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7.9.2 Rate of limitation the introduction of the Debt Management and Recovery System (DMRS) and date of effect rules, a limitation amount may be applied automatically, calculated according to the rules contained in the Receivables Recovery Plan. The following table provides, in a summarised format, the portion amount to be applied to debts:

If the excess payment is...


< $26

One off lump sum

? $26 ? $500

Amount of negative arrears ? 13 fortnights

> $500 ? $1000

Amounts of negative arrears ? 26 fortnights

> $1000 ? $5200

The lesser of:

  • negative arrears ? 26; or
  • formulated rate.

> $5200

No auto portions

Note:Where the debt is greater than $5,200 the debt should be referred to the OMU for alternative recovery arrangements even where the debtor has the capacity to repay the amount as a lump sum. to the introduction of DMRS, recovery by limitation was based on a formulated rate. In its May 1987 economic statement, the Australian Government determined that debts that could not be recovered via a lump sum, be recovered at a minimum rate determined by a formula. That formula was determined as 14% of the total income from all sources to the maximum basic rate of pension, plus 55% of income from all sources up to the income free area, plus 27.5% of all other incoming monies. A decision to recover at a rate less than the 'formula rate' was only to be made if severe financial difficulties were being experienced by a debtor (refer to this manual's Section 7.9.4 Review of Rate of Limitation). formulated rate is still applied to determine a reasonable rate of recovery for manually processed overpayments. for the purposes of determining the rate of limitation includes pensions from all sources. It does not include allowances such as rent assistance, pharmaceutical allowance, additional payments for children, but does include the non-indexed component of the war widow's/widower's pension (previously called domestic allowance).