7.8.3 Discounted cash refund | Compensation and Support Reference Library, Overpayment Management Manual, Ch 7 Recovery and Other Methods of Finalising Debts , 7.8 Methods of Recovery

You are here

7.8.3 Discounted cash refund

7.8.3.1If a full cash refund is not possible, but the debtor has readily available funds equal to 80% or more, but less than 100% of the total debt (i.e. the whole of the overpaid amount), consideration should be given to offering up to a 20% discount on the total debt. In all circumstances where this offer is made and accepted, the amount repayable is 80% or more of the total, original debt. The discount on an original debt does not apply to a person who has already entered into a recovery plan to repay the debt.

7.8.3.2The offer can be made in respect of all types of debts, including debts due from a deceased estate, except where:

  • the client or the estate has the capacity to repay the debt in full; and/or
  • the overpayment was caused by fraud.

7.8.3.3For the purposes of overpayments, fraud is defined as:

"a deliberate act of deceit on the part of the pensioner, in order to obtain a higher rate of pension than would otherwise be payable. The act of deceit may be a knowingly false statement, or a deliberate withholding of information - the outcome of the fraud is that the person knowingly receives monies to which he/she has no legal entitlement".

7.8.3.4The standard 'first notice' requests full recovery within 28 days and also advises the person to contact the Department if they are unable to pay the overpaid amount in a lump sum within the prescribed period, or if they wish to discuss the matter. This letter should continue to be sent in the first instance in all manually calculated overpayment cases. For automatic overpayments which arise when a change in circumstances is coded into PIPS, limitation amounts may be applied automatically to the rate of a debtor's ongoing income support payment. The standard 'first notice' in this instance may inform the debtor that the overpayment will be recovered via deductions from a person's ongoing pension.

7.8.3.5If after 28 days no reply is received in relation to a request for a lump sum refund, and the debtor is no longer in receipt of DVA pension, allowance or pecuniary benefit, a letter should be sent with a request for the client to contact the Department with a view to commencing recovery negotiation. Once contact is established and the debtor confirms or advises that a full cash repayment is not possible the steps outlined below should be considered:

Step

Action

1

The debtor's financial circumstances are examined - i.e. forms D2708 and D2589 (where appropriate) should be completed. It should be noted that the readily available funds of the debtor and/or partner should be taken into account when determining 'capacity to repay' (Refer to this manual's Section 7.8.2.1).

2

If the debtor's financial circumstances confirm that there is limited scope to repay the amount in full or at the formulated rate, a discount offer is made if the client meets the criteria outlined in this manual's Sections 7.8.3.1 and 7.8.3.2

3

If the client accepts the offer and pays the agreed amount within 28 days of the offer, the discounted amount is then waived under sub-paragraph 206(1) VEA.

4

If the client does not accept the offer, or fails to pay the agreed amount by the due date, standard negotiation procedures should be resumed - i.e. a partial lump sum repayment with regular instalments sought, limitation imposed etc.

7.8.3.6If a client who is in receipt of an ongoing pension, allowance or pecuniary benefit, receives a 'first notice' requesting a lump sum refund, and does not reply within 28 days, a limitation may be applied to that payment based on the formulated rate of limitation. Where the client has made contact with the Department and there is no capacity to repay the debt in a lump sum the negotiation steps outlined above should be considered.

Example

A veteran has been overpaid service pension totalling $10,000.He has readily available funds of $8,500. A 20% discount is offered which he accepts, and provides a lump sum payment of $8,000 within the specified time. The balance of the debt totalling $2,000 is waived.