the SS Act. Calculating portability is a complex process. If a person is disputing the rate at which their payment is calculated while they are overseas, they should consider obtaining legal advice. Compensation and damages payments Compensation payments are treated differently under social security law. In section 17(2) of the SS Act, ‘compensation’ is defined for social security purposes. For a payment to be ‘compensation’ for social security purposes, the payment must include a component for economic loss. Centrelink examines settlements and decides whether this is the case. Otherwise, such payments are generally treated as ordinary income. Most Centrelink payments are ‘compensation affected’. A person who receives compensation may have their payment affected. This depends on whether they receive compensation in the form of a periodic payment, or as a lump sum settlement, or due to a court judgment. A person who is receiving periodic payments of compensation for a loss of income will have their ‘compensation-affected payment’ reduced by the amount of those payments, ordinarily on a dollar- for-dollar basis. Where a person recovers compensation in a lump sum, the person is precluded from receiving a social security payment for a period that is directly related to the amount of compensation or damages. Where a person has been receiving a compensation- affected payment and later receives compensation covering the same period, the person is liable to repay the social security payments. Usually, Centrelink will recover the social security money paid to a person from the employer or insurance company. The amount that Centrelink is entitled to recover depends on a formula set out in the SS Act. This is a complex area and any specific queries should be taken to the solicitor who is handling the damages or compensation claim. If Centrelink decides that there are special circumstances relating to the person receiving compensation, it can treat some or all of the compensation paid as not having been paid. This decreases the preclusion period or the amount to be repaid to Centrelink, or both. Income tax and Centrelink payments Some Centrelink payments form part of the recipient’s taxable income. These include: • ABSTUDY Living Allowance, if the person is over 16 years old; • Age Pension; • Austudy ; • Bereavement Lump-sum Benefit; • Carer Payment, if the carer or person being cared for is of Age Pension age; • Dad and Partner Pay; • Disability Support Pension, if the person is of Age Pension age; • Education Entry Payment;