FACT
SHEET
LumpsumcompensationandCentrelink
Thisfactsheetisabouthowreceivinglumpsumcompensationforpersonalinjuryaffectssocialsecurity
payments.Itprovidesgeneralinformationonly.Itisnotlegaladvice.Ifyouneedlegaladvice,youcan
contactyourlocalsocialsecurityrightsservice,whichyoucanfindfromourwebsiteatwww.nssrn.org.au.
Compensationforpersonalinjury
Ifyoureceivelumpsumcompensationforpersonalinjury,youmaynotbeeligibleforasocialsecurity
paymentforaperiodoftime,knownasalumpsumpreclusionperiod.Itappliestoalmostallsocialsecurity
payments.YoumayalsohaverepaymoneyfromyourcompensationtoCentrelink,ifyoureceivedasocial
securitypaymentafteryouwereinjured.
Familyassistancepayments,suchasfamilytaxbenefit,mayalsobeaffectedbyreceivinglumpsum
compensation.
Itisimportanttounderstandthisbeforeyousettleacompensationclaimandyoushoulddiscussitwithyour
lawyer,ifyouhaveone.
Alumpsumpreclusionperiodappliesifyoureceivelumpsumcompensationforpersonalinjuryanditincludes
compensationforfinanciallossbecauseoftheinjury,includinglostincomeinthepastorbeingunabletowork
inthefuture.
Alumpsumpreclusionperioddoesnotapplyifthecompensationdoesnotincludeanyamountforfinancial
loss(egforlostwagesorlostcapacitytoearn).Italsodoesnotapplytolumpsumpaymentswhicharemade
upsolelyofarrearsofpastperiodiccompensationpayments(suchasweeklyworkerscompensation
payments).
Ifyouthinkyoushouldnothavealumpsumpreclusionperiodbecauseofthetypeofcompensationyou
received,youcangetlegaladviceaboutthisfromoneofourmemberservices.
Thelengthofthelumpsumpreclusionperiod
Therearecomplicatedrulesforcalculatingthelengthofthelumpsumpreclusionperiod.
Inthemajorityofcases,lumpsumcompensationispaidafteryousettleyourpersonalinjuryclaim.Inthese
cases,thelengthofthepreclusionperiodinweeksiscalculatedbytakinghalfyourtotallumpsumanddividing
itbyanumbercalledthe“incomecut-outamount”,whichchangesovertime.Centrelinkhasanonline
calculatorforestimatingthelengthofthepreclusionperiodandanycompensationcharge(discussedbelow),
athttps://www.humanservices.gov.au/customer/enablers/compensation-estimator.
Yourtotallumpsumisused,evenifyoudidnotreceiveallofit.Forexample,evenifyoupaidsomeofit
directlytoyourlawyersfortheirfees,thetotalamountyousettledforincludingthisamountisusedforthe
calculation.
Thepreclusionperiodusuallystartsfromthedateofyourinjuryor,ifyoureceivedperiodiccompensation
(suchasweeklyworkerscompensationpayments),thedateyourperiodicpaymentsstopped.
Therulesaboutcalculatingthelengthandstartofthepreclusionperiodarecomplicatedandifyouthink
Centrelinkhasmadeamistake,youcangetlegaladviceaboutthisfromoneofourmemberorganisations.
2
TheCentrelinkcompensationcharge
Whenyoubecomeeligibleforcompensation,suchaswhenyousettleyourpersonalinjuryclaim,theperson
payingyoucompensation(oftenaninsurancecompany)hastotellCentrelinkandgetapprovaltopayyouthe
compensation.
Centrelinkworksoutfirstifyouoweitanymoney,calledacompensationcharge.Thiscanhappenbecause
youreceivedasocialsecuritypaymentafteryourinjury,whichisnowcoveredbythelumpsumpreclusion
period.
IfyoudooweCentrelinkmoney,Centrelinkwillrequirethepersonpayingcompensationtopaythemthis
money,beforepayingtherestofyourcompensationtoyou.
Inrarecases,itmaybepossibletoappealandhavesomeorallofthismoneypaidbacktoyoubyCentrelinkif
therearespecialcircumstancesaboutyourcase.
Shortening(“waiving”)thelumpsumpreclusionperiod
Inmostcases,youareunabletoreceiveasocialsecuritypaymentduringthelumpsumpreclusionperiod.Itis
possibletohavethelumpsumpreclusionperiodshortenedor“waived”iftherearespecialcircumstancesin
yourcase.Normallythishappensonlyifyouareinseverefinancialhardship,buteventhenitmaynotbe
waivedasthelawisverystrict.
Thelawisverystrictandwaiverisrare,soitisimportanttothinkabouthowtomakeyourcompensation
moneylastifyouthinkyoumightnotbeabletogobacktoworkorsupportyourselfinsomeotherway.
Alumpsumpreclusionperiodwillrarelybewaivedifyouboughtahomeorpaidoffyourmortgagewiththe
compensation.
Stepsyouwillneedtotake
IfyouwanttohaveyourcaseconsideredbyCentrelink,youshouldlodgeaclaimforasocialsecuritypayment
andifitisrejected,lodgeanappealtoanAuthorisedReviewOfficer.Theseareverydifficultappealstowin,so
itisagoodideatogetlegaladvicefromoneofourmemberorganisationsifthinkingaboutanappeal.Thereis
afactsheetaboutappealsonourwebsite.
Itisimportanttocollectevidencetohelpsupportyourapplication,including:
1.
2.
Evidenceaboutthecompensationpaymentyoureceived.
Forexample,ifyoupaidyourlawyersandreceivedlessthanthetotalamount,thebillortrust
accountstatementfromyourlawyers.
Evidenceabouthowyouspentthemoney.
Althoughitmaynotbepossibletoshowhowyouspentallthemoney,itisimportanttoprovideas
muchevidenceaspossibleaboutthemainthingsyouspentiton.
Forexample,ifyouhadallthemoneyinabankaccount,gettingthestatementsforthataccountisa
goodidea.Youmayalsohavesomereceiptsfrombigpurchaseslikeawashingmachine.
3
3.
4.
Evidenceaboutothercircumstancesoreventswhichhelpexplainwhyyouareinhardship.
Sometimesthereisaparticulareventorcircumstancewhichexplainswhyyougotintofinancial
trouble.Forexample,youmayhavestartedabusinessthatdidnotgowell,hadafamilylawproperty
settlementorhavespentmoneyondisabilitymodificationstoyourhomeorcar.
Itmayalsobeimportanttoexplainifyouhadanaddictionsuchastogamblingduringtheperiod.If
yousawacounsellor,itisreallyimportanttogetaletterfromthemconfirmingthatyouwereorare
nowgettingtreatmentfortheaddiction.
Evidenceaboutyourcurrentsituation.
Youneedtoprovideevidenceaboutyourcurrentsituation,especiallyyourfinancialsituation.This
couldinclude:
• Yourcurrentbankaccount
• Anoverduenoticeforabill,acreditcardoryourrent
• Aletterfromyourdoctoraboutanyhealthproblems
Ifyouhaveanymajorassets,youneedtoprovideevidenceaboutthem.Itisoftenimportantto
explainwhatimpactsellingthoseassetswouldhaveonyou,otherwiseyourpreclusionperiodmay
notbewaivebecauseyoucouldselltheasset.Forexample,ifyouhaveacaritmaybeimportantto
explainwhyyouneedit(forexample,thereislimitedpublictransportinyourarea,youareacareror
parentetc.),
Ifyouboughtahouseorpaidoffamortgagewiththecompensation,itisverydifficulttogetyour
preclusionperiodwaived.Itisagoodideatogetlegaladvicefromoneofourmemberorganisations
aboutappealinginthissituation.
CanIgetahealthcarecard?
Youmaybeeligibleforahealthcarecardevenifstillinalumpsumpreclusionperiod.
Normallyyouwillbeeligibleafter52weeksfromthedateyoubecameentitledtothecompensation.
4