B41/1991 APPLICATION OF ADMINISTRATIVE CHARGE ON OVERPAYMENTS

DATE OF ISSUE: 16 August 1991

APPLICATION OF ADMINISTRATIVE CHARGE ON OVERPAYMENTS

Purpose

To advise of new procedures on the calculation of the administrative charge applicable to overpayments not repaid within 3 months of notice.

Background

2.The administrative charge on overpayments was introduced by the Government in 1987.  The charge was to cover some of the costs associated with the administration of overpayments and provide an incentive for debtors to repay the debt within the time constraints imposed.

3.Section 205 of the VEA was amended and provides where :

(1)a... in consequence of a false statement or  representation, or of a failure or omission to comply with a  provision of this Act or of the Regulations,an amount has  been paid by way of pension, allowance or other pecuniary  benefit under this Act that would not have been paid but for  the false statement or representation or but for the failure  or omission;

(5)...where

(a) a person is indebted to the Commonwealth under or  as a result of paragraph (1) (a); (b) the amount of the debt exceeds $50; and   (c) the debt is not discharged within 3 months after  the person has been  given a notice advising the person  of the amount of the debt for the  purpose of this  subsection;

the person becomes liable to pay to the Commonwealth an  additional amount (not exceeding $515) calculated by adding  $15 and 10% of so much of the amount of the debt as remains  due at the end of that period of 3 months.

4.The effective date for the introduction of this charge is 1 September 1987.

5.The Attorney General's Department has advised that DVA & DSS have misinterpreted the Legislation in excluding the charge on the overpayment component which occurred after 1 September 1987 in cases where the debt was known prior to this date.

Correct Application

6.The AG's ruling means that all debtors are required to pay the administrative charge on that portion of the overpayment which represents excess payments made after 1-9-87, even though the debt itself commenced or was discovered prior to this date ie.  whenever the overpayment period continues past 1-9-87, the administrative charge is payable in respect of that portion of the debt which accrues after 1-9-87.

Processing of Cases

7.In all cases where the overpayment period commenced before 1 September 1987, continued past that date and any portion of that debt is still outstanding, a letter to advise of the administrative charge is to be sent to the debtor. The letter must include the following information:

-inform the debtor that legal advice has now been  received from the Attorney-General's Department that  the administrative charge is now payable on any portion  of a debt which accrued after 1 September 1987.

-the debtor is to be reminded of the original total debt  and informed of the portion which represents the  overpayment accruing after 1 September 1987.

-the debtor is to be advised that any portion of the  overpayment accruing after 1 September 1987 which is  still outstanding three months after the date of this  advice letter, will incur the administrative charge.

8.From that point, procedures will be followed in the same manner as those that apply where the debt accrues entirely after 1 September 1987.

9.No administrative charge can be applied without the debtor being given prior notice.

10.It is important to note that there is no right of appeal on the application of an administrative charge under the VEA or the SWPA.

FELICITY BARR

A/G NATIONAL PROGRAM DIRECTOR BENEFITS