B59/1993 CHANGES TO PROCEDURES FOR THE RECORDING OF FRINGE BENEFITS AND TREATMENT 'SAVED'

External

Departmental Instruction

DATE OF ISSUE: 2 NOVEMBER 1993

CHANGES TO PROCEDURES FOR THE RECORDING OF FRINGE BENEFITS AND TREATMENT 'SAVED'

INTRODUCTION

The purpose of this Departmental Instruction is to provide details of new procedures relating to the recording of fringe benefits and treatment 'saved' eligibility for service pension clients who satisfied the 'modified' fringe benefits test that applied when the deeming provisions were introduced.

BACKGROUND

2.A 'modified' fringe benefits and treatment income test came into effect on 21 August 1990. This test was introduced in order to minimise the impact of deeming provisions on fringe benefits eligibility for service pension clients.

3.The 'modified' fringe benefits test was applied to the following:

clients who would have lost fringe benefits or s. 53D treatment eligibility (also known as TSP) under the 'ordinary' fringe benefits test between 21 August 1990 and 1 March 1991 due to the rearrangement of their investment income to maximise that income; and

those service pensioners who continued to be eligible for fringe benefits or gained fringe benefits during the period 21 August 1990 and 1 March 1991 under the 'ordinary' fringe benefits test but who would have lost fringe benefits under the 'ordinary' fringe benefits test from 21 March 1991 when the deeming provisions commenced to apply.

4.Where service pension was reduced to nil from 21 March 1991 as a result of deeming or due to rearrangement of investment income (between 21 August 1990 and 1 March 1991) to prevent the application of the deeming provisions, s 85(7) treatment eligibility (also known as TSD) was also saved.

5.The 'ordinary' income test applies to those pensioners who become eligible for fringe benefits after 1 March 1991.

6.The difference between the 'modified' test and the 'ordinary' income test is that certain types of income are excluded under the 'modified' test including:

bank, building society and credit union account interest (including deemed interest);

managed investments;

interest from loans, including bonds and debentures;

shares; and

immediate annuities.

7.Where the 'modified' fringe benefits test applies the case is generally referred to as fringe benefits 'saved'.

8.If service pension is assessed under the assets test the modified rules do not apply.

9.From 1 April 1993 fringe benefits were extended to all recipients of service pension. With the extension of fringe benefits, the cut-off point for fringe benefits became the level of income at which service pension is no longer payable. Accordingly the 'modified' fringe benefits test income limits were also extended to the pension cut-off point.

10.The 'modified' treatment benefits test also applied to s. 53D treatment

eligibility. It is important to note that the extension of fringe benefits did not flow on to s. 53D treatment. The more stringent income and assets tests continue to apply to s. 53D treatment eligibility.

11.In the case of s. 85(7) treatment the 'modified' treatment benefits test only applied to cases where service pension was reduced to nil.

12.Detailed information concerning fringe benefits and treatment 'saved' provisions are contained in the on-line General - GOSP.

TARGET POPULATION

13.The existing number of possible clients nationally entitled to fringe benefits under the modified fringe benefits test is 44, as follows:

NSW — 12

QLD — 1

SA 6

TAS — 1

VIC — 18

WA — 6

14.This number was reduced significantly when the fringe benefits income and assets test were abolished from 1 April 1993. From that date all service pensioners were entitled to fringe benefits.

15.Since 1 April 1993 fringe benefits 'saved' provisions only apply to cases where service pension is reduced to nil.

EXISTING PROCEDURES

16.Currently, where a service pension has been reduced to nil but 'saved' fringe benefits apply, a 'dummy' pension amount is recorded on the PP.MR (manual rates) screen, usually $1.00 per fortnight or in the case of more recently updated cases $6.20, $5.20 or $2.60 per fortnight depending on whether the pensioner is single or married.

17.A 'Y' indicator is entered in the fringe benefit field on PP.MR and the rate of service pension is placed under total suspension.

18.This procedure ensured that although no pension was payable, a card would be issued.

19.In cases where s. 53D treatment 'saved' rules apply and the veteran is still in receipt of some rate of service pension the system currently automatically identifies and records the treatment 'saved' status. This automatic procedure will continue.

20.Where an Australian veteran is eligible for s. 85(7) treatment, i.e. 50% DP or more plus any amount of service pension, treatment 'saved' provisions may also apply in cases where service pension is reduced to nil. There are currently no s. 85(7) 'saved' cases in existence.

OBJECTIVE OF CHANGES

21.The objectives of the changes to be introduced are to correct and simplify existing recording procedures for these cases.

CHANGES

22.As a result of the changes to be implemented, the system will automatically identify and record details where a client has fringe benefits and treatment 'saved' status.

23.Fringe benefits 'saved' entitlement will no longer be recorded on the Pension Information Processing system (PIPS). A new screen, Saved Entitlement (EN.SE) has been created (see Attachment A) on the Entitlement and Treatment Eligibility Recording System (EATERS).

24.Both fringe benefits and treatment 'saved' eligibility will be recorded on this screen in the future.

25.For fringe benefits 'saved' the system only has to determine the fringe benefits eligibility date and whether service pension is payable or not.

26.In cases where an Australian veteran is in receipt of service pension but has s. 53D treatment 'saved' status, the 'saved' status will be automatically determined and recorded by checking treatment 'on' date (pre 1 March 1991) and excluding the relevant sources of income from the assessment.

PROCEDURES

27.It will be necessary for Branches to manually review and record all fringe benefits and treatment 'saved' cases currently recorded on PP.MR with a total suspension on the service pension amount, on the new EN.SE screen.

28.The procedures are as follows:

Step 1 Arrange ACF2 Security access

29.Because there are so few FB 'saved' cases nationally it is proposed that ACF2 security access to screens is restricted to a small number of examiners /delegates in each Branch. It will be up to the individual Branches to determine who should have access to the new screens.

Step 2 Ensure FB eligibility date is recorded

30.Check to see if a fringe benefits eligibility date is recorded on the Historic Dates (PP.HD) screen. If no fringe benefits eligibility date recorded the file will have to be obtained and a date entered. If fringe benefits was granted prior to 1984, the appropriate effective date will be either 01/01/84 or the actual grant of fringe benefits date.

Step 3 Cancel the suspended service pension

31.Register a case on CM.CP item: 09 department initiated action.

PP.AC — action: CHG date: next payday

PP.MR — delete FB/treatment indicators and

manual rates of service pension

PP.AD — Suppress advice

PP.SU — Submit to MS for 50

Step 3 Determine the case

32.Determine — PP.DE

Step 4 Record FB 'saved' status on EATERS

33.Once the PIPS action has been finalised:

34.Register new case — CM.CP — Select new item 19 Saved

Entitlement and place in "await

prepare recording status."

CM.SC select appropriate stage number, e.g. 145 for "prepare recording".

EN.SE — enter details of action necessary

(see screen details below)

Step 5 Determine case

EN.DC add 'Y' to determine case to record decision stage

EN.RD — add 'Y' for case finalisation

35.It should be noted that it will not be possible for the same officer to enter the details on the saved entitlement screen and determine the case.

ENTITLEMENT SAVED (EN.SE)

36.The new saved entitlement (EN.SE) screen (see attachment A) will be used to collect details for Fringe Benefits 'saved' cases.

37.Valid inputs for each field are shown below:

ADD'ADD' or 'A'

ACTIONFor Change use 'CHG' or 'C', for Delete use 'DEL' or 'D'

ELIGIBILITY TYPE 'FB' or 'TSP'

COUNTRY CODEThis is a protected field that defaults to 'AU'. It is only relevant for treatment purposes not general FB purposes.

EFFECTIVE DATEDD/MM/YY e.g. 08/08/88. This is the date of fringe benefits eligibility. If unsure refer to the PP.HD screen.

DECISION BODY Will default to 'DEL' for delegate

DECISION DATEDecision date field will be date of eligibility under the FB 'saved' rules. In most of the existing cases it is anticipated that this would be either 21 March 1991 or a date after 21 August 1990 but prior to 1 March 1991 when service pension was reduced to nil due to rearrangement of investment income.

ERROR MESSAGES

38.The ranges of error messages for the EN.SE screen include:

Warning - client is deceased
Invalid File No. client not found
Client not found for given person indicator
Invalid person indicator. Must be VET, SPS or DEF.
Too many entitlements found. Unable to process this client.
Facility not available for this class
Facility not available for this stage
Field Marked "?" Missing, please enter
Invalid eligibility type must be "TSP" or "FB"
"TSP' invalid for dependants, can only save "FB" eligibility.
This facility is unavailable, client currently receiving "SP"
Effective date must be a paydate. Next Paydate is **/**/**
Invalid result. Please enter "on' or "off"
Effective date must not be in the future
Decision date must not be in the future
Invalid action. Must be "CHG" or "DEL"
PFK: 14=HOLD 16=Resume 19=PGUP 20=PGDN. Update as required
PFK: 14=HOLD 16=Resume 19=PGUP 20=PGDN. Update successful
Please enter valid date
Conflicting details for same effective date
AENSBMT - Merge of screen tables halted - wrong action - contact ADP
Client is deceased. Effective date must be before date of death ($$/$$/$$)

TIME FRAME

39.Subject to ACF2 security access for relevant officers the new screens will be available from 1 November 1993. This will provide 4 full days to examine possible FB 'saved' cases and manually transfer existing FB 'saved' cases to EATERS.

40.It is important to note that manual transfer action on existing fringe benefits 'saved' cases should be finalised before 5 November 1993, that is cut off for PCC data extraction. Failure to finalise the cases prior to data extraction will result in a duplicate PCC being issued to the individuals with existing FB 'saved' status.

41.On 20 October 1993 a list of existing fringe benefits 'saved' cases was provided to the individual Branch contact officers (see attachment B for Branch contact officer list).

FUTURE 'SAVED' CASES

42.Future 'saved' cases will be automatically identified by a check of pre-deeming (pre 01/03/91) fringe benefits/treatment eligibility and income details. If the fringe benefit/treatment eligibility date is prior to 1 March 1991, and non-investment income is below the relevant cut off point, the client will retain FB under the modified fringe benefits rules and therefore be automatically recorded on the EN.SE screen.

43.In the case of s 85(7) 'saved' cases the treatment will be automatically recorded under EN.OT.

RESTORATION OF SERVICE PENSION

44.If restoration of service pension on a case with FB 'saved' status occurs it will be necessary for examiners to treat the case in a similar manner to transfer in cases, that is, a 'Y' indicator will have to be entered in the FB 'saved' field on the PP.PA screen as part of PIPS processing. Once the case is finalised and service pension granted the indicator will default to 'N'.

45.It should be noted that this action will be necessary even though a fringe benefits eligibility date should already be recorded on the PP.HD screen.

INQUIRY SCREENS

46.Details of fringe benefits entitlement for all service pension clients will continue to be available on the following general Inquiry screens (GIS):

IQ.CE

IQ.EF

47.Card eligibility details are also located on EC.CC for Treatment cards; and for Pensioner Concession Card eligibility, when implemented, on

8 November 1993, on EC.PC.

ADVICES

48.When transferring existing cases from PIPS to EATERS, automatic advices should be suppressed as part of the transaction. No further advice is necessary as there will be no change to eligibility.

49.The payment advices system (PAS) does not cater adequately for new fringe benefits/treatment 'saved' cases that may arise as a result of reduction of service pension to nil. Changes to PAS were considered but would require major changes in order to make the link to EATERS.

50.Where a new fringe benefits 'saved' case arises a PC advice letter should be prepared advising of cancellation of service pension and retention of fringe benefits and where relevant treatment. (See Attachment C for suggested paragraph wording on PC based advice letters.)

51.It is expected that the number of new 'saved' cases will be very low.

52.Branches will be provided with a list of 'ons' and 'offs' fringe benefits and treatment 'saved' cases on an ongoing basis.

53.Where service pension is restored an automatic advice will be produced on the PAS.

54.From time to time a case may arise where a client(s) loses their FB 'saved' status for example they may become assets tested or their non-investment income may increase to the pension cut-out points. Suggested wording is set out at attachment D.

CONTACT OFFICERS

55.If there are any inquiries arising from this instruction, please contact Oona O'Beirne on (02) 213 7771 or Liz Lambart on (06) 289 6408 and for system related matters Barry Threlfall on (08) 213 2440.

CAROL BATES

AG.ASSISTANT SECRETARY

INCOME SUPPORT

BENEFITS PROGRAM

ATTACHMENT A

NEXT:ENTITLEMENT AND TREATMENT ELIGIBILITY RECORDING — 16/06/93

PSWD:PAGE:

STATE:FILE NO:PERSON INDICATOR:

ACTION NO:CURR ACTION:

NAME:RECEIVED:CLASS TYPE

STAGE START:STAGE:

<< >>

ELIGIBILITY — COUNTRY — EFFECTIVE — DECISION — DECISION

TYPE — CODE — RESULT — DATE — BODY — DATE

ADD==>

::::::

ACTION

(CHG/DEL)

Attachment B

FRINGE BENEFITS PHASE II/PENSIONER CONCESSION CARDCONTACT OFFICER LIST

LOCATIONNAMETELEPHONEFACSIMILE

CENTRAL OFFICEOona O'Beirne(02) 213 7771(02) 213 7322

(PD&I)Liz Lambart(06) 289 6405(06) 289 6553

(SM&S)Raelene Lihou(06) 289 6081(06) 289 4853

Barry Threlfall(08) 213 2440(08) 213 2412

BRANCHES

Tasmania — Doug McLean(002) 216 684(002) 216 602

Victoria — Wendy Hall(03) 284 6379(03) 284 6797

Queensland — Richard Graveur(07) 223 8835(07) 223 8533

Nth Queensland — Michael Christensen(077) 22 3309(077) 22 3300

NSW — Mark Boden(02) 213 7048(02) 281 2083

WA — Mike Crowe(09) 425 8259(09) 221 3094

SA — Barbara Wozniak(08) 213 2650(08) 213 2412

ATTACHMENT C

Please note:The following paragraphs are based on similar wording that exists on the Payment Advices System. Paragraph selection should be chosen based on the individual client's circumstances and not copied down verbatim.

ALOYSIUS McHAGUS

10 TSUNAMI CRESCENT

MAELSTROM NSW 0000

YOUR FILE NUMBER IS NX111111

Dear Mr McHagus

CANCELLATION OF YOUR PENSION AND/OR ALLOWANCE

This letter is to advise you of a change to your pension assessment.

Following the advice received in (XX/XX/XX) regarding your (add detail of source of increase). Your income is in excess of the allowable limit and your service pension has been cancelled.

(If applicable) The cancellation of service pension does not affect your disability pension that will continue at the rate of ($XXX.XX). As a disability pensioner you will also continue to receive pharmaceutical allowance of ($X.XX).

Your Income and Assets

The income and assets recorded for you are listed below:

(Examiners are asked to ensure that accurate details of the income and assets used to calculate pension eligibility are provided.)

Financial Institutions and Cash

Institution — Account — Balance — Actual Assessed

Number — Interest Rate Interest per

fortnight

Commonwealth 06-804-3891 $120,000.00 — 8.00%$369.23

ANZ cheque ac. 1234-34-892 $ 50,000.00 — 4.25% $81.73

Miscellaneous Income

State Superannuation Board of Victoria - $520.00

The total of your fortnightly income as listed above is $970.96. The total of all your assets listed above is $170,000.00.

Fringe Benefits

As a service pensioner you were also eligible for service pension fringe benefits. You will continue to be eligible for fringe benefits under a modified fringe benefits test that applies to service pensioners who were eligible for fringe benefits prior to the introduction of deeming rules on 21 March 1991.

Under the modified fringe benefits test investment income from banks, building societies, credit unions, managed investment funds, interest from loans, bonds and debentures, shares and immediate annuities do not affect fringe benefits eligibility.

You do not have to return your (Pensioner Health Benefits or after 1 January 1994 Pensioner Concession) card.

Medical Treatment (where applicable only)

Your eligibility for medical and hospital treatment through this Department with your (red plastic Service Pensioner Benefits Card (SPBC) or yellow plastic Personal Treatment Entitlement Card (PTEC) as applicable) will also continue because of the savings provisions that currently apply to you.

Your Right of Review

If you do not agree with a decision affecting your rate of service pension, you may apply to have it reviewed by a Delegate of the Repatriation Commission. The Delegate may decide the original decision was correct, or may decide to change it. If the decision is changed, your pension may be increased or decreased.

Any request for a review must be made in writing within 3 months of the day you receive this letter. Your letter should state the specific grounds for your request for review.

Your Obligations to the Department

This advice is issued under Section 54 of the Veterans' Entitlements Act. Please read the following obligations carefully. You must tell us within 21 days if any of the events listed below occur.

When you are telling us of changes to your circumstances you should do this by telephoning or visiting any Department of Veterans' Affairs Office, or by writing to the Deputy Commissioner. The address and telephone number are noted at the beginning of this letter. If you telephone, we may ask you to confirm information in writing or to send us certain documents that are related to the matter.

Obligations - General

You must tell us if:

You change your postal and/or residential address

You leave Australia permanently

Release and Use of Information

The income and asset information you give to this Department are used to work out your eligibility for pension and other benefits. Some information that you have supplied may be released to other agencies or bodies such as the Department of Social Security; the Australian Taxation Office, the Health Insurance Commission; various state and local government authorities; and superannuation funds.

The reason for supplying information to such agencies or bodies is to verify income/asset details; matching of information; payment of accounts for treatment; and to verify eligibility for rebates or concessions.

If you have any questions about any of the above matters contact this office at the address or telephone number shown at the top of this letter.

Yours sincerely

Geoff Stonehouse

Deputy Commissioner

as Delegate of the Secretary

ATTACHMENT D

ALOYSIUS McHAGUS

10 TSUNAMI CRESCENT

MAELSTROM NSW 0000

YOUR FILE NUMBER IS NX111111

Dear Mr McHagus

CANCELLATION OF FRINGE BENEFITS/TREATMENT ENTITLEMENT UNDER THE MODIFIED FRINGE BENEFITS TEST

Following the advice received in (XX/XX/XX) regarding your (add details of source of increase) eligibility for service pension fringe benefits (and treatment benefits where applicable) has been cancelled from (XX/XX/XX).

(If applicable) The cancellation of fringe benefits entitlement does not affect your disability pension that will continue at the rate of ($XXX.XX). As a disability pensioner you will also continue to receive pharmaceutical allowance of ($X.XX).

Your Income and Assets

The income and assets recorded for you are listed below:

(Examiners are asked to ensure that accurate details of the income and assets used to calculate fringe benefits eligibility are provided.)

Financial Institutions and Cash

Institution — Account — Balance — Actual Assessed

Number — Interest Rate — Interest per

fortnight

Commonwealth — 06-804-3891$120,000.00 — 8.00%$369.23

ANZ cheque ac.1234-34-892$ 50,000.00 — 4.25% $81.73

Miscellaneous Income

State Superannuation Board of Victoria - $820.00

The total of your fortnightly income as listed above is $1270.96. The total of all your assets listed above is $170,000.00.

Fringe Benefits

Your eligibility for fringe benefits was assessed under the 'modified' fringe benefits test, introduced on 21 March 1991, to ensure that service pensioners did not lose fringe benefits entitlement due to the deeming provisions.

The 'modified' fringe benefits test excluded all income from investments in banks, building societies, credit unions, managed funds, loans, bonds, debentures, shares and immediate annuities.

As your non-investment income (or assets) now exceeds the allowable limits for fringe benefits purposes you are no longer eligible for the Pensioner Health Benefits and Transport Concession Cards (or Pensioner Concession Card) that you hold.

Please return your Pensioner Health Benefits and Transport Concession Cards (or Pensioner Concession Card) to this Department immediately.

Medical Treatment (where applicable only)

The treatment benefits you have been eligible for with the red plastic Service Pensioner Benefits Card (SPBC) are no longer available from the date of this variation and you should return the card to this office.

(If accepted disabilities exist the following wording should be used)

You are eligible to receive medical and hospital treatment through this Department for your war-caused injuries or diseases.

A white plastic Specific Treatment Entitlement Card (STEC) will be sent to you within the next four (4) weeks. Instructions on its use and the benefits available will also be supplied with your card. You can continue to receive medical and hospital treatment for your war-caused disabilities from the same doctor (Local Medical Officer) Please tell this office if you wish to do so. If you decide to change to a new doctor, you need to request a list of the Local Medical Officers in your area.

As you are only covered for war-caused injuries and diseases, you may want to join a private health fund to cover treatment or hospitalisation not covered by your STEC or Medicare. You may also have to pay the Medicare Levy.

Your entitlement to treatment through this Department does not cover dependants. If you have dependants and they wish to receive treatment or hospitalisation that is not covered by Medicare, you may want to get private health insurance cover for them.

You should also be aware that dependants are not exempt from the Medicare levy.

The benefits you have been eligible for with the yellow plastic Personal Treatment Entitlement Card (PTEC) are no longer available from the date of this variation and you should return the card to this office.