B16/1994 TAX FILE NUMBERS (TFNs) : NEW EXEMPTION CATEGORY

DATE OF ISSUE: 22 APRIL 1994

TAX FILE NUMBERS (TFNs) : NEW EXEMPTION CATEGORY

Purpose

The purpose of this DI is to advise you of :

a new exemption category for 'DP only' pensioners; and

the administrative procedures for reinstating pension to those 'DP only' pensioners whose pension has been suspended or cancelled for failure to provide a TFN or failure to respond to a request for a TFN and have now been granted an exemption under the new category.

Background

2.One of the 1990 Budget initiatives was to require all recipients of service, disability, war widow/ers pensions and allowances to provide their TFN. The authority for requesting a TFN is contained in S128A of the VEA.

3.In recognition of the fact that some pensioners would be disadvantaged or put under undue stress trying to comply with the requirement to provide their TFN, an exemption list was developed based on DSS guidelines.

4.In general, a pensioner is granted exemption, upon application, if he/she :

has been in receipt of SP for more than ten years and has additional income of less than $20.00 per week;

lives overseas;

is a recipient of a wife/widow dependant's DP;

is homeless; or

is profoundly disabled.

5.In addition, anyone over 80 years of age, a blinded service pensioner or a resident in a nursing home or similar institution, has been exempted automatically from the requirement to provide a TFN.

6.Since then, there have been representations from various individuals seeking exemption on other grounds. Most of these concerns stem from recipients of 'DP only' based on the fact that disability pension is not income tested by this department and is not taxable.

7.Where exemption has been denied or the pensioner has refused to provide their TFN, continued refusal has led to suspension and in some cases cancellation of pension.

New Exemption Category

8.In response to these concerns, the Secretary has approved a new guideline. Under this guideline, a 'DP only' pensioner may be exempted from providing a TFN if they can provide proof that their income and/or assets preclude them from receiving an income support pension or benefit. The introduction of this new category means that some of those who have been cancelled or suspended may now qualify for reinstatement of pension.

9.However, pensioners who have already provided their TFN cannot now be considered for exemption.

Required Branch action

10.Branches will have to:

identify those pensioners whose DP is in suspension or has been cancelled for :

(a)failure to provide their TFN;

(b)failure to reply to correspondence requesting the TFN;

write to these pensioners advising of the new exemption category and invite them to apply for reinstatement of pension if they think they meet the exemption criteria. Where the pension is suspended/cancelled because the pensioner did not reply to correspondence (eg. whereabouts unknown), action is required to try to contact the pensioner before writing eg. by a phone call, etc;

assess claims for exemption;

grant or reject the claim as appropriate and advise the client; and

restore or resume pension and pay arrears where applicable.

11.Copies of the wording to be used to write to these pensioners are at Attachments A, B and C. The wording has been varied depending on (i) whether the person's pension was suspended for refusing to supply their TFN; (ii) whether their pension was cancelled for refusing to supply their TFN; or (iii) whether the person did not reply to correspondence.

12.Where one of these letters is sent to the pensioner and there is no response within two months, it will be assumed that they do not wish to apply for the exemption. No follow up action is required.

13.As you are aware, there is no requirement under the legislation for pensioners in receipt of dependant's DP to supply a TFN and therefore the question of an exemption in these cases does not arise.

Legal opinion on cancellations under section 128A

14.For cancellations under s128A of the VEA, the Legal opinion is that this section:

"does not have the effect, at law, of cancelling a pension. It merely provides that the pension 'is not to be paid', even though the person remains ' eligible to receive' the pension...

Once a person has provided the TFN (or is granted an exemption), unless the person actually seeks an increase in pension, there is no reason to reassess pension or re-determine eligibility because those matters are not affected by s128A..."

15.The legislation in respect of payment of arrears in these cases is unclear and is open to several interpretations. The more beneficial approach has been adopted and full arrears may be paid following restoration or resumption of pension. However, Branches should be aware that a Bill to amend the VEA which limits arrears payments to a maximum of 3 months is expected to be before Parliament in June 1994.

Assessment for exemption

16.Normally when assessing the rate of pension payable we have to be satisfied that the pensioner's income is below the current income and asset levels. Under the new exemption category, the reverse will apply, ie. Branches must confirm that the pensioner is excluded from an income support payment because of excess income and assets.

INCOME TEST

17.As at 31 March 1994, the income limits at which pension ceases are:

Not a member of a couple$734.60 per fortnight

Partnered (combined)$1223.60 per fortnight

Spouse, Widow/er$617.00 per fortnight.

18.For the purposes of assessing eligibility for exemption under this new category, the increased income limits normally applicable for eligible children or renters are not be applied. In addition, Disability Pension is to be assessed as income.

ASSETS TEST

19.As at 31 March 1994, the asset limits at which pension ceases are:

LOW LIMITHIGH LIMIT

Not a member of a couple$220,750 $301,250

Partnered (combined)$339,500 $420,000

Spouse, Widow/er$203,000 $283,500

20.In assessing eligibility for the new exemption category, either the low or the high asset limits should be applied as in a normal assets test assessment.

21.If the pensioner meets the exemption guideline, then pension is to be reinstated and arrears paid where applicable.

What constitutes 'proof'

22.The onus is on the pensioner to prove that he/she has income or assets in excess of the limits. The degree of investigation required in order to be satisfied that a pensioner would not be eligible for an income support pension or benefit is at the discretion of Branch Office delegates. Branches should not as a matter of course initiate investigation to substantiate a pensioner's claim. Income and Asset Review forms should only be used in doubtful cases where clarification of income and/or assets is required.

23.Some examples of proof of income/assets which may be used are: Income Tax Assessment Notices, group certificates, statements from accountants, rates notices, insurance policies, bank statements, etc. A statutory declaration from the pensioner or a statement from the Department of Social Security verifying that the person is not in receipt of a pension/benefit from that Department, would not normally be considered as sufficient evidence of income or assets.

24.Any documents obtained as evidence must be destroyed or returned to the client by certified mail. No documentation showing a pensioner's income or assets is to be filed except for the certificate of exemption.

Certificate of exemption

25.The delegate who has the authority to exempt will need to certify that income and/or assets are above the limits. This is to be done on a "certificate of exemption", copies of which are provided at Attachments D and E.

26.Delegates are required to certify that the pensioner's income/assets are above the relevant income or assets limits and the pensioner is thereby excluded from payment of an income support pension. In addition, the Delegate must indicate (by ticking the appropriate box or boxes), the form of evidence provided, which was the basis of the Delegate's decision to exempt.

27.A copy of Branch Office positions with the delegation to grant exemptions will be provided to the Branch Contact Officers for Data Matching.

Duty of Care

28.If in the course of investigating a person's eligibility for the exemption, it is apparent that the pensioner may be eligible for an income support pension, Branches have a 'Duty of Care' to advise the pensioner that they may be eligible for an income support payment from either DVA or DSS.

Appeal Rights

29.There is no right of appeal against a decision to not grant exemption except to the Federal Court concerning points of law.

Collection of Statistics

30.We anticipate that Parliament will require detailed reports on the new exemption category. For this reason it will be necessary to keep extensive statistics on these cases and it may be appropriate for activity relating to this exemption to be undertaken within one area and/or by one officer. It is also logical for the assessment and determination of these cases to be done by income support staff.

31.The following statistics are to be retained:

(i)the number of letters sent to pensioners who have been cancelled for:

refusal to supply a TFN;
failure to respond to our request for a TFN; and

(ii)the number of letters sent to pensioners who are currently suspended for:

refusal to supply a TFN;
failure to respond to our request for a TFN; and

(iii)the numbers of pensioners who applied for the new exemption;

(iv)the names, file numbers and rates of pension payable to all pensioners who are granted the new exemption;

(v)the value of arrears resulting from reinstatement of pension as a result of this exemption; and

(vi)the administrative costs of doing this exercise.

Systems Changes

32.The TFN exemption screen will be amended to incorporate the new category, 'DP only, Income/Assets in excess'.

Existing Advices

33.Branches will need to amend any existing advices listing TFN exemptions to include the new category.

Enquiries

34.There is an expectation that there could be a large number of enquiries due to a number of incorrect media reports on the new exemption. VAN areas should be made aware of this.

Contact

35.If you have any enquiries in relation to this DI please contact Masuda Sheikh on (06) 289 6442.

NATIONAL PROGRAM DIRECTOR

(BENEFITS)

THIS ATTACHMENT HAS BEEN REKEYED TO ENABLE IT TO BE INCLUDED ON 'THE GENERAL'

ATTACHMENT A

DO NOT REPLY TO

CORRESPONDENCE

12 April 1994

(NAME)

(ADDRESS)

Dear Mr Smith,

I refer to our letter of (date) informing you that your Disability Pension has been cancelled with effect from(date). This action was taken because you did not reply to our correspondence requesting you to supply your Tax File Number. Your pension cannot be reinstated unless you supply your Tax File Number or are granted an exemption from providing one.

This letter is to inform you about the new exemption category recently announced by the Minister for Veterans' Affairs, Mr Con Sciacca. Under the new category, pensioners who receive a disability pension, but no service pension, do not have to supply a Tax File Number if they can provide proof that their income and/or assets would preclude them from receiving an income support pension.

You may wish to apply for your disability pension to be reinstated if you consider that your income or assets are above the levels listed below.

INCOME

You may be exempted from the need to supply a Tax File Number if your current income exceeds $734.60 per fortnight (if you are single) or if your and your partner's income exceeds $1,223.60 per fortnight (if you are married). For the purposes of assessing eligibility under this exemption, disability pension will be regarded as income.

ASSETS

If you own your own home, you may be exempted from the need to supply your Tax File Number if your assets, excluding your home, exceed $220,750 (if you are single) or $339,500 (if you are married). If you do not own your own home the levels are $301,250 (single) and $420,000 (married).

HOW TO APPLY FOR THE EXEMPTION

If you wish to apply for this exemption you must write to us, or you can apply directly to the nearest office of the Department of Veterans' Affairs, submitting evidence of your income or assets. There is no need to supply details of your partner's income or assets if your income/assets alone are above the applicable amount.

The type of evidence of income or assets required will vary depending on each individual's circumstances. For example, as evidence of your income you may wish to submit your Income Tax Assessment notice, your last group certificate, or a statement from your accountant detailing your annual income. As evidence of your assets you may wish to submit recent rate notices or property valuations showing the value of any property owned other than your home, bank statements or insurance policies. Original documents will be returned to you by certified mail and copies will not be maintained on your file.

If no reply is received to this letter it will be assumed that you do not wish to apply for exemption under the new category.

Please contact (contact officer)on (phone number) if you wish to apply for the exemption or seek further information concerning this matter.

Yours sincerely

(CLERK)

for Deputy Commissioner

ATTACHMENT B

REFUSED TO SUPPLY TFN

12 April 1994

(NAME)

(ADDRESS)

Dear Mr Smith,

I refer to our letter of (date) informing you that your Disability Pension has been cancelled with effect from (date) . This action was taken because you declined to supply the department with your Tax File Number. Your pension cannot be reinstated unless you supply your Tax File Number or are granted an exemption from providing one.

You may wish to apply for your disability pension to be reinstated if you consider that your income or assets are above the levels listed below.

INCOME

ASSETS

HOW TO APPLY FOR THE EXEMPTION

If you wish to apply for this exemption you must write to us, or you can also apply directly to the nearest office of the Department of Veterans' Affairs, submitting evidence of your income or assets. There is no need to supply details of your partner's income or assets if your income/assets alone are above the applicable amount.

If no reply is received to this letter it will be assumed that you do not wish to apply for exemption under the new category.

Please contact (contact officer)on (phone number) if you wish to apply for the exemption or seek further information concerning this matter.

Yours sincerely

(CLERK)

for Deputy Commissioner

ATTACHMENT C

PENSION SUSPENDED

12 April 1994

(NAME)

(ADDRESS)

Dear Mr Smith,

I refer to our letter of (date) informing you that your Disability Pension has been suspended with effect from (date) . Your pension has been suspended as you have not supplied the department with your Tax File Number. Your pension cannot be resumed unless you supply your Tax File Number or are granted an exemption from providing one.

You may wish to apply for an exemption from providing a Tax File Number if you consider that your income or assets are above the levels listed below.

INCOME

ASSETS

HOW TO APPLY FOR THE EXEMPTION

If no reply is received to this letter it will be assumed that you do not wish to apply for exemption under the new category.

Please contact (contact officer)on (phone number) if you wish to apply for the exemption or seek further information concerning this matter.

Yours sincerely

(CLERK)

for Deputy Commissioner

ATTACHMENT D

CERTIFICATE OF EXEMPTION

(to be placed on file/ not for external use)

INCOME TEST

Name :

File number :

Assessment : (single/married)

I certify that the pensioner/s named above has/have provided proof that his/her income level is above the current income limit of $/per fortnight which precludes him/her from receiving an income support pension or benefit.

Evidence was provided in the form of :

o Income Tax Assessment Notice

o Group certificates

o Statements from accountant/broker

o Statement from employer

o Investment policies

o Financial Institutions statements

o Other (please specify)

On this basis, an exemption is granted from providing a Tax File Number under the existing guidelines.

(Signed)

as delegate of the Secretary under s128A of the VEA

(date)

ATTACHMENT E

CERTIFICATE OF EXEMPTION

(to be placed on file/ not for external use)

ASSETS TEST

Name :

File number :

Assessment : (single/married)

(homeowner/non-homeowner)

I certify that the pensioner/s named above has/have provided proof that his/her asset level is above the current asset limit of $ which precludes him/her from receiving an income support pension or benefit.

Evidence was provided in the form of (tick one or more of the following):

o Income Tax Return

o Statements from accountant/broker

o Council rates notices

o Investment policies

o Financial Institutions statements

o Other (please specify)

On this basis, an exemption is granted from providing a Tax File Number under the existing guidelines.

(Signed)

as delegate of the Secretary under s128A of the VEA

(date)

Source URL: https://clik.dva.gov.au/compensation-and-support-reference-library/departmental-instructions/1994/b161994-tax-file-numbers-tfns-new-exemption-category