Social Security (Administration) (Penalty Amount) Determination 2025

The text defines and deploys a compact set of concepts that determine how sanctions reduce payments. The central concept is the daily penalty rate, defined by s 10(1) as "the lesser of" two alternative calculations for a given day in an instalment period. The formulas use three core inputs: a person’s penalty-affected rate (PAR) for the instalment period, the number of days in that instalment period (Dayinst), and the number of weekdays in that instalment period (WDinst) (s 10(2)-(3)).

Penalty-affected rate (PAR) is itself a formulaic concept set out in s 10: PAR = PPAinst − (PAinst + PSinst + RAinst + RAAinst + YDSinst). In that formula PPAinst is the amount of participation payment payable to the person for the instalment period, and the other abbreviations are amounts for pharmaceutical allowance, pension supplement, rent assistance, remote area allowance, and youth disability supplement respectively (s 10). The instrument expressly clarifies that certain supplements that are part of a participation payment rate are included in PPAinst (Note 1), while listing other allowances and supplements that are not part of the rate and therefore not included in PAR (Note 2).

Failure-type concepts are imported or cross-referenced to the Act and then given monetary conversion rules. The determination treats three failure types: reconnection failure (term defined as in subsection 42H(1) of the Act), no show no pay failure (as in subsection 42C(1) of the Act), and non-attendance failure (as in subsection 42SC(1) of the Act) (s 5). For reconnection and non-attendance failures the person’s penalty amount is the sum of the daily penalty rates for each weekday that falls within the reconnection failure period or the non-attendance failure penalty period respectively (ss 7, 9). For a no show no pay failure on a particular day the penalty amount is simply the daily penalty rate for that day (s 8).

Temporal and counting concepts are central. Instalment period has the same meaning as in s 43 of the Act (s 5). Weekday is defined as any day that is not a Saturday or Sunday (s 5). The calculation logic therefore differentiates between calendar days and weekdays; weekends are excluded when aggregating daily penalty rates for reconnection and non-attendance failures (ss 7, 9). The determination also instructs that when a penalty period spans multiple instalment periods, more than one calculation method and daily amount may apply (s 10, Note 3).

Transitional and boundary concepts are included. The determination applies to decisions made on or after 1 October 2025 regardless of whether the underlying failure occurred before that date (s 6). The instrument also repeals the 2015 penalty amount determination in full (Schedule 1), so the operative concepts and formulas here replace the earlier instrument from that date forward (Schedule 1).

The immediate class of affected persons are individuals who are subject to social security sanctions of the types named in this determination: reconnection failures, no show no pay failures, and non-attendance failures. The determination converts those sanction events into monetary amounts that are calculated with reference to each person’s participation payment and certain associated supplements and allowances (ss 5, 7-10). The text identifies the payer of the result implicitly: the person liable for the penalty amount bears the economic effect because the calculation reduces the amount drawn from their participation payment entitlements via the defined formulas (s 10).

Administratively, the Department or decision-maker under the Social Security (Administration) Act will be required to perform the calculations. The instrument is made under subsection 42T(1) of the Act, which is the statutory authority for an instrument determining penalty amounts (s 3). The determination applies to decisions made on or after 1 October 2025 (s 6), so the departments and staff who make those decisions will be affected in terms of training, system configuration, and business rules necessary to implement the formulae and count weekdays and days in instalment periods (s 10).

Payees whose participation payment rates include certain supplements will see those supplements treated as part of the base participation payment for the purpose of calculating the penalty-affected rate; the determination explicitly says participation payment may include language, literacy and numeracy supplement and approved program of work supplement (s 10, Note 1). Conversely, recipients who rely on allowances expressly excluded from PAR , mobility allowance, pensioner education supplement, telephone allowance, utilities allowance , will be affected because those amounts are not included when deriving the person’s available rate for penalty calculation (s 10, Note 2).

Organisations and intermediaries that support claimants or represent them in administrative matters will also be affected because the instrument changes the numeric process by which penalties are calculated (ss 7-10). IT systems that calculate or withhold payments must be updated to: identify whether a penalty period falls across instalment periods; segment the period accordingly; compute Dayinst and WDinst for each instalment period referenced; compute PPAinst and each excluded or included allowance component; apply the lesser-of-two-methods rule for daily rates; and then aggregate weekday daily rates for reconnection and non-attendance failures (ss 7-10, Note 3). The Schedule repealing the prior determination (Schedule 1) means existing system logic based on the 2015 determination requires replacement or revision to conform with this determination from 1 October 2025.

The determination imposes formulaic duties rather than discretionary ones. It requires the decision-maker to calculate penalty amounts in accordance with the precise algebraic rules it sets out (s 10). For any day within an instalment period the duty is to calculate the daily penalty rate as the lesser of the two prescribed methods (s 10(1)). Where a reconnection failure or non-attendance failure penalty period exists, the duty is to sum the daily penalty rates for each weekday in the reconnection failure period or the non-attendance failure penalty period respectively to produce the person’s penalty amount (ss 7, 9). For a no show no pay failure on a particular day the duty is to apply the daily penalty rate for that day as the person’s penalty amount (s 8).

The determination sets duties about which payment components must be included or excluded when forming PPAinst. The duty is to treat participation payment and any supplements that are part of the rate as PPAinst, and to subtract the listed allowances and supplements from PPAinst to determine PAR (s 10). The instrument provides explicit content for those duties through its notes: Note 1 identifies that participation payment rates may include language, literacy and numeracy supplement and approved program of work supplement; Note 2 clarifies that mobility allowance, pensioner education supplement, telephone allowance, and utilities allowance are not part of the participation payment rate and therefore are excluded from PAR calculation (s 10, Notes 1-2).

Rights under the determination are indirect and procedural rather than freestanding entitlements within the text. The document frames the calculation of penalties for decisions under the Act and thereby establishes the numeric basis by which individuals will have their payments reduced. The rights available to affected persons to have penalties calculated according to this instrument follow from the statutory process for decision-making under the Act and from the determination’s binding formulas. The instrument, however, does not itself set appeal rights or review mechanisms; it prescribes the method for calculating penalty amounts while leaving the Act to govern administrative decision-making processes referenced by the definitions (ss 3, 5).

Operational duties also arise for counting and segmentation. The decision-maker must identify the instalment period in which each day falls (instalment period as defined in s 43 of the Act, referenced by s 5) and determine the number of days in that instalment period (Dayinst) and the number of weekdays in the instalment period (WDinst) to apply the lesser-of-two formulae (s 10). Where a penalty period spans more than one instalment period, the duty is to apply more than one calculation method and to determine daily amounts for each instalment segment that applies (s 10, Note 3). The instrument thereby transforms the administrative duty into a piecewise calculation over instalment-period boundaries.

The instrument does not create new criminal or civil offences. Instead it prescribes how monetary penalties arising from specific failure events under the Social Security (Administration) Act are to be calculated. The enforcement mechanism is structural: the relevant provision of the Act establishes failure events (for example reconnection failure, no show no pay failure, non-attendance failure as referenced in s 5), and this determination converts those failure events into specific monetary amounts by specifying how to compute the daily penalty rate and how to aggregate it across relevant weekdays and periods (ss 7-10).

For reconnection failures the enforcement outcome is that a person’s penalty amount equals the sum of the daily penalty rates for each weekday in the reconnection failure period (s 7). For non-attendance failures the enforcement outcome is the sum of daily penalty rates for each weekday in the non-attendance failure penalty period (s 9). For a no show no pay failure on a particular day the enforcement outcome is the daily penalty rate for that day (s 8). The instrument thus standardises the conversion of behavioural sanctions into payment reductions.

From an implementation perspective the primary enforcement apparatus is the administrative machinery that implements payment adjustments based on the computed penalty amounts. The Act provides the statutory framework for making decisions that apply penalties; this determination provides the numeric rules (s 3). The text requires the enforcement calculation to reflect the person’s rate of participation payment and specified allowances and supplements: PAR is computed by subtracting PAinst, PSinst, RAinst, RAAinst, and YDSinst from the participation payment for the instalment period (s 10). The decision-maker must therefore have access to up-to-date information about an individual’s entitlements to compute and apply penalties reliably.

There is an enforcement-temporal nuance in the transitional provision. The determination applies to decisions made on or after 1 October 2025 even if the underlying failure occurred before that date (s 6). The enforcement consequence is that monetary penalties applied by a decision made on or after that date must be computed under this determination; therefore enforcement actions taken after that date will use the new calculation methods regardless of when the failure occurred. The instrument also repeals the prior 2015 determination (Schedule 1), meaning the pre-existing numeric rules will no longer be the basis for computing penalty amounts for decisions made on or after 1 October 2025 (Schedule 1).

This determination is expressly made under subsection 42T(1) of the Social Security (Administration) Act 1999 and therefore functions as a subordinate instrument that specifies penalty amounts under the Act (s 3). Several key terms used in the determination are defined by reference to provisions of the Act: instalment period is defined as in s 43 of the Act, no show no pay failure as in subsection 42C(1), non-attendance failure as in subsection 42SC(1), non-attendance failure penalty period as in subsection 42T(3B), reconnection failure as in subsection 42H(1) and reconnection failure period as in subsection 42H(4) (s 5). The determination, therefore, interacts with the Act by operationalising monetary outcomes for Act-defined sanctions.

Because the determination relies on statutory terms from the Act, any substantive rule or condition contained in those Act provisions will govern whether a penalty event has occurred, and this instrument then provides the monetary translation. For example, the Act’s definitions and decision-making processes will determine whether a reconnection failure period exists; this determination supplies the instruction that the penalty amount for that reconnection failure is the sum of the daily penalty rates for each weekday in the reconnection failure period (s 7). The determination does not alter the Act’s definitions; it references them and applies numeric conversion.

The instrument’s notes draw a boundary between supplements and allowances for the purposes of calculating PAR. Those distinctions will interact with the legal treatment of entitlements under the Act and any other subordinate instruments that define or vary the composition of participation payment rates. The determination clarifies that some supplements that form part of the participation payment rate are included in PPAinst, whereas other allowances that are not part of the rate are excluded from the PAR calculation (s 10, Notes 1-2). The practical effect is that interaction with instruments that determine participation payment rates and what counts as part of those rates will alter the numeric outcome from this determination.

By repealing the Social Security (Administration) (Penalty Amount) Determination 2015 (No. 1) in full (Schedule 1), the instrument replaces the prior subordinate-law framework for computing penalty amounts. Systems and compliance rules that previously referenced the 2015 determination will need to reference this 2025 determination from 1 October 2025 (s 2, Schedule 1). The commencement clause and the transitional provision (s 6) interact with administrative law principles concerning retrospective application of subordinate instruments insofar as a decision made after commencement must apply these calculation rules even if the underlying failure occurred prior to commencement. Any other statutory limits on retrospective operation embedded in the Act would therefore continue to govern; the determination sets the calculation rules to be applied by decision-makers under the Act.

This determination is presented as an original instrument and contains an internal commencement table indicating that the whole instrument commences on 1 October 2025 (s 2). The commencement table includes a note that it relates only to the provisions as originally made and will not be amended to deal with later amendments (s 2(2)). The instrument expressly provides for transitional application to decisions made on or after the commencement date irrespective of when the failure occurred (s 6).

The instrument also contains a Schedule labelled Schedule 1,Repeals. That Schedule repeals in full the Social Security (Administration) (Penalty Amount) Determination 2015 (No. 1), with item 1 of Schedule 1 stating "The whole of the determination" and the action as "Repeal the determination" (Schedule 1). The effect is that, once this instrument commences, the 2015 determination will no longer be in force.

No amendments to this determination are listed in the text beyond the Schedule that records the repeal of the 2015 instrument. Section 4 provides a general mechanism for Schedules to this determination to amend or repeal other determinations specified in a Schedule and states that any item in a Schedule has effect according to its terms (s 4). The instrument therefore uses the Schedule mechanism to give effect to the repeal, and that is the sole Schedule action present.

The instrument’s Notes in s 10 identify interpretative points about inclusion and exclusion of payment components when calculating PAR (s 10, Notes 1-2). Note 3 in s 10 records a calculation boundary rule that more than one calculation method and calculated daily amount may apply if a reconnection failure period exceeds one instalment period. These notes function as interpretative guidance within the instrument rather than formal amendments.

There is no text within the instrument that records prior amendments to this particular determination because it is presented as a fresh determination made under the Act. The Schedule replacing the 2015 determination is the only explicit cross-instrument amendment recorded in this text (Schedule 1). The commencement table’s note that it applies only to provisions as originally made signals that future amendments would be recorded separately if made.

The determination text contains no references to judicial decisions or litigation. It names no cases and records no judicial interpretation. As a newly made subordinate instrument commencing 1 October 2025, the document itself does not include any litigation history or reference to precedents.

Potential sources of dispute that arise from the instrument’s terms can be identified directly from the text. Those potential dispute areas include the proper identification and computation of the penalty-affected rate (PAR), especially the question of whether particular supplements or allowances are part of the participation payment rate for the instalment period and therefore included in PPAinst, or whether they fall into the exclusion list in Note 2 (s 10, Notes 1-2). Another potential area for dispute is the segmentation and aggregation process where a penalty period spans multiple instalment periods: the instrument expressly contemplates that more than one calculation method and calculated daily amount may apply in such cases (s 10, Note 3), which could produce factual disagreements over how to allocate days to instalment periods for calculation purposes.

The transitional provision (s 6) creates a potential locus for challenge based on application of the determination to decisions made on or after 1 October 2025 for failures that occurred earlier. Legal argument may arise as to whether the application of the new calculation rules to pre-commencement conduct is consistent with statutory limits or administrative law principles, although the instrument itself asserts the application in express terms. Disputes could also arise over whether the decision-maker correctly counted weekdays or applied the lesser-of-two methods rule for a given day in an instalment period (s 10(1)-(3); s 5 definition of weekday).

Because the instrument is subordinate to the Act, litigation that challenges penalty amounts will likely engage the Act’s decision-making and review procedures; however those procedural aspects are not set out in the determination text. The determination itself is narrow and procedural in substance: it sets calculation rules. Any litigation would therefore turn on statutory interpretation of the instrument’s formulas and their interaction with the Act’s definitions and decision mechanisms as referenced throughout the text (ss 3, 5, 10).

The determination contains several drafting features that create practical traps if overlooked. First, the instrument applies to decisions made on or after 1 October 2025 whether or not the underlying failure occurred before that date (s 6). That means a decision-maker applying this determination must be prepared to calculate penalties under the new formulas for past conduct. Systems and caseworkers that assume the date of failure controls the applicable penalty rules rather than the date of the decision will misapply the instrument.

Second, the daily penalty rate is the lesser of two formulae that use different denominators: Dayinst (number of days in the instalment period) and WDinst (number of weekdays in the instalment period), and one of the methods applies a 1.4 multiplier to PAR (s 10(1)-(3)). The interplay between the multiplier and the denominators means that on instalment periods with many weekend days the WDinst denominator in the second method will be smaller, possibly resulting in a higher per-weekday charge under the second method; because the rule is to take the lesser of the two results, practitioners must compute both formulae for each instalment period. Failure to compute both and to select the lesser will produce an incorrect daily rate.

Third, PAR is not simply the participation payment rate but is participation payment minus a set of specified allowances and supplements (s 10). The instrument’s Notes make the inclusion and exclusion rules specific. Note 1 states that some supplements that are part of the participation payment rate , for example language, literacy and numeracy supplement and approved program of work supplement , are to be treated as part of the participation payment amount for PAR purposes (s 10, Note 1). Note 2 names allowances that are not part of the rate and therefore are excluded from PAR , including mobility allowance, pensioner education supplement, telephone allowance, and utilities allowance (s 10, Note 2). Misclassifying a component as included or excluded will alter PAR and therefore the computed daily penalty rate.

Fourth, weekdays are defined narrowly: a weekday is any day that is not a Saturday or Sunday (s 5). The penalty amounts for reconnection failures and non-attendance failures are sums of daily penalty rates for each weekday in the relevant penalty period (ss 7, 9). Because weekend days are excluded from aggregation, penalty periods that include weekends will often produce lower nominal totals than an otherwise similar number of calendar days spanning only weekdays. Administratively this requires correct calendar arithmetic that differentiates weekends from weekdays across instalment boundaries.

Fifth, the determination contemplates multi-instalment-period penalty periods. Note 3 in s 10 explicitly records that more than one calculation method and calculated daily amount may apply to a reconnection failure period that exceeds one instalment period (s 10, Note 3). The same segmentation logic will apply by implication for non-attendance failure penalty periods. Implementing agencies must therefore partition a penalty period by instalment periods, compute Dayinst and WDinst for each segment, compute PAR for each instalment period, and then apply the lesser-of-two rule per day per instalment segment.

Sixth, the instrument repeals the 2015 determination in full (Schedule 1). Entities that maintain procedures or software based on the 2015 instrument must update processes and verify that historical calculations remain consistent where necessary for prior decisions, recognising that decisions made on or after the commencement date must use the 2025 determination (s 2; Schedule 1).

Finally, the determination’s reliance on definitions in the Act means that any uncertainty or dispute about whether a failure event occurred will engage the Act’s provisions rather than the determination. The instrument only governs the numeric result once a failure event has been found to exist under the Act (s 3; s 5 cross-references). Practitioners must therefore ensure that the underlying Act-based decision-making is robust before applying these numeric rules.

For agencies responsible for administering penalties, and for advisers assisting affected persons, compliance with this determination requires a tightly specified operational checklist derived from the text.

1. Date and scope check. Confirm the decision to be made is dated on or after 1 October 2025, because the determination applies to decisions made on or after that date irrespective of when the failure occurred (s 2; s 6). If the decision predates 1 October 2025, the new rules do not apply.

2. Identify failure type and relevant penalty period. Establish whether the event is a reconnection failure, no show no pay failure, or non-attendance failure by reference to the Act (s 5). For reconnection failures and non-attendance failures identify the reconnection failure period or the non-attendance failure penalty period as defined by the Act (s 5).

3. Segment penalty period by instalment periods. Determine the instalment period(s) in which each day of the penalty period falls (instalment period has the meaning in s 43 of the Act, referenced by s 5). If the penalty period spans multiple instalment periods, partition the period into the applicable instalment-period segments (s 10, Note 3).

4. For each instalment period segment, collect inputs:

   • Determine PPAinst: the amount of participation payment payable to the person for the instalment period, including any supplements that form part of the rate (s 10; Note 1).
   • Determine PAinst, PSinst, RAinst, RAAinst, and YDSinst: the amounts of pharmaceutical allowance, pension supplement, rent assistance, remote area allowance, and youth disability supplement for the instalment period (s 10).
   • Confirm which allowances or supplements are not part of the participation payment rate and therefore excluded (mobility allowance, pensioner education supplement, telephone allowance, utilities allowance per s 10, Note 2).

5. Compute penalty-affected rate (PAR) for each instalment period segment:

   • PAR = PPAinst − (PAinst + PSinst + RAinst + RAAinst + YDSinst) (s 10).

6. Determine Dayinst and WDinst for each instalment period segment:

   • Dayinst is the number of days in that instalment period.
   • WDinst is the number of weekdays in that instalment period; weekday is any day that is not a Saturday or Sunday (s 10; s 5).

7. Compute the two candidate daily rates for each day in the instalment segment and select the lesser:

   • First method: daily penalty rate = 1.4 × PAR / Dayinst (s 10(2)).
   • Second method: daily penalty rate = PAR / WDinst (s 10(3)).
   • Daily penalty rate for a day is the lesser of the two amounts (s 10(1)).

8. Aggregate to produce the penalty amount depending on failure type:

   • Reconnection failure: penalty amount = sum of daily penalty rates for each weekday in the reconnection failure period (s 7).
   • Non-attendance failure: penalty amount = sum of daily penalty rates for each weekday in the non-attendance failure penalty period (s 9).
   • No show no pay failure: penalty amount for the particular day = the daily penalty rate for that day (s 8).

9. Record and explain methodology in decision documents. The decision record should document the instalment periods used, the PPAinst and other allowance values, the Dayinst and WDinst counts, the two candidate calculations, and the selection of the lesser daily rate per day, as the determination requires that penalties be computed according to those formulae (s 10). For segmented penalty periods, provide the partitioning logic and separate calculations for each instalment period segment (s 10, Note 3).

10. System and staff readiness. Update case management and payments software to implement the above steps automatically where possible. Train staff on:

• distinguishing supplements that form part of the participation payment rate from excluded allowances (s 10, Notes 1-2);
• splitting penalty periods across instalment boundaries and counting weekdays correctly (s 5; s 10, Note 3);
• applying the lesser-of-two methods rule for each instalment period day (s 10).

11. Transitional handling. For decisions made on or after the commencement date that relate to failures before that date, ensure the new calculation method is applied consistently to the decision as required by s 6.

12. Repeal awareness. Remove or archive any references to the 2015 determination and update internal guidance to reflect that Schedule 1 repeals the earlier instrument in full (Schedule 1).

For advisers representing affected persons, compliance steps mirror those above but focused on audit and verification: obtain the decision record, verify the PPAinst and other allowance inputs used by the decision-maker, recompute Dayinst and WDinst for the instalment periods relied upon, compute both candidate daily rates and check that the lesser was used, verify aggregation over weekdays only for reconnection and non-attendance penalty periods, and confirm that the transitional rule in s 6 was applied where appropriate.

Following these steps and documenting each element will align calculation and record-keeping with the determination’s explicit requirements (ss 5-10; s 6; Schedule 1).