Social Security (Administration) (Declinable Transactions and BasicsCard Bank Account) Determination 2023

The central concept is the BasicsCard bank account - a restricted transaction account held with an approved financial institution (currently Indue or Traditional Credit Union) that cannot be used for cash withdrawals and is designed to limit spending to excluded goods or services as defined in the Act. Although the instrument does not define “excluded goods”, “excluded services”, or “cash‑like product”, those terms are defined in the Act and are critical for understanding the scope of Schedules 1 through 4.

The enhanced income management regime is the statutory framework (Part 3B of the Act) under which a welfare recipient has a portion of their payments quarantined and directed into a restricted account. The Determination operationalises the account mechanics and the transaction‑blocking rules. A person “subject to the enhanced income management regime” is the account holder; a “Part 3B payment nominee” may also operate the account.

Declinable transactions are the key enforcement lever: a financial institution may decline any transaction at a business that falls within the declared categories. The categories are layered to capture both explicit code‑matched businesses and those that evade precise coding. Schedule 1 uses four broad descriptive categories: businesses selling excluded goods/services/cash‑like products; businesses where purchases are made online or without card presentation; businesses reasonably believed to facilitate cash access; and businesses that would be captured under Schedules 2 or 3 if correctly classified. This design aims to address circumvention - for example, a retailer miscoding under ANZSIC or MCC to avoid detection is still captured by Schedule 1 item 4.

Merchant Category Codes (MCC) refer to ISO 18245:2003 as in force at commencement, and ANZSIC codes refer to the 2006 version as in force at commencement. The adoption of external standards means the list is static at the date of the instrument - any subsequent changes in those standards do not automatically update the Determination.

The account terms in Schedule 4 embed a “so far as possible” standard for the systems that block excluded purchases and prevent transfers to non‑BasicsCard accounts for prohibited purposes. This is a limitation of means, not an absolute guarantee. The financial institution is not required to achieve zero failure, only to implement systems that, as a practical matter, make such transactions unlikely. This introduces a compliance gap - determined individuals may find ways around the controls.

The account is single‑name only, prohibiting joint ownership. The prohibition on cash withdrawals extends to all methods, including debit card cash‑out, over‑the‑counter withdrawals, and automatic teller machine access. This is a total restriction, not a limit. The account also cannot earn or be charged interest, nor can the financial institution impose fees for deposits or the issue of the debit card. However, other account‑keeping fees are not explicitly prohibited.

The Determination directly affects welfare recipients who are subject to the enhanced income management regime. These are individuals who have a portion of their social security payments directed into a BasicsCard bank account. The Determination applies only to those in this regime, which covers specified geographical areas (e.g., certain remote Indigenous communities) and categories of recipients (e.g., those referred by child protection authorities or assessed as vulnerable). The instrument does not extend to mainstream welfare recipients or those on other payment management arrangements.

Two financial institutions are directly affected: Indue and Traditional Credit Union. They are the only approved providers of BasicsCard bank accounts (section 7). They must implement the systems and restrictions specified in Schedule 4, including the ability to decline transactions at the listed businesses. They bear the operational and compliance costs of maintaining the blocking infrastructure, processing transfers between BasicsCard accounts, and handling account closures and fund transfers within the 91‑day window after cessation of the regime or death. They must also accept deposits and issue debit cards without charging fees for those specific services.

Businesses listed in Schedules 2 and 3 are affected because transactions from BasicsCard cards at their premises may be declined. These include pubs, bottle shops, casinos, lottery agents, duty‑free stores, liquor manufacturers, tobacco wholesalers and retailers, financial institutions that process quasi‑cash transactions, gambling outlets, billiard halls, and certain securities brokers. Businesses caught by the Schedule 1 descriptions are also affected, even if they do not fall under a code. For example, any online retailer that sells excluded goods (e.g., alcohol or gambling services) may see declined transactions, as may any business that a financial institution reasonably believes engages in cash‑facilitation. The practical effect is a reduction in potential revenue from BasicsCard holders, although many such businesses may already be in locations with a limited number of BasicsCard users.

Part 3B payment nominees are also affected: they are permitted to operate the BasicsCard account on behalf of the holder. The account may be used in automatic drawing arrangements based on BSB and account number, subject to restrictions (Schedule 4 clause 6). That affects third parties such as landlords or utilities to whom the holder has authorised direct debits: such payments will only proceed if they do not involve excluded goods or cash access.

The Department of Social Services and the Secretary are affected through the notice and approval functions: account holders must give the Secretary notice in the approved form and manner when intending to switch BasicsCard providers, and the Secretary can prescribe the form. The Determination also affects the Commonwealth’s contractual relationship with Indue and Traditional Credit Union.

Account holders have a right to open a BasicsCard account with Indue or Traditional Credit Union. They can deposit any amount of money into that account and receive a debit card without charge (Schedule 4 clauses 2, 3, 7). They can use the debit card for telephone, internet, or card‑not‑present purchases (clause 5), though such transactions may be declined if the merchant is in a declared category. They can transfer money freely to another BasicsCard account (clause 4) and can authorise automatic drawing arrangements based on BSB and account number, subject to clause 11’s restriction (clause 6). They can request to switch BasicsCard providers by notifying the Secretary, and upon establishment of a new BasicsCard account, the old account’s funds can be transferred (clause 18).

Account holders are subject to several material duties and restrictions. They cannot withdraw cash from the account by any method - not via debit card cash‑out, over‑the‑counter, automatic teller machine, or any other withdrawal mechanism (clause 9). This is absolute. They cannot use the account to purchase excluded goods or excluded services, or to obtain cash‑like products that could be used to get excluded goods or services. They are subject to systems that, so far as possible, prevent such purchases (clause 10). Similarly, they cannot transfer money to a non‑BasicsCard bank account unless the transfer is for a purpose other than enabling access to cash or obtaining cash‑like products, excluded goods, or excluded services (clause 11). The financial institution may impose limitations on spending amounts and transfer amounts (clauses 12, 13). The account must be single‑name only - no joint accounts.

Financial institutions (Indue and Traditional Credit Union) have duties to: establish the account with the prescribed features; provide a debit card; not charge fees for deposits or the debit card; not charge interest on the balance; maintain systems to block excluded transactions and restricted transfers (so far as possible); and accept transfers from other BasicsCard accounts. They have the right to decline transactions at declared businesses. They have the right to close the account without consent upon cessation of enhanced income management, death of the holder, or upon the holder’s notice to switch providers if the account has a nil balance (clause 15). After cessation or death, they have a right (but not an obligation) to close the account within 91 days or transfer remaining funds to a previously notified account (clauses 16, 17). They may impose spending and transfer limits.

The Secretary’s duty is to receive notices from account holders who wish to switch BasicsCard providers, approve the form and manner of such notices, and presumably facilitate the transfer of information to the new financial institution.

The Determination itself does not create any penalties, offences, or civil penalties. It is a legislative instrument that authorises financial institutions to decline transactions and prescribes account terms. Enforcement of the restrictions ultimately relies on the Act’s provisions (not reproduced here). Under the Act, use of a BasicsCard account to obtain excluded goods or excluded services may be an offence or may result in cancellation or suspension of payments, but that is not within the text of this Determination. What the Determination does is give the financial institution the legal basis to block certain transactions. If an account holder attempts to circumvent the restrictions (e.g., by using the card at a mis‑coded merchant), the consequence is likely that the transaction will be declined or that the automated systems will flag the behaviour. The “so far as possible” language in clauses 10 and 11 means that if a transaction slips through, the financial institution may not face automatic liability, but the holder may still face consequences under the Act.

For financial institutions, the Determination creates no express penalties for breach of its terms. However, the parent Act and any contract with the Commonwealth would impose obligations - failure to maintain adequate blocking systems could lead to contractual penalties or removal from the list of approved providers. The prohibition on charging fees for deposits or debit cards is enforceable as a term of the Determination; if a financial institution breaches that term, it may be in breach of the instrument, and the holder could potentially seek a remedy under administrative law or through the Ombudsman, though the Determination does not specify a private right of action.

Schedule 5 repeals the 2019 Determination. That repeal is not a penalty; it is a transitional action. The old instrument ceases to have effect once the repealing provision of the amending Act commences.

The practical enforcement mechanism is transaction‑level: the merchant’s point‑of‑sale system or the financial institution’s backend processes will decline the transaction. The holder’s only recourse would be to challenge the decision under the Act’s internal review mechanisms or through the Administrative Appeals Tribunal, but the Determination gives the financial institution broad discretion - for example, “reasonable grounds for believing” in Schedule 1 item 3 is a subjective standard. This creates a low bar for declining transactions, and challenging such a decline would be difficult.

The Determination is made under the Social Security (Administration) Act 1999 and cannot operate independently of that Act. The definitions of “excluded goods”, “excluded services”, “cash‑like product”, “Part 3B payment nominee”, and “subject to the enhanced income management regime” are sourced from the Act, not the Determination. Any change in those definitions automatically changes the scope of this Determination - for instance, if the Act is amended to expand “excluded goods” to include electronics, the Determination’s Schedule 1 item 1 would catch those sales without a separate amendment to this instrument.

The Determination interacts with the ANZSIC and MCC standards as at the date of commencement. This creates a static snapshot: if a merchant changes its ANZSIC classification after commencement, the Determination will not automatically update. However, Schedule 1 item 4 captures businesses that would be covered under the correct code even if they are currently miscoded. This is an anti‑avoidance mechanism that relies on the financial institution’s ability to determine the “correct” code, which may not be straightforward and could lead to disputes with merchants.

The Determination interacts with banking and privacy laws. The BasicsCard account is a bank account subject to the Banking Act 1959 and the Privacy Act 1988. The requirement to implement systems to block certain transactions may involve monitoring account usage, which raises privacy considerations. The instrument does not address how the financial institution balances its blocking obligations with privacy obligations, but it is likely that the contract or the Act authorises such monitoring as incidental to the regime.

The Determination also interacts with the contract law governing the account relationship. Schedule 4’s terms and conditions override any inconsistent bank standard terms to the extent of inconsistency. For example, a bank’s usual ability to charge account‑keeping fees is displaced by the no‑fee provisions for deposits and debit cards. However, the Determination does not prohibit the financial institution from imposing other fees (e.g., monthly account‑keeping fees, dishonour fees), which could be charged unless inconsistent with the express prohibitions.

The repeal in Schedule 5 of the 2019 Determination means that the earlier instrument no longer applies to any accounts or transactions. That repeal is timed to coincide with the commencement of the repeal of the cashless debit card provisions in the Act, ensuring a smooth transition. Any references to the cashless debit card regime in older case law or guidance are now obsolete.

The instrument may interact with state and territory gambling, liquor, and tobacco licensing laws, because the restrictions primarily target those industries. A transaction declined under this Determination does not affect the legality of the underlying sale; it merely prevents the BasicsCard account from being used as a payment method.

This Determination was made on 1 March 2023 by Ray Griggs, Secretary of the Department of Social Services, and registered on the Federal Register of Legislation shortly after. It has not been amended since. All provisions except Schedule 5 commenced the day after registration. Schedule 5 is tied to the commencement of Part 2 of Schedule 1 of the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Act 2022, which repealed the cashless debit card framework and transitioned participants to enhanced income management. That repealing Act received Royal Assent in 2022 but its operation was deferred; once it commences, the 2019 Determination is repealed.

The instrument supersedes the Social Security (Administration) (Cashless Welfare Arrangements) (Declinable Transactions and Welfare Restricted Bank Account) Determination 2019. The change in name from “Cashless Welfare Arrangements” and “Welfare Restricted Bank Account” to “Enhanced Income Management” and “BasicsCard Bank Account” reflects the renaming of the regime. The list of declinable businesses was expanded in certain respects: for example, the 2023 Determination includes a new catch‑all category in Schedule 1 item 4 for businesses that would be covered under the correct code. It also updates the MCC and ANZSIC references to the versions in force at commencement (ISO 18245:2003 and ANZSIC 2006). The 2019 Determination referenced slightly different code versions; the update prevents divergence where external standards have been revised.

The account provider list in section 7 is narrower than the previous instrument: the 2019 Determination allowed accounts with Indue only, whereas the 2023 Determination adds Traditional Credit Union as an alternative. This gives account holders a limited choice. The closure provisions in Schedule 4 are also more detailed, including the 91‑day window and the mechanism for switching providers. The absence of interest and fee prohibitions was present in the earlier determination in similar form.

Because this Determination has not been amended, all references to codes and business descriptions remain as at March 2023. Any subsequent changes to ANZSIC or ISO 18245 would require an amending instrument to be made. That creates a risk of code drift - a business that changes its activity or that is reclassified under a revised standard may fall out of or into the restricted categories without a corresponding amendment, creating compliance gaps or over‑inclusive blocks.

The source text of the Determination contains no references to any litigation. No court cases are noted, incorporated, or cited. The Determination itself is a legislative instrument that has not yet been the subject of any judicial consideration, on the public record at least. However, the broader cashless welfare framework - including the predecessor cashless debit card regime - has been litigated. Cases such as McCloy v Commissioner of Taxation (indirectly) and various challenges to the constitutionality of forced income management in the Northern Territory have arisen. The High Court has upheld the validity of similar regimes, but those cases concerned different statutory provisions.

Given that this Determination is a ministerial instrument made under delegated powers, it could be challenged on grounds of reasonableness, jurisdictional error, or failure to comply with the parent Act. For example, if a financial institution declines a transaction under a Schedule 1 description that is applied unreasonably, the affected person could seek judicial review under the Administrative Decisions (Judicial Review) Act 1977. The “reasonable grounds for believing” test in Schedule 1 item 3 is a classic candidate for review - a person could argue that the financial institution lacked reasonable grounds to believe the business facilitates cash access.

The determination of the “correct” merchant category code under Schedule 1 item 4 could also generate disputes. A business that is declined because a financial institution believes it should be in a different code may challenge that conclusion. However, the Determination does not provide a mechanism for a business to object; the litigation would likely be brought by the account holder or the business itself on the basis of an error of law.

To date, there is no recorded case specifically interpreting this Determination. Those advising clients subject to enhanced income management or financial institutions implementing the restrictions should monitor any future judicial decisions that may clarify the scope of “reasonable grounds” or the meaning of “so far as possible” in the system‑blocking obligations.

The most significant hidden trap is the absolute prohibition on cash withdrawals in Schedule 4 clause 9. This is not qualified by “so far as possible”. Even an emergency need for cash - for a taxi, a tradie, or a family member’s funeral - cannot be met from the BasicsCard account. The only way to access cash is to have funds transferred to a non‑BasicsCard account under clause 11, but that transfer must be “for a purpose other than enabling the person to access cash or obtain cash‑like products, excluded goods or excluded services”. If the true purpose is to then withdraw that cash, the transfer is prohibited. This creates a perverse incentive: the holder may need to misrepresent the purpose to the financial institution to get the transfer, or may find the transfer blocked.

The “so far as possible” language in clauses 10 and 11 is a double‑edged sword. On one hand, it protects financial institutions from liability if a transaction slips through despite best efforts. On the other hand, it creates uncertainty for holders: a transaction may succeed and be later characterised as prohibited, leading to potential loss of payments or prosecution under the Act. The holder cannot rely on the system blocking it.

The single‑name requirement means that a married couple or de facto partners each need an individual BasicsCard account if both are on the regime. Joint household expenses must be managed by transferring between BasicsCard accounts, which is allowed under clause 4. But if one partner is not on the enhanced income management regime, their account is not a BasicsCard account, and transfers to them from the BasicsCard account are subject to the clause 11 restriction. This may limit the ability to pay shared household bills from the restricted account unless the bill is for a permitted purpose.

The prohibition on fees for deposits and debit cards does not prevent other fees. Financial institutions could charge monthly account‑keeping fees, over‑the‑counter deposit fees (though deposits are free), or dishonour fees. The Determination is silent on whether such fees are permissible. A holder expecting zero fees could be surprised by a charge itemising “account service fee”. The instrument also says interest cannot be charged on a balance, but it does not say interest cannot be earned. That is consistent with a non‑interest‑bearing account; the holder receives no interest income.

The closure provisions allow the financial institution to close the account without consent in three circumstances. The most abrupt is when the holder ceases to be subject to enhanced income management: the financial institution may close the account within 91 days. If the holder has not given notice of a preferred alternative account to the Secretary, the institution cannot transfer remaining funds (clause 16(b) only allows transfer to an account the holder “had previously given notice of to the Secretary”). That means if the holder fails to notify the Secretary before leaving the regime, the financial institution may close the account and be left with funds that it cannot transfer or may need to escheat. The holder could lose access to those funds.

The broad discretion in Schedule 1 item 3 to block transactions from any business “there are reasonable grounds for believing engages or has engaged in transactions with a person subject to the enhanced income management regime that facilitate … access by the person to cash”. This could catch legitimate businesses where an unrelated third party has used cash‑back or other services. The phrase “reasonable grounds” is subjective; a financial institution could adopt a conservative approach and block whole categories of merchants (e.g., all convenience stores) to avoid risk, even if the specific business is not facilitating cash access. The holder has little practical recourse.

For an individual subject to enhanced income management with a BasicsCard account, the first step is to understand exactly which purchases are prohibited. The Act defines excluded goods and services - typically alcohol, gambling, tobacco, and pornographic material. The Determination expands the purge to include any business in the declared categories, even if the specific purchase is not an excluded good. For example, buying a sandwich at a pub (ANZSIC 4520) may be blocked because the pub is in Schedule 3 item 6, even though food is not an excluded good. The holder should identify which local businesses are likely to be in Schedules 2 or 3 and avoid attempting transactions there. For online purchases, the holder should only use the BasicsCard at merchants that are clearly not selling excluded goods or that are not in the declared categories.

The holder must never attempt to withdraw cash from the BasicsCard account. This includes asking a merchant for cash‑out or using the debit card to obtain cash at a financial institution. For legitimate cash needs, the holder should have a separate bank account (not a BasicsCard) into which funds can be transferred. The transfer from the BasicsCard to that account must be for a purpose other than accessing cash - for example, to pay a rent bill to a landlord whose account is not a BasicsCard account. The holder should ensure the purpose is documented and justifiable, as the financial institution’s systems may assess the transfer. If the holder is leaving the enhanced income management regime, they should immediately notify the Secretary of their preferred alternative bank account so that the financial institution can transfer any remaining funds within the 91‑day window. Failure to do so risks the funds being stranded.

For financial institutions (Indue and Traditional Credit Union), compliance requires implementing a robust transaction screening system that cross‑references the BasicsCard usage against the MCC and ANZSIC tables, as well as the broader descriptions in Schedule 1. The system must be capable of declining transactions in real time at the listed businesses. For the Schedule 1 catch‑alls, the institution must develop policies to assess “reasonable grounds” and to determine the “correct” code for a merchant (item 4). This may require maintaining a database of merchant classifications and updating it based on business activity. The institution must also implement controls on account‑to‑account transfers - allowing transfers to other BasicsCard accounts freely, but blocking transfers to non‑BasicsCard accounts unless the system can reasonably verify the purpose is not cash‑access or excluded goods. This is operationally difficult because the purpose is self‑reported; the institution may need to rely on indicators like recurring transfers to known accounts with a permissible history. The institution must also ensure that its account opening process enforces the single‑name requirement and that its debit card issuance does not attract any fee. It must track closures and transfers within the 91‑day period after cessation or death, and act only on a Secretary‑approved notice when a holder seeks to switch providers.

For businesses that appear in Schedules 2 or 3 or that fall under Schedule 1 descriptions, the practical compliance burden is minimal - they cannot force acceptance of BasicsCard payments. However, if a business believes it has been incorrectly included (e.g., an online retailer that sells only baby products but was assigned a gambling‑related MCC), it should seek to correct its merchant category code with its acquiring bank. A failure to correct may lead to persistent declines of BasicsCard transactions, but that is not a legal penalty for the business - it is simply lost sales. Businesses that wish to serve BasicsCard holders (e.g., a café that sells alcohol but also coffee) may need to accept that BasicsCard transactions will be declined on the premises if the business is classified under a liquor‑related code. They could consider having a separate point‑of‑sale for non‑alcohol items under a different code, but that is expensive and not directly required by the Determination.