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7.6.7 Penalty interest case types
- The defacto spouse of a veteran receiving service pension* is working. Earnings from employment are not disclosed to DVA and both veteran and spouse incur an overpayment. The defacto spouse leaves the veteran and ignores all notices to repay the debt or enter into a repayment agreement. The defacto spouse has lost eligibility for service pension due to separating from her veteran partner – Apply penalty interest from the day after the final payment day.
- A veteran's spouse is employed casually and has variable earnings. Earnings from her employment are not disclosed to DVA and both veteran and spouse incur an overpayment. The spouse's earnings are averaged over a 13-week review period. This means that at the end of each review period service pension could increase or decrease. The last review period resulted in the couple's service pension being reduced to NIL. They have lost payability for service pension due to the spouse's earnings. However, due to the spouse's fluctuating earnings, it is likely that the couple will become payable in the near future – Do not apply penalty interest.
- Where a pensioner loses payability for service pension due to his/her income or assets, and his/her income or assets are not subject to an ongoing review process – Apply penalty interest from the day after the final payment day.
- A pensioner makes a false identity claim in order to gain entitlement to pension. The case is not detected until sometime after the grant of pension and thus an overpayment is raised – Apply penalty interest from the day after the final payment day.
Note:In cases where fraud is evident prosecution under subsection 208 VEA may be sought.
*Note:The above case types may also apply to income support supplement.