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12.7.4 Departmental Initiated Reviews and Actions
Last updated 25 November 2008
Department initiated actions
A department initiated action (DIA) is a reassessment action undertaken by the department. Global or 'batch' runs are DIAs, undertaken by the department for a number of clients with income and assets that fall into a specific category, such as:
- Commonwealth and State superannuation
- [glossary:ma:] — [glossary:naged investment:] and shares
- income streams
- overseas pensions
- British Retirement Income pensions
No obligation to notify
Pensioners with these items in their assessments are not obliged to notify the department of CPI or indexation variations, changes to the unit prices of shares and managed investments, or changes in the exchange rates of pensions paid in overseas currencies.
Department initiated reviews
The term department initiated review (DIR) is a way of referring to review or investigation action initiated by the department, either at the local or national level. Examples of reviews initiated at a national level by the department include:More ?
- annual property revaluations by the [glossary:Australian Valuation Office:] [glossary:(:][glossary:AVO:][glossary:):]
- annual allocated pension reviews
- end of bereavement reviews
- data matching exercises.
Examples of reviews initiated at a local level by the department include:
- aged care reviews
- earnings reviews
- business reviews (excluding trusts and companies reviews)
- specific and compliance reviews.
Classification types for registering DIRs vary according to the type of review initiated.
Treatment of department initiated actions
Changes to pension assessments, where the pensioner is not under obligation to notify (such as CPI increases, changes to exchange rates and changes to the unit price of shares and managed investments) are subject to the date of effect rules set out in section 56G VEA (for favourable determinations), and section 56H VEA (for adverse determinations). These sections generally provide that the date of effect is the date that a determination is made, although other dates of effect may be specified in the determination.
For adverse determinations, the pension reduction cannot be effective from a date that is earlier than the date of the determination. This approach is taken (rather than the alternative date of effect rules set out in section 56 VEA, section 56A VEA and section 56B VEA) because the department takes responsibility for updating this type of information on an ongoing basis for all affected pensioners, rather than responding to notified changes.More ?
Example of treatment of department initiated actions
A person has British Pension in their assessment. As a result of the British Sterling exchange rate being updated by the department the person's pension is reduced. The effective date for this reduction is the date of the batch run (being regarded as the date that the reassessed rate was determined).
Treatment of department initiated reviews where notification obligations arise
If a DIR uncovers a change of circumstances that the person has an obligation to notify of, the date of effect for the changes is determined under section 56, section 56A or section 56B as appropriate.More ?
Example of department initiated reviews where notification obligations arise
If a person has a compliance review which indicates that the amount of British Pension in Pounds Sterling has increased, the date of effect may be determined under section 56, section 56A VEA or section 56B VEA (being the event date or the end of the notification period). This is because, even though the compliance review is a department initiated review, the change to a person's amount of British Pension in Pounds Sterling is a notifiable event. A person's obligations in respect of notifiable events do not generally change for DIRs.More ?
Treatment of department initiated reviews where notification obligations do not arise
In some cases a DIR may be undertaken where the normal obligations on people to notify events do not arise. This may be because the information is to be directly obtained by the department, or because pensioners have been specifically requested not to notify of changed circumstances where a periodic review is intended. In these cases, the suspension of the normal obligation to notify means that the date of effect of a pension reassessment will be determined in the same manner as for department initiated actions under section 56G VEA or section 56H VEA.
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Section 11.1.4 Determining Effective Dates for Variations and Terminations
According to section 5H of the VEA income is:
- an amount earned, derived or received by a person for the person's own use or benefit;
- a periodical payment by way of gift or allowance; or
- a periodical benefit by way of gift or allowance.
An asset means any property, including property outside Australia.
According to subsection 5J(1) of the VEA, an income stream includes:
- an income stream arising under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993; or
- an income stream arising under a public sector scheme (within the meaning of that Act); or
- an income stream arising under a retirement savings account; or
- an income stream provided as life insurance business by a life company registered under section 21 of the Life Insurance Act 1995; or
- an income stream provided by a friendly society (within the meaning of the Income Tax Assessment Act 1996); or
- an income stream designated in writing by the Commission for the purposes of this definition, having regard to the guidelines determined under subsection 5J(1F) of the VEA;
but does not include any of the following:
- available money;
- deposit money;
- a managed investment;
- an investment in a public unit trust;
- an investment in an insurance bond;
- an investment with a friendly society;
- an investment in a superannuation fund;
- an investment in an approved deposit fund;
- an investment in an ATO small superannuation account;
- a listed security;
- a loan that has not been repaid in full;
- an unlisted public security;
- gold, silver or platinum bullion; or
- a payment of compensation in relation to a person's:
- inability to earn, derive or receive income from remunerative work; or
- total and permanent disability or incapacity.
The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).
The date of effect, or effective date, is the day on which a certain incident or 'event' begins affecting a pension assessment.
A compliance review is a risk-based, department-initiated review based on risk profiling. Risk profiling identifies assessments containing high-risk characteristics such as volatile income and asset items. Examples of risk groups are pensioners who have not had their income and assets reviewed for a number of years or assessments with high-risk property that has not been revalued for many years.