This Bills Digest replaces a preliminary Digest published on 9 February 2026 to assist in early consideration of the Bill.

Key points

• The Social Security and Other Legislation Amendment (Technical Changes No. 1) Bill 2026 (the Bill) amends child support and social security law to:
  • align child support legislation with Services Australia’s long-standing practices in relation to the start date of child support periods and eligibility for child support for parents/carers with less than 35% of the care of a child
  • retrospectively apply the child support amendments and validate previously unlawful decisions
  • provide legislative authority and a framework for urgent payments to social security recipients outside standard fortnightly payment instalment periods
  • clarify the operation of employment income assessment rules for social security payments in relation to a partner’s employment income and for when rates are calculated following a payment suspension or claim for a new payment.
• The Commonwealth Ombudsman investigated 2 of the 3 child support issues addressed in the Bill. In relation to 1 issue, the Ombudsman found Services Australia had knowingly failed to comply with child support legislation for 6 years.
• The Ombudsman did not investigate 1 of the child support issues relating to the start date of child support assessments. It is unclear how long government agencies have been aware that start date decisions were being made unlawfully, and what the impact on families has been.
• At the time of writing, the Bill had not been referred to or reported on by any parliamentary committees.

Introductory Info

Date of introduction: 5 February 2026
House introduced in: House of Representatives
Portfolio: Social Services
Commencement: Schedules 1 and 3 commence the day after Royal Assent. Schedule 2 commences on the earlier of proclamation or 12 months after Royal Assent.

Purpose of the Bill

The purpose of the Social Security and Other Legislation Amendment (Technical Changes No. 1) Bill 2026 (the Bill) is to amend the Child Support (Assessment) Act 1989 (the CSA Act), the Social Security Act 1991 (the SS Act), and the Social Security (Administration) Act 1999 (the SS Admin Act) to:

• align child support legislation with Services Australia’s long-standing practices in relation to the start date of child support periods and eligibility for child support for parents/carers with less than 35% of the care of a child
• retrospectively apply the child support amendments and validate previously unlawful decisions
• provide legislative authority and a framework for the Secretary of the Department of Social Services (DSS) to provide urgent payments to social security recipients outside standard fortnightly payment instalment periods
• clarify the operation of employment income assessment rules for social security payments in relation to:
  • how the employment income of a person’s partner is attributed for a particular period
  • preserving employment income attribution to a particular period so that an individual’s rate of payment can be calculated later (relevant to individuals who may have had their payment suspended or where a person claims a new payment).

The amendments were not previously announced but the DSS Secretary stated in November 2025 that legislation would be prioritised in early 2026 to address concerns raised by the Commonwealth Ombudsman around unintended consequences of child support amendments.

Structure of the Bill

The Bill comprises 3 Schedules:

• Schedule 1 – Child Support
• Schedule 2 – Urgent Payments
• Schedule 3 – Employment income attribution rules.

Background

Bill forms part of a series responding to unlawful practices

The Bill is the latest in a series of legislative responses to identified cases where government agencies have been making unlawful decisions. In most—but not all—cases, the agencies have unknowingly acted contrary to legislative provisions.

The most significant example is income apportionment. Income apportionment was an unlawful method used to calculate social security debts for payment recipients with employment income prior to December 2020 (p. 4). The use of the method dates back more than 30 years and could have affected debts raised against more than 3 million people totalling $4.4 billion (pp. 1–3). The Social Security and Other Legislation Amendment (Technical Changes No. 2) Act 2025—passed by the Parliament in December 2025—retrospectively validated the use of the method and established a Resolution Scheme to make payments to affected individuals. Services Australia and DSS first became aware of the issue in late 2020 (p. 6).

The Education Legislation Amendment (Integrity and Other Measures) Act 2025—passed by the Parliament in November 2025—retrospectively validated unlawful decisions around the date of effect for Child Care Subsidy entitlements (dating back to 2018). The Department of Education’s ICT system was applying incorrect start dates (dates that did not align with family assistance law) resulting in underpayments or overpayments of Child Care Subsidy (pp.16 – 17). It is unclear how many people were affected by this issue.

Another high-profile instance is the Department of Employment and Workplace Relations’ (DEWR) and Services Australia’s unlawful cancellation of income support payments under the Targeted Compliance Framework. DEWR commissioned a legal review as well as a review of its ICT system. The government has announced changes in policy and practices to address the issues, but no legislative changes have been proposed.

Legal Compliance and Remediation Program

In April 2025, Services Australia established the Legal Compliance and Remediation Program to ‘centrally coordinate reporting and escalation of all matters involving legal non-compliance in the administration of payments and services delivered across all Agency programs’ (Legal Compliance and Remediation Program—Playbook, p. 5). As at November 2025, the agency had registered 144 issues including those described above. Of this list, 16 issues were identified as requiring legislative change ‘to provide clarity’—4 of these practices had ceased and 12 were continuing (pp. 2–3).

The Bill addresses 2 of the issues listed as matters requiring legislative changes—child support entitlements for parents with less than 35% care and the legislative basis for urgent payments (p. 88). The other amendments in the Bill are not linked to issues identified through this Services Australia program.

Child support

The Child Support Scheme was introduced in 1988 by the Hawke Government. The Scheme is intended to ensure children receive the proper level of support from their parents. The Scheme assesses amounts of child support in accordance with a formula and collects and enforces these assessments, child support agreements and court orders. In 2024–25, around $4.3 billion in child support was expected to be transferred between parents (pp. 83–84). Around $2.0 billion was collected and transferred through Services Australia while $2.3 billion was assessed to be paid by parents through private arrangements (pp. 83–84). As at September 2025, there were around 627,185 active child support cases involving 1.1 million parents or carers and around 960,000 children (p. 1).

The CSA Act sets out how child support assessments are to be conducted by the Child Support Registrar (the CEO of Services Australia). Child support assessments determine the amounts of child support that might be payable by one parent to another according to a formula. Other avenues for determining child support payments are child support agreements and court orders.

The assessment formula (p. 11):

• assesses the income of both parents
• deducts an amount needed for self-support
• determines the percentage of care each parent has for each child and what costs are met through that direct care—if a parent’s share of their combined income remains positive, after adjusting for the share of costs met through direct care, then they are considered the payer
• determines the costs of each child based on the level of the parents’ combined income and the annual rate of child support payable.

Under this formula, as amended in 2008, a parent with more than 65% care of the child is generally not liable to pay child support (p. 11).

The assessment normally uses income information reported in the parent’s most recent tax return. Where a parent has not lodged a tax return, the Registrar can draw on other available income information—from within Services Australia (relating to income support payments) or information provided by the parents, government agencies, employers, or other sources (p. 13).

Annual rates payable under an assessment can be varied at any time to reflect changes in financial circumstances, care arrangements or other events. The Registrar can make changes independently and parents can apply for a change to an assessment in certain circumstances.

DSS statement on an anomaly in the law

On 26 November 2025, the Secretary of DSS, Michael Lye, released a statement noting that the Commonwealth Ombudsman has raised concerns about previous amendments to child support legislation and that the Australian Government would prioritise legislative amendments in 2026 to address the concerns. The prior amendments had an unintended consequence in that a ‘small number of parents with little to no care of their child may be technically eligible for child support under an anomaly in the law’. The Secretary stated: ‘It is a longstanding principle of the child support scheme that parents with less than 35% care of a child should not be eligible for child support.’

Ombudsman report

In January 2026, the Commonwealth Ombudsman published the report, Following the law is not optional: An investigation into the actions of Services Australia and the Department of Social Services to address an ongoing issue of non-compliance with the law.

The Ombudsman’s investigation found that in February 2019 (p. 15), Services Australia had identified an issue where in some circumstances ‘one parent providing less than 35% care of a child is legally entitled to receive some child support from the other parent but is not paid it (or is not paid the correct amount)’ (p. 4). DSS was made aware of the issue by Services Australia in February 2020. The issue identified by Services Australia arose from amendments made by the Family Assistance and Child Support Legislation Amendment (Protecting Children) Act 2018 (Protecting Children Act) which commenced on 1 July 2018.

While being aware that the CSA Act as amended provided a legal entitlement to child support for some parents/carers with less than 35% care, Services Australia did not apply the law. Services Australia did not comply with the CSA Act ‘due to concerns that doing so would result in child support outcomes that customers and stakeholders would likely perceive as “unfair and nonsensical”’ (pp. 5–6).

DSS advised Services Australia in April 2025 of a further circumstance where individuals with less than 35% care could be paid child support: where care was shared by 3 or more parties (p. 13). This issue arose from amendments made by the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act2006 (New Formula Act) which commenced in July 2008.

Between 2019 and 2025, there were 4 reported attempts by government agencies to develop legislative amendments to correct the issue, but no Bill was introduced to Parliament (p. 18). References to the issue were contained in submissions to the Minister for Social Services in 2021, 2024 and 2025 (p. 18). Services Australia notified the Ombudsman of the issue in June 2025. Services Australia did not brief the Minister for Government Services about its decision to not apply the law until 30 September 2025, and DSS briefed the Minister for Social Services in November 2025 (p. 25).

The Ombudsman’s report stated:

It is not acceptable that an agency knows for years that it is not following the law and chooses to continue to not follow the law. The rule of law and trust in government are dependent on agencies complying with the law. If the intention is that the law be retrospectively amended to correct an apparent defect in the law, that intention can be publicly announced, so that at least there is transparency about the decision to not comply with the law pending that retrospective amendment. (p. 4)

The Ombudsman found ‘the lack of action by the agencies has only served to exacerbate the issue’ (p. 6).

The less than 35% care issue

The child support formula works out what each parent should contribute to the costs of a child (or children) based on each parent’s share of their combined income, less their contribution to the costs of the child provided directly through care. As noted above, the child support formula was designed with the intent that a parent or carer would not be entitled to be paid any child support if their percentage of the care of a child was less than 35%. Prior to March 2022, DSS’ Child Support Guide stated that to be entitled to receive child support, a parent/carer must have at least 35% of the care of a child. The Ombudsman’s report stated that DSS amended the Guide on 22 March 2022 (p. 15).  

The care percentage is the proportion of the care of the child the person is likely to have over a care period (usually 12 months). This is usually worked out by the number of nights in the care period the child is likely to be, or has been, in the care of the parent/carer. For example, a parent who has care of the child for 260 nights in a year (5 nights a week), would have a care percentage of 72%. Where there is doubt about care arrangements, other factors may be considered by the Registrar such as the person’s responsibility for major decisions affecting the child or how they meet the child’s accommodation, food and clothing needs.

The 2018 Protecting Children Act made a wide range of changes to child support law, mostly in response to recommendations made by a House of Representatives Standing Committee on Social Policy and Legal Affairs Committee’s 2015 report. The Act included amendments to date of effect rules, including when a change in care percentages would be recognised if parents and carers have delayed notifying the Registrar of the change (items 175–183 of Schedule 1). Under the amendments, if it takes 28 days or more for a parent to notify Services Australia of a change in care, then any decreased care percentage would be applied from the date of the care change. Increased care percentages would continue to be applied from the date of notification. The intended effect of the changes was to limit the backdating of beneficial child support payment amounts where the responsible parent had not notified Services Australia within a reasonable timeframe (p. 44).

The change has resulted in gaps between when a decreased care percentage is reflected in a child support assessment, and when the increased care percentage is reflected in the same assessment. The Ombudsman found that this change has meant:

Under the legislation, in some instances parents with less than 35% care during the gap period may be entitled to child support. This is because neither parent is recognised during this period as having a care percentage of more than 65% and so neither parent’s obligation to pay to child support is removed under s 40C(b) of the Assessment Act [CSA Act] (pp. 12–13).

Section 40C of the CSA Act provides that the amount a parent has to pay in child support is nil if their percentage of care is more than 65% (and if the formula at section 35 or 37 is used—where the income of both parents is assessed and there is no non-parent carer).

The Ombudsman included Figure 1 to demonstrate the impact of the ‘gap period’ where neither parent has an assessed care percentage of more than 65%. In the depicted scenario, during the gap period, Parent B has increased their care percentage to 85% but would be required to pay child support to Parent A, whose care percentage has reduced to 15%.

Figure 1  Illustration of the potential impact of the gap period on assessed care percentages

Source: Commonwealth Ombudsman, Following the law is not optional, (Canberra: Commonwealth Ombudsman, January 2026), p. 13.

A separate unintended scenario was identified by DSS in 2025 and has existed since the New Formula Act commenced in 2008 (p. 13). Here, the issue is where care is shared between 3 or more parties (such as the 2 parents and a grandparent). DSS identified that, in some cases, the third party is an ineligible carer for the purposes of the child support assessment, but the care they provide reduces the care percentages of the parents such that neither has more than 65% care (p. 8). Section 40C of the CSA Act does not prevent child support being payable to a parent with less than 35% care by the other parent.

Services Australia did not comply with the law when making some child support assessments

Services Australia has not complied with the CSA Act in making child support assessments affected by the 2 scenarios set out in the previous section. Services Australia became aware of the gap period issue in 2019 but has not complied with the law (pp. 4–5). The agency has instead made decisions in line with the policy of a parent with less than 35% care not being entitled to child support.

Services Australia advised DSS of the issue in 2020. DSS has responsibility for child support policy and legislation. While DSS advised Services Australia to follow the law, the Ombudsman found that DSS knew or should have known that Services Australia continued to not do so (p. 5).

In regards to the gap period issue, the Explanatory Memorandum states:

As the effect of the 2018 amendments was not initially appreciated, the changes have not been given effect in system implementation. That is, the Registrar’s decisions have generally proceeded on the basis of the policy intent, with a parent with less than 35% care not assessed as being entitled to child support in the gap period scenario. (p. 9)

Regarding the third-party scenario, the Explanatory Memorandum states: ‘These rare cases could have occurred since 1 July 2008, though they were not recognised and were not given this effect in administration of the Assessment Act’ (p. 8).

How many people might have been affected

Services Australia advised the Commonwealth Ombudsman that as at 1 March 2024, around 16,600 parents in 10,000 child support cases could have been affected by the gap period scenario (p. 13). If these cases were recalculated in accordance with the law, they would result in an average debt (child support owed) per case of around $560.

Services Australia advised that it was difficult to determine how many cases might have been affected by the third-party scenario with 4 cases identified for the period 1 January 2023 to 30 September 2024 (p. 13). If these cases had been recalculated in accordance with the law, all 4 would have resulted in debts ranging from $60 to more than $10,000 (p. 13).

Separate issue relating to unlawful decisions around start dates

Part 1 of Schedule 1 of the Bill addresses a separate issue where some of Services Australia’s decisions around child support period start dates have not complied with the CSA Act. This issue was not discussed in the Ombudsman’s 2026 report, and it is unclear how long Services Australia and DSS have been aware of these unlawful decisions.

Subsection 7A(3) of the CSA Act currently provides that a child support period will end at the end of a calendar month in which the Registrar makes a child support assessment when a new tax figure is available (via an income tax assessment made by the Australian Taxation Office). The new child support assessment will apply at the start of the new child support period. Paragraph 7A(2)(d) of the CSA Act provides a child support period will start ‘immediately after the end of the preceding child support period that relates to child support payable for the child’. These provisions provide that when the Registrar receives information regarding a parent’s tax assessment and makes a new child support assessment, the new child support assessment should apply from the first day of the next calendar month.

According to the Explanatory Memorandum:

Where tax assessments are available to the Registrar in the second half of a calendar month, it has been a long-standing practice for the Registrar to immediately process these assessments but to make a determination that the first day of the child support period for the new assessment is the first day, not of the next month, but the first day of the month after that. That is, a tax assessment received on 20 September would generally result in the Registrar issuing a new assessment shortly after receipt, but for a child support period commencing on 1 November, rather than 1 October. This practice was adopted to give parents sufficient notice to adjust to their new assessment, whilst not unduly delaying the making of a new assessment. (pp. 6–7)

This means it has been ‘a long-standing practice’ for the Registrar to not comply with the start date provisions at section 7A of the CSA Act. This is despite subsection 7A(5) providing a clear example of when child support periods should end and start if a new child support assessment is made towards the end of a month based on a new tax assessment:

• On 20 October 2000, the Registrar makes a new administrative assessment based on an assessment under the income tax law of Peter’s taxable income for the 1999–2000 year of income (as required by section 34A). The first child support period starts on 8 June 2000 and ends at the end of 31 October 2000, and the second starts on 1 November 2000.

Unlike the 2 other unlawful practices investigated by the Commonwealth Ombudsman, this issue has not been independently reviewed, and it is unclear what the scale of the impact has been.

Urgent payments

Services Australia’s Legal Compliance and Remediation Program identified urgent payments as being ‘inconsistent with the payment provisions under social security law’ [p. 6].

Urgent payments are the early delivery of part of a person’s social security entitlement, with the remainder of their entitlement paid on their normal payment delivery date. Most social security payments are paid in fortnightly instalments—the entitlement to a payment is accrued daily and paid in arrears. According to the Explanatory Memorandum:

Urgent payments offer more immediate, flexible financial support for people experiencing exceptional and unforeseen circumstances. Further, these payments are not subject to the more stringent criteria or conditions of other hardship payments. (p. 20)

Other special arrangements for people in exceptional and unforeseen circumstances include advance payments and hardship advance payments (which are only paid in certain circumstances and are gradually paid off through reductions in later payment instalments); and the separate Crisis Payment. These payments have very specific eligibility criteria.

The Legal Compliance and Remediation Program has also identified that the automation of advance payments may not be permitted under social security law [p. 7]. The Bill does not include amendments to address issues with advance payments.

The proposed amendments in Schedule 2 of the Bill are intended to provide a legislative basis for urgent payments.

Employment income attribution

Schedule 3 of the Bill amends the employment income attribution rules in the SS Act. One of the main purposes of the amendments is to clarify that the employment income of a social security recipient’s partner should be attributed to periods of time (an ‘assessment period’) in the same way as a social security recipient’s employment income. Currently, the SS Act provisions setting out employment income attribution do not specifically refer to the partners of social security recipients. The employment income of partners who are not in receipt of a social security payment themselves may not be covered by the provisions.

It is unclear how Services Australia is currently attributing the employment income of partners. The Explanatory Memorandum states ‘the policy intent is that the attribution rules should also apply to assess employment income paid to the social security recipient’s partner, for the purposes of income testing that recipient’ (pp. 41–42).

Policy position of non-government parties/independents

Shadow Minister for the Environment Angie Bell stated that the Coalition did not oppose passage of the Bill. Ms Bell called for ‘robust safeguards’ to ensure the urgent payment amendments did not increase financial stress.

Independent MP Zali Steggall described the Bill as technical and not harmful but criticised the Government for not making broader reforms to the child support system.

Key issues and provisions

Schedule 1—Child support

Schedule 1 of the Bill addresses the 3 child support issues set out in the background. The proposed amendments will align the CSA Act with the policy intent and practices of Services Australia in administering the Child Support Scheme. The amendments will retrospectively validate the actions and decisions by the Child Support Registrar which did not align with the CSA Act provisions prior to commencement of the proposed amendments.

Unlike the recent retrospective validation of unlawful Child Care Subsidy decisions, the Bill does not include a provision making the Commonwealth liable to pay compensation to any person if the retrospective application of amendments result ‘in the acquisition of property from a person otherwise than on just terms and the acquisition would be invalid because of paragraph 51(xxxi) of the Constitution’ (section 37 of Schedule 2, Education Legislation Amendment (Integrity and Other Measures) Act 2025). And unlike the retrospective validation of income apportionment, there are no proposals for resolution payments to be made to affected individuals.

Child support periods

Item 2 repeals and substitutes paragraph 7A(3)(b) of the CSA Act setting out that if the Registrar must make a new child support assessment because a new tax figure is available (as required by section 34A), then the end of the child support period will depend on when the new assessment is made:

• if the child support assessment is made on or before the 15th day of a calendar month, then the child support period ends at the end of that calendar month
• if the child support assessment is made after the 15th day of a calendar month, then the child support period ends at the end of the calendar month following the month in which the Registrar makes the assessment.

Item 3 adds new examples of when child support periods end, at the end of subsection 7A(3). Item 4 repeals the existing examples at subsections 7A(4)–(8), including the example at subsection 7A(5) which clearly demonstrated that Services Australia’s ‘long-standing’ practice of delaying child support period end and start dates was unlawful.

Item 5 repeals and substitutes subsection 34A(2) to clarify when a child support period starts when the Registrar makes a new child support assessment based on new tax figures. The period will start on the first day of the next month if the new assessment is made on or before the 15th day of a calendar month. If the assessment is made after the 15th day of a calendar month, then the new period will start on the first day after the end of the calendar month following the month in which the assessment is made.

The amendments provide that if, for example, the Registrar receives new tax assessment information for a parent and makes a new child support assessment on 20 October, then the current child support period continues until 30 November, and the new assessment applies from a period starting 1 December.

Items 8–10 are application and validation provisions. While the amendments apply from commencement, the validation provisions provide that earlier decisions by the Registrar which align with the proposed amendments are not to be taken as invalid or ineffective. Subitem 10(6) provides that the validation provisions do not affect any parties’ rights or liabilities from determined court proceedings.

No entitlement to child support for those with less than 35% care

As explained in the ‘Background’ section above, section 40C of the CSA Act provides that the amount a parent has to pay in child support is nil if their percentage of care is more than 65% (and if the formula at section 35 or 37 is used—where the income of both parents is assessed and there is no non-parent carer).

Item 13–15 amend section 40C so that a parent’s rate of child support is nil if the other parent’s percentage of care is less than 35% (where either the formula at section 35 or 37 is used to work out the rate of child support).

The proposed amendments do not alter the date of effect rules and could still result in a gap period where the total care percentages of the parents do not equal 100%. However, the amendments ensure that parents with less than 35% care will not receive any child support.

Item 16 sets out application provisions, including that the proposed amendments apply to child support assessments made or amended on or after 1 July 2008. However, under subitem 16(2), the amendments do not apply to assessments made or amended before commencement which correctly applied section 40C (where a parent with less than 35% care was assessed as eligible to be paid child support). This is to ensure the retrospective amendments do not invalidate previous, lawful, assessments. However, under subitem 16(3) if an objection to, or an ART review of, such an assessment is decided after commencement, the amendments will be applied by the decision maker. The amendments do not affect rights or liabilities arising from finalised court proceedings.

Item 17 retrospectively validates decisions which determined a nil rate of child support for a parent with less than 35% care.

Schedule 2—Urgent payments

Schedule 2 provides a legislative framework for the payment of urgent payments. As noted in the ‘Background’ section, the Legal Compliance and Remediation Program has identified that urgent payments are ‘inconsistent with the payment provisions under social security law’ (p. 6).

Section 43 of the SS Admin Act sets out how periodic social security payments are to be paid in arrears and by instalments. The section includes provision for the DSS Secretary to pay some groups on a weekly basis rather than the typical fortnightly basis—these groups are to be specified in a legislative instrument. However, the section does not provide a legislative basis for or set conditions for the payment of urgent payments.

It is unclear when government agencies became aware that there was no clear legislative basis for making urgent payments.

Rules for making urgent payments

Item 9 of Schedule 2 repeals subsections 43(3E) and (3F) of the SS Admin Act and substitutes subsections 43(3DA)–(3F) to establish the power of the Secretary to make urgent payments, conditions for making these payments and the process for determining amounts. Individuals receiving weekly instalments of social security payments will be ineligible for urgent payments. Those on weekly payment arrangements who require an urgent payment can request to revert to a fortnightly arrangement and then request an urgent payment (p. 25).

Under new subsection 43(3DB), individuals ‘experiencing exceptional and unforeseen circumstances’ can request an urgent payment of between $20–$200. These circumstances are not defined and there is no requirement for individuals to prove their circumstances. The Secretary must determine the person is to be paid the amount if:

• they have not been paid an urgent payment on the day the person makes the request and
• the amount calculated under subsections 43(3DC) and (3DD) is more than $20.

The amount of the urgent payment is worked out under subsections 43(3DC) and (3DD) is the lesser of:

• the requested amount and
• 50% of the person’s accrued entitlement for the period up to and including the day the request is made (after any required deductions such as debt repayments) minus any other urgent payments made in the instalment period.

The Explanatory Memorandum provides an example calculation (p. 30).

Item 10 inserts new section 43A, which provides that if a person has received 10 urgent payments within a 90-day period, they must discuss their circumstances with Services Australia before they can request another urgent payment. If they do not contact Services Australia to discuss their circumstances, then they will have to wait 90 days from the day the 10th urgent payment was made before they can make another request. The Explanatory Memorandum states the purpose of this restriction is to provide an opportunity to ‘identify whether the person faces particular risks and explore other personalised alternative supports that may assist them through their exceptional and unforeseen circumstances’ (p. 26).

The current policy guidelines for urgent payments state that an individual can only receive 2 such payments in a 12 month period, with exceptions in special circumstances.

Treatment of urgent and weekly payments for deductions and income management

New subsection 43(3E) provides that for the purposes of social security law, all the payments made to a person in respect of an instalment period (including any urgent or weekly payments) are to be taken as a single instalment of their periodic payment. New subsection 43(3F) provides an exception to this rule so that weekly payments are considered as separate instalments for the purposes of:

• section 61 of the SS Admin Act (recipient requests deductions from their payment instalments be paid to the ATO)
• section 61A (recipient requests deductions from their payment instalments be paid to a business or organisation)
• enhanced income management (Part 3AA of Division 3) and income management (Part 3B of Division 5) and
• section 238 (deductions from instalments to be paid to the ATO or the Child Support Registrar).

Urgent payments are to be treated as separate instalments for the purposes of enhanced income management and income management (but not for the purposes of requested and required deductions).

Social security recipients subject to enhanced income management and income management have a portion of their payment instalments restricted in how they can be spent. The amendments ensure that these restrictions apply to weekly and urgent payments. For example, an individual subject to enhanced income management may have 70% of their payment instalments allocated to a SmartCard which can only be used at certain merchants, with 30% of their payment able to be used without restriction. The same percentage of any weekly or urgent payments will be allocated to the person’s SmartCard account.

More than 80% of people subject to income management identify as Indigenous. Urgent payments are disproportionately accessed by Aboriginal and Torres Strait Islander recipients—around 45% of the 440,000 urgent payment recipients in 2024–25 were Aboriginal and Torres Strait Islander peoples (while only 6% of all income recipients identify as Aboriginal and/or Torres Strait Islander) (p. 20).

Schedule 3—Employment income attribution rules

Schedule 3 clarifies the operation of the employment income assessment rules in the SS Act with regard to:

• how employment income of a person’s partner is attributed for a particular period
• preserving employment income attribution to a particular period so that an individual’s rate of payment can be calculated later (relevant to individuals who may have had their payment suspended or where a person claims a new payment).

The proposed amendments apply from commencement, not retrospectively.

Employment income assessment

The way employment income is assessed for the social security income test changed from December 2020. For background information on the changes and how employment income is attributed across employment and assessment periods, see the Bills Digest for the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020.

Under the social security income test, a person is taken to receive employment income over a period known as the assessment period which starts on the first day of the payment instalment period in which they were paid. The assessment period duration is equal to the number of days in the employment period—the period for which the employment income has been paid for (for example, a week or a fortnight of work). For each day in the assessment period, the person is taken to have received an amount of employment income worked out by dividing the total amount of employment income from that employer by the number of days in the assessment period.

Where a person’s employment income is taken to have been paid during only part of a particular instalment period, the person is taken to receive on each day of that instalment period an amount worked out by dividing the portion of their employment income attributed to that instalment period divided by the number of days in the instalment period. An assessment period may extend across instalment periods, so part of the person’s employment income from 1 pay day is assessed in multiple payment instalment periods.

Partner income

Currently, the SS Act provisions setting out employment income attribution do not specifically refer to the partners of social security recipients. Partners who are not in receipt of a payment may not be covered by the provisions. The rate calculator references to partner income in other sections of the SS Act are to the partner’s ordinary income but do not specify how any employment income should be assessed for any particular instalment period.

The proposed amendments add in specific references to the employment income of a recipient’s partner. For example, item 1 of Schedule 3 repeals and substitutes subsection 1073A(1) of the SS Act to provide that the employment income attribution rules apply to the person whose social security rate is being worked out or to employment income paid to their partner. Other amendments make clear that a partner’s employment income is not to be taken into account on any day in an assessment or instalment period on which they are not the recipient’s partner (for example, item 8 inserts new subsection 1073A(4A)).

Attributed income period

Item 27 repeals and substitutes subsections 1073BAB(1) and (2) to clarify that employment income attributed to a particular period (an assessment period), will remain attributed to that period if, during the relevant assessment period:

• a person ceases to receive a social security payment (through a suspension, employment income nil rate period, or cancellation)
• and then starts to receive a social security payment (whether the same type of payment or a new type).

This rectifies an issue where the current attribution provisions only cover situations where a person claims a new payment during an assessment period, not where their payment has only temporarily ceased.