DATE OF ISSUE: 10 DECEMBER 1991
DELEGATED POWERS TO EXEMPT FROM DEEMING
INTRODUCTION
On 24 October 1991 the Minister delegated his powers to exempt from the deeming provisions certain accounts and loans held by individual pensioners. The purpose of this Instruction is to set out the guidelines to be applied, the procedures to be followed, and the statistical information needed.
GUIDELINES
2.Column 3 of the Schedule of Delegation (Attachment A) sets out the circumstances in which the State Program Manager (Benefits) has delegation to approve or reject a pensioner's application for exemption from the deeming provisions of the VEA.
3.The basis for granting individual account exemptions include the following:
a.Pensioners resident overseas should submit a statement that in the country in which they live they are unable to obtain the current deemed interest rate in an on-call account.
b.They should provide recent brochures or information sheets of at least one major bank in their country of residence showing current on-call interest rates. If, say 6% is freely available, an account getting only 4% would not be exempted.
c.Accounts getting NIL interest would not normally be exempted.
d.Exemptions would not normally apply to any funds held in Australia.
e.Australian residents may hold accounts in countries that have currency restrictions forbidding transfer of money to Australia. Such accounts would normally be exempted if an appropriate interest rate for that country was being earned.
f.If funds are deposited in a country other than the place of residence or Australia, and are earning less than could be expected in the country of residence, the SPM (Benefits) must be satisfied that S.48 (deprivation) does not apply before granting an exemption.
Examiners should note that in many countries, including the UK, the interest rate should be referred to as the gross interest rate.
4.Where a private business to which the pensioner has loaned money goes into receivership, and the interest or the loan itself cannot be realised by the pensioner, the loan should be exempt from the deeming provisions. Evidence that the business has failed may include a report from the appointed liquidator or receiver of the company.
PROCEDURES
5.The examiner is responsible for ensuring that the pensioner has provided sufficient information to allow an application for exemption to be fairly decided. A Requestfor Exemption From Deeming form will be available soon.Apart from giving particular details of the account to be exempted, the pensioner must explain why it would be unreasonable under the circumstances to apply the deeming provisions.
6.Applications should be submitted in the first instance to the Senior Delegate who will keep a register of requests for exemption. With the Senior Delegate's recommendation for either approval or rejection, the request is then sentto the SPM (Benefits) for a decision.
7.The case will be returned for the Senior Delegate to note the decision, and where exemption is not approved, passed to the examiner to notify the pensioner of the decision. Where exemption is approved, the examiner will change the exemption indicator against the relevant account on the FI screen, or against the exempted loan on the ML screen from 'N' to 'S'. This will result in re-assessment back to the pre-deeming rate.
8.If service pension is varied because of an exemption being allowed, the increase will take effect from the first payday after the day on which the request for exemption was received.
LIMITS
9.Examiners should keep in mind that the SPM (Benefits) does not have delegation to exempt either church and charitable organisations or financial organisations. When a pensioner asks about exemption for such an organisation, the examiner should:
a.check with the Investment Policy Officer whether the fund/account is already exempt, and if so, reassess pension (see point 7); or
b.inform the client that the request for exemption must come from the organisation which operates the fund/account.
RIGHTS OF APPEAL
10.A decision taken by the SPM (Benefits) under S.46Z or S.46ZF not to exempt an individual pensioner's account from deeming is not reviewable. It is separate to a decision by a delegate of Commission with regard to an assessment of service pension under S.46X or S.46Y.
STATISTICS
11 — Branch Office records of applications for exemptions should include the following:
a.type of account;
b.name of the financial institution;
c.country in which the account is held;
d.pensioner's country of residence;
e.SPM (B)'s decision; and
f.whether pension was varied as a result.
CONTACT OFFICER
12.The contact officer for enquiries is Helen MACKINNON. Her telephone number is 06-289 6426.
PETER HAWKER
NATIONAL PROGRAM DIRECTOR
BENEFITS