4.3.9.50 Income from Gifts, Legacies, Royalties & Native Title Claims

Summary

This topic provides information on income from:

  • gifts,
  • legacies,
  • royalties paid to Indigenous people,
  • payments to Indigenous communities, and
  • payments to Indigenous individuals.

Act reference: SSAct section 8(1)-'income'

Gifts

The following table shows how different gift situations are assessed as income for social security purposes.

If the gift is … Then it…
a one-off payment, IS NOT treated as income.

received regularly from an immediate family member,

Example: Brother, sister, mother, father, son or daughter.

IS NOT treated as income.

received regularly from another source,

Example: A firm, union or friendly society.

IS treated as income.

Note: Prior to 1 July 2017, gifts received regularly from an immediate family member were reduced to a fortnightly equivalent and treated as income for benefit purposes.

Legacies

Amounts received by way of a legacy or inheritance is NOT treated as income whether received as a lump sum or by instalments.

Explanation: All payments of a legacy are considered to be one-time, lump sum payments and not payments of a recurring nature.

Royalties

The following table shows how different royalty payment situations are assessed as income for social security purposes.

If the royalty payment is … Then it…

made directly to a self-employed person,

Explanation: The person's income is assessed by adding income from royalties to the fees and other income earned from the self-employment and then deducting expenses to calculate a net profit.

IS treated as income.
a lump sum amount paid to a person who is not self-employed, IS treated as income for 52 weeks from the date the person is entitled to receive that amount.

Note: A royalty payment could be a compensatory type payment. Refer to 'Compensatory payments' below.

Royalties paid to Indigenous people

The following table shows how different royalty payment situations, paid to Indigenous people, are assessed as income for social security purposes.

If the royalty payment is … Then…
paid to an individual member of an Indigenous community, it IS treated as income.
paid to a self-employed member of an Indigenous community, it IS treated as income.

paid directly to an Indigenous community and used by the community for the overall benefit of the community,

Explanation: In most communities the royalties are paid into non-discretionary trusts administered by community leaders.

it is NOT treated as income of an individual person.
  • paid directly to an Indigenous community, AND
  • the Indigenous people's council subsequently made payments to a person from the royalty payments invested by the community,
those payments ARE considered income.

Note: A royalty payment could be a compensatory type payment. Refer to 'Compensatory payments' below.

Act reference: SSAct section 8(8) Excluded amounts-general, section 8(11) An amount received by a person is an exempt lump sum if…, section 1067G-H21 Ordinary income includes certain periodical payments from relatives, section 1068-G5 Ordinary income includes certain periodical payments from relatives, section 1068B-D5 Ordinary income includes certain periodical payments from relatives, section 1073 Certain amounts taken to be received over 12 months

Policy reference: SS Guide 4.3.2.30 Income exempt from assessment - legislated

Payments to Indigenous communities

Payments for claims or development activity to Indigenous communities are not treated as income of an individual person. Payments made to communities that are used for community purposes such as education or maintenance of community facilities are not assessable income for social security purposes.

Compensatory payments

Includes payments for loss of access to traditional land, suspension or extinguishment of native title whether those payments are received by way of royalty or other payments for a development activity or received as a result of a successful native title claim.

These compensatory payments ARE NOT assessed as compensation (1.1.C.240) for social security purposes.

Explanation: Only compensation for personal injury is assessed under the compensation provisions of the SSAct.

It is likely that any payments resulting from successful native land title claims will be made to communities rather than individuals. When a payment is made to a community, the compensation should be assessed like the treatment of royalties, listed in the table above.

Where individual people receive compensatory amounts, either from the community or the compensation payer, Centrelink Help Desks should refer the details to DSS Means Test Policy Section for guidance.

Details about recognition of Indigenous native title rights are available from the National Native Title Tribunal including Indigenous land use agreements (ILUAs).

Act reference: SSAct section 17(2) Compensation

Policy reference: SS Guide 4.3.2.30 Income exempt from assessment - legislated, 4.3.2.31 Income Exempt from Assessment - Specifically Approved, 4.13 Compensation

Payments to Indigenous individuals are assessed according to their purpose

Payments to Indigenous individuals are assessed according to their purpose as outlined under the following 3 headings:

  • commercial payments,
  • payments for services rendered, and
  • reimbursements for expenses incurred.

Commercial payments

Individuals may receive payments on a commercial basis. One example may be gate takings. Gate takings are contributions or fees from people accessing traditional Indigenous land. Certain payments made under native title agreements may also have a commercial character.

Commercial payments are assessable income when received by an individual, but not when received by the community.

When an individual is employed by the local community or land council the amount paid is employment income.

Payments for services rendered

Payments for heritage surveys, site clearances, cultural training, interpretation at meetings, monitoring, employment by the local council, sitting fees where the payments are in recognition of the expertise (cultural or otherwise) of the individual are generally treated as income for social security purposes. Sitting fees may be paid for attending meetings with state government agencies or to an individual to sit on a committee or council. Where the person is self-employed certain allowable deductions may apply.

The payments are considered as casual earnings where attributable to a specific period and spread over that period if longer than a fortnight. If NOT attributable to a specific period the fee is a remunerative lump sum, assessed for up to 52 weeks from the date they are entitled to receive the lump sum amount.

Please see 'Reimbursement for expenses incurred' below which details situations where the income is not counted for social security purposes.

Act reference: SSAct section 8(1A) A reference in this Act to employment income, in relation to a person, is a reference to ordinary income of the person, section 1073 Certain amounts taken to be received over 12 months, Part 3.10 Division 1AA Employment income attribution rules, section 1073A Employment income attribution over a period for social security pensioners, section 1073B Daily attribution of employment income, section 1073C Fortnightly or yearly expression of attributed employment income, Part 3.10 Division 1A Business income, section 1074 Ordinary income from a business-treatment of trading stock, section 1075 Permissible reductions of business income

Policy reference: SS Guide 1.1.E.102 Employment income, 4.3.2.30 Income exempt from assessment - legislated, 4.7.1 Assessing the Income & Assets of Sole Traders & Partnerships

Reimbursements for expenses incurred

Where payments are made to cover out-of-pocket expenses these payments are not considered to be income. Any excess amount above out-of-pocket expenses incurred should be treated as income. For example, reimbursement of travel and accommodation costs for attendance at meetings with government and representative organisations are excluded as income, as the person will not gain additional benefit from the payment.

Policy reference: SS Guide 4.3.2.10 Income received to cover specific expenses

Last reviewed: 3 July 2017