Crisis Payments

A crisis payment is a non-taxable, “one off” non refundable payment to financially assist eligible people to establish themselves in a new home following specifically defined extreme circumstances.  It should be noted that the eligibility and payability criteria for crisis payment are restricted.

2.  Background to payment

Concern was raised in representations by welfare groups that non-refundable assistance was not available to persons who are forced to leave their homes as a result of extreme circumstances, such as natural disasters, fire and domestic or family violence.

3.  Purpose of new payment

The purpose of a crisis payment is to extend immediate financial assistance to:

people in severe financial hardship who are forced to leave their home due to an extreme circumstance, such as domestic and family violence or house fire; and

released prisoners from either gaol or psychiatric confinement in 'severe financial hardship'.

The payment is designed to assist the person to establish themselves in a new residence.

4.  Start date

The commencement date for this initiative is 11 November 1999.

5.  Legislative authority

The Repatriation Commission has approved the use of the existing section 106 Veterans' Entitlements Act (Special Assistance), to authorise payment of a crisis payment.  This section allows the Commission to make payments as it deems fit, subject however to prescribed conditions.

Legislative amendments to the Social Security Act 1991 (SSA) provide for crisis payments under that Act.

6.  Number affected

Whilst Centrelink are likely to have a large number of beneficiaries applying, the initiative is likely to have minimal impact upon DVA pensioners with no more than a handful likely to apply.

7.  What form does crisis payment take

Crisis payment is paid as a one-off, non-refundable payment equivalent to  one week at the maximum basic rate of income support pension.  To receive a crisis payment from DVA in addition to their regular payments a person must:

qualify for a service pension, income support supplement or an age

meet the qualifications for either “extreme circumstances forcing departure from home” or “release from lawful custody from either a gaol or psychiatric confinement”.

8.  Eligibility requirement

Pensioners applying for crisis payment under section 106 of the VEA must have claimed and be actually receiving or be eligible to receive a service pension, partner service pension, or income support supplement.

9.  Severe financial hardship

To qualify for crisis payment, the person must be in severe financial hardship on the day on which the claim for crisis payment is made.  For the purposes of crisis payment:

a person who is not a member of a couple is in severe financial hardship if the value of the person's liquid assets (see definition below) is less than the fortnightly amount at the “maximum payment rate” (see note below) of DVA income support pension payable to the person; or

a person who is a member of a couple is in severe financial hardship if the value of the person's liquid assets (see definition below) is less than twice the fortnightly amount at the “maximum payment rate” (see note below) of DVA income support pension payable to the person.

Definition of liquid assets means  -  cash and readily available funds and includes, but is not restricted to, assets such as: shares, debentures, monies with financial institutions (regardless of whether the funds can be withdrawn immediately), money owed by an employer but excludes a qualifying eligible termination payment as defined in the Tax Act.

Note:  The 'maximum payment rate' of pension referred to immediately above is inclusive of basic rate of pension and associated allowances before the income/assets test is applied but excludes remote area allowance(RAA).  For income support supplement recipients, this amount is limited to the ceiling rate.  The maximum payment rate is determined from Part 2 – Rate Calculator Module A – Overall rate calculation process in Schedule 6 as follows:

Class of entitlement                    Applicable Method

                                                                                Statement Steps

service pension (not blind, not war                Method statement 1, Step 4

    widow/war widower – pensioner)

service pension (blind, not war                      Method statement 2, Step 4

    widow/war widower – pensioner)

service pension (not blind, war                      Method statement 1, Step 4

    widow/war widower – pensioner)

service pension (blind, war widow/               Method statement 1, Step 4

    war widower – pensioner)

income support supplement, not blind           Method statement 1, Step 4

income support supplement, blind                  Method statement 1, Step 4

10.  Eligibility requirements for a person in lawful custody

To be eligible for a crisis payment, a person in lawful custody (see note below) must:

1)   be in lawful custody for 14 days or more;

claim crisis payment within 7 days of release (also refer paragraph 13 on

        early lodgement of claim);

3)   be in “severe financial hardship”; and

4)   receive an income support pension.

Please refer to Attachment B for a table of when crisis payment is payable on release from prison/psychiatric confinement following lawful custody.

Note: Lawful custody means detention of a person in gaol, or in psychiatric confinement because he or she has been charged with an offence.

11.  Eligibility requirements for a person forced to depart their home due to an extreme circumstance

A person in extreme circumstances (see attachment C for examples of extreme circumstances) must fulfil all the eligibility criteria below. The person is eligible if he/she:

has left or cannot return home because of extreme circumstances;

cannot reasonably be expected to remain in, or return to the home because of the extreme circumstances;

has established or intends to establish a new home;

was in Australia when the extreme circumstances occurred;

claims the crisis payment within 7 days after the extreme

circumstances occurred;

on the day of the claim:

was in 'severe financial hardship' (refer paragraph 8);

is receiving or has made a claim for (on that day or an earlier day) - an income support pension entitlement and is eligible to receive payment on that day; and

in the 12 months prior to the date of claim, has been paid 3 or less crisis payments.

Note:  Attachment A provides a table of when a crisis payment can be made as a result of an extreme circumstance.

12.  Psychiatric facility patients not charged with an offence

A person who lives in a psychiatric facility will only be considered for crisis payment if they have been in lawful custody for 14 days or more and fulfil the other eligibility criteria.  In all other circumstances i.e. those where the person has not been charged with an offence, their departure from that facility would have to have been the result of extreme circumstances i.e. fire etc.

13.  Exclusion from eligibility

A person is not eligible if:

a disaster relief payment has been paid for the same circumstances

      at the time of the determination; or

if the Commission is satisfied that the extreme circumstances were bought about in order to obtain a crisis payment.

14.  Establishing a new home

The person must have established a new home or they must be intending to establish a new home.  When the extreme circumstance is due to domestic and family violence, the examiner will need to determine whether the person has established or intends to establish a new home.

In the case of other extreme circumstances, a person is considered to have established a new home if a person's home is considered uninhabitable for 5 or more days after the extreme circumstance occurred.

15.  Claim in Australia within 7 days

A claim must be made in Australia within 7 days of the extreme circumstance occurring or from the date of prison release on an approved form (D567 for prison release and D568 for extreme circumstances) completed by the person or their authorised representative.  This 7 day period is intended to allow people in remote areas to lodge a claim.

16.  Informal claim for a person in extreme circumstances

An informal claim for crisis payment can be lodged by a person who is:

in Australia;

eligible for crisis payment on the day of the informal claim; and

a proper claim is made within 14 days of the informal claim.

17.  Withdrawal

of claim

A claimant or their authorised representative can withdraw a claim yet to be determined either orally or in writing and the claim is then taken not to have been made.

18.  Payment rate

The rate of crisis payment is a flat rate of one week's pension based upon the 'maximum basic rate' of the person.  The amount of a crisis payment is half the fortnightly 'maximum basic rate' as worked out in accordance with Module B of the rate calculator.

Therefore for service pensioners, this is the maximum service pension rate applicable to the person before the income and assets tests are applied.  The rate does not include the addition of any allowances or add-ons.

The 'maximum basic rate' is determined by reference to Module B of the Rate Calculator in Schedule 6 of the VEA.  That module provides only two possible rates of the 'maximum basic rate':

Not a member of a couple/member of an illness separated couple/ or a member of a respite care couple; and

Partnered.

Therefore ISS recipients do not have their payment based upon the ceiling rate of $120.10 but rather upon the relevant rate recorded in one of the above two categories in Module B of the Rate Calculator, that is the rate before the income and assets test or ceiling rate is applied.

Note:  the 'maximum basic rate' is not to be confused with the 'maximum payment rate' referred to in paragraph 9.  The maximum payment rate is used to determine whether someone is in severe financial hardship with a view to determining eligibility for crisis payment.  The maximum basic rate referred to in this section deals with the actual rate of payment.

19. Effective date

The effective date of the determination is the day on which the determination is made or an earlier day as specified in the determination.

20. Method of payment

The few payments to be made will be done as manual payments either by cheque or a one time amount payment into a financial institution.  The payment can be done on a manual coding sheet such as a D408.  The form used for authorising the payment should be marked as a crisis payment made under section 106 VEA.  It should also clearly be marked as a non-taxable payment to ensure the authority is not passed to the tax clerk.

A category for crisis payments may be added to the new integrated payments system.  It should be coded as a service pension payment for the time being.

Payment of the crisis payment should be paid to a bank account but can be paid in another manner where this is directed by a delegate of the Commission authorising the payment.

21.  Advices

Letters relevant to crisis payments, including rejection letters will be available via standard letters.  Attachment D provides samples of these letters.  Crisis payments letters for age pensioners will also be available via standard letters.

22.  Taxation exempt

Payments made as 'special assistance' under section 106 VEA have a standing tax exemption under the Income Tax Assessment Act 1997.

23.  Crisis payment is an exempt asset

Crisis payments are not assessable under the income or assets tests and legislative action will be taken to included these payments under the definition of an 'exempt asset' in section 52 VEA.

24.  Right of appeal

A claimant seeking a review of a rejection of a crisis payment application must:

put the request in writing;

specify the grounds of the appeal;

lodge the request within 3 months of the advice of the rejection of crisis payment.

25.  Appeal to the AAT

A claimant wishing to have a request for review of a crisis payment by Commission reconsidered can apply to the Administrative Appeal Tribunal within 3 months of receipt of advice of the review determination.

26.  Date of effect of review decision

Any successful appeal against a crisis payment determination will take affect from the date the original decision would have taken effect.

26.  Contact

Any queries regarding the above should be directed to:

Tim Adams on 03 9284 6306 or Oona O'Beirne on 02 9213 7771.