Post by Banjo on Feb 18, 2012 15:52:26 GMT 7
CENTRELINK PAYMENTS AND GARNISHEES
The issue has arisen recently of the degree to which Centrelink payments are protected in the hands of a pensioner or benefit recipient.
The starting point is that Centrelink benefits are inalienable: that is, they cannot be sold or transferred to another person (1). If a person becomes bankrupt, some types of Centrelink income such as family payments are not counted as income (2). Income as such does not vest in a trustee in bankruptcy (3), and in any case the income of a person principally dependent on Centrelink benefits is well below the level at which a bankrupt is required to make a contribution from income (4).
If a debtor is not bankrupt, in some circumstances an earnings appropriation order, referred to in other states as a garnishment of wages, can be made (5). Earnings are defined to exclude a pension, benefit or allowance payable to a person under the Social Security Act 1991 or the Veteran’s entitlement Act 1986 (6).
Accordingly, a Centrelink payment or entitlement is well protected on its way to a person. However, once a person receives a Centrelink payment and it is in their bank account, it loses its protected status conferred by the Act.
Despite this general principle, the Social Security (Administration) Act gives some protection to Centrelink payments that have been paid into a person’s bank account. If a court makes a debt appropriation order (7) in relation to money in the person’s account, then a portion of the account is protected. The protected portion is described as ‘the saved amount’ and is calculated by adding the Centrelink payments to the person put into the account in the last four weeks, and subtracting the amount withdrawn from the account in the same four week period (8).
To put it more simply, a saved amount is the difference between Centrelink benefits paid into an account, and the amount the person withdraws from the account. The saved amount from the last four weeks is protected, but saved amounts from before that time are not protected.
Clients who have Centrelink payments going into an account, and who fear that a court may make an order seeking to take that money may wish to take the saved amount principle into account in their planning.
NOTES:
1. Social Security (Administration) Act 1999 (Commonwealth) s. 60
2. Bankruptcy Act 1966 (Commonwealth) s. 139K (b) (ii) (A) – (definition of income)
3. Re Gillies; Ex parte Official Trustee in Bankruptcy v Gillies 115 ALR 631
4. Bankruptcy Act s. 139P
5. Civil Judgments Enforcement Act 2004 (WA) s. 35
6. Civil Judgments Enforcement Act s. 4 (h)
7. Civil Judgments Enforcement Act s. 45
8. Social Security (Administration) Act s. 62
Ian Macdonald
www.financialcounsellors.org/counsellors/documents/CENTRELINKPAYMENTSANDGARNISHEES_000.pdf
The issue has arisen recently of the degree to which Centrelink payments are protected in the hands of a pensioner or benefit recipient.
The starting point is that Centrelink benefits are inalienable: that is, they cannot be sold or transferred to another person (1). If a person becomes bankrupt, some types of Centrelink income such as family payments are not counted as income (2). Income as such does not vest in a trustee in bankruptcy (3), and in any case the income of a person principally dependent on Centrelink benefits is well below the level at which a bankrupt is required to make a contribution from income (4).
If a debtor is not bankrupt, in some circumstances an earnings appropriation order, referred to in other states as a garnishment of wages, can be made (5). Earnings are defined to exclude a pension, benefit or allowance payable to a person under the Social Security Act 1991 or the Veteran’s entitlement Act 1986 (6).
Accordingly, a Centrelink payment or entitlement is well protected on its way to a person. However, once a person receives a Centrelink payment and it is in their bank account, it loses its protected status conferred by the Act.
Despite this general principle, the Social Security (Administration) Act gives some protection to Centrelink payments that have been paid into a person’s bank account. If a court makes a debt appropriation order (7) in relation to money in the person’s account, then a portion of the account is protected. The protected portion is described as ‘the saved amount’ and is calculated by adding the Centrelink payments to the person put into the account in the last four weeks, and subtracting the amount withdrawn from the account in the same four week period (8).
To put it more simply, a saved amount is the difference between Centrelink benefits paid into an account, and the amount the person withdraws from the account. The saved amount from the last four weeks is protected, but saved amounts from before that time are not protected.
Clients who have Centrelink payments going into an account, and who fear that a court may make an order seeking to take that money may wish to take the saved amount principle into account in their planning.
NOTES:
1. Social Security (Administration) Act 1999 (Commonwealth) s. 60
2. Bankruptcy Act 1966 (Commonwealth) s. 139K (b) (ii) (A) – (definition of income)
3. Re Gillies; Ex parte Official Trustee in Bankruptcy v Gillies 115 ALR 631
4. Bankruptcy Act s. 139P
5. Civil Judgments Enforcement Act 2004 (WA) s. 35
6. Civil Judgments Enforcement Act s. 4 (h)
7. Civil Judgments Enforcement Act s. 45
8. Social Security (Administration) Act s. 62
Ian Macdonald
www.financialcounsellors.org/counsellors/documents/CENTRELINKPAYMENTSANDGARNISHEES_000.pdf