Place holder node for 1991
Central Office Instruction
Instruction No. 15
Date of Effect: 24 December 1991
AMENDMENTS TO THE DEFENCE SERVICE HOMES ACT 1918 BY THE VETERANS' AFFAIRS LEGISLATION AMENDMENT ACT (No. 2) 1991
Purpose
The purpose of this Instruction is to explain the amendments made by Part 2 of the Veterans' Affairs Legislation Act (No. 2) 1991 which relate to the Defence Service Homes Act 1918.
Background
Following advice from the Department of Defence, the operational dates for areas of Malaya and Singapore, as defined in Schedule 2 of the VEA, have been amended.
Also the closing date for operational service in the Gulf region has been proclaimed. As well, Iraq and Kuwait have been declared operational areas and included in a new Item 11 in Schedule 2 to the VEA.
Changes to VEA
Changes to the dates of operational service for Items 5 and 7 in Schedule 2 to the VEA are required to reflect the periods during which the areas were actually "operational". The dates are amended as follows:
Column 2 of Item 5 - On and from 28 May 1963 to and including 19 April 1967.
Column 2 of Item 7 - On and from 17 August 1964 to and including 30 September 1967.
Item 10 of Schedule 2 had no closing date as hostilities had not commenced, let alone ceased, when the VALA Act (No. 1) 1991 was proclaimed. Now a closing date, 9 June 1991, for operational service in the Gulf region has been included. The dates therefore are as follows:
Column 2 of Item 10 - The period from and including 2 August 1990 to and including 9 June 1991.
The original operational area in Column 1 of Item 10 did not include the areas of Iraq and Kuwait. In view of the different commencement dates and different areas a new Item 11 has been included in Schedule 2 as follows:
Item 11. The area comprising Iraq and Kuwait. The period from and including 23 February 1991 to and including 9 June 1991.
Changes to Defence Service Homes Act 1918
As a result of Iraq and Kuwait being declared operational areas, the following is to be inserted in subsection 4(1) after paragraph (gb) of the definition of "Australian Soldier":
"(gc) a person who, as a member of the Defence Force or as a member of a unit of the Defence Force, was allotted for duty within the meaning of subsection 5B(2) of the Veterans' Entitlements Act 1986 in the operational area described in item 11 of Schedule 2 to that Act during the period specified in that item and whose first service in the Defence Force began on or before 14 May 1985;"
Savings Provisions
A savings provision has been included which protects the rights of any veterans who might otherwise be adversely affected by the amendments to Item 5 of Schedule 2. The savings provision would operate in respect of applications received on or before 7 November 1991 but not finally determined before 8 November 1991. In such cases the application will be determined as though the amendments had not been made.
Effective dates
Except for the savings provisions, the date of commencement of the amendments to Items 5 and 7 is immediately after the commencement of the Veterans' Entitlements Act 1986 (22 May 1986).
The date of commencement of the amendment to item 10 is 24 December 1991.
The date of commencement of the insertion of item 11 is 23 February 1991.
The above amendments will be included in the next reprint of the VEA and DSH legislation.
FELICITY M BARR
GENERAL MANAGER
7 February 1992
Central Office Instruction
amending General Orders (1993 edition)
Instruction No. 14
Date of Effect: 22 August 1991
Purpose
The purpose of this Instruction is to introduce a change to the treatment of applications from two or more eligible persons in respect of the same property.
Concurrent assistance may now be made to two or more eligible persons whether they are married persons or not.
Background
It has been the view that only one subsidy could be paid in respect of the one home - except in respect of hospitals/nursing homes acquired by nurses. This view has been confirmed recently by the President of the AAT when hearing an appeal based on the DSH Act as in force before 8 January 1991. However, she expressed the opinion that the AAT would view the matter differently if it was reviewing a decision based on the Act as revised by the Veterans' Affairs Legislation Amendment (VALA) Act 1990.
The interpretation was that, once a married couple became joint borrowers based on the entitlement of one party and the other party became a borrower solely on the basis of having been joined as a joint tenant, the second party was then capable of applying for a Certificate of Entitlement based on his/her own entitlement. This interpretation was obtained from the definitions of "initial advance" and "further advance".
Outcome
The intention of the changes effected by the VALA Act was to grant sequential access to subsidised advances to each of the eligible married persons. However, legal advice has confirmed that the amended Act also allows for concurrent use of subsidised loans by two or more eligible persons.
In the past, one reason why it was accepted that only one entitlement was available at the one time was s.4A of the Act. This section provides that the Secretary may join a spouse with the eligible person to create one eligible person. The purpose of s.4A was to enable joint tenancy ownership by an eligible person and his/her ineligible spouse and it can be applied only to join an ineligible spouse to an eligible person. It cannot be applied where all parties are eligible persons whether they are spouses or unrelated. They must, of course, own the property as joint tenants and the Certificate of Entitlement will specify this.
It needs to be pointed out that the Act as it stands at present does not permit a loan to be made as tenancy-in-common under any circumstances. Joint ownership must be as joint tenants irrespective of whether the provisions of s.4A are invoked. In a situation where more than one entitlement is being used concurrently and part of the group is a married couple with only one of those persons being eligible, the Secretary's discretion under s.4A must be invoked for that couple but the joining of other eligible persons as joint owners of the property must be of their own volition and the Certificate of Entitlement should state the joint tenancy requirement.
Although tenancy-in-common would be the preference of most unrelated eligible persons, they need to be informed that this is not possible under the DSH Act and that they need to obtain independent advice on the implications of holding property as joint tenants.
Procedure
Separate applications need to be obtained from each eligible person. A question on combined use is contained in the revised Subsidy Application form which will be available shortly.
Separate Certificates of Entitlement also need to be issued because s.25 of the Act provides that the maximum that can be expressed in a Certificate of Entitlement is $25,000. Where it is known that clients intend to use Certificates of Entitlement in conjunction, the Certificates should be endorsed to that effect.
As an example, John and Jill Citizen, who each have eligibility for DSH assistance, lodge separate applications for a Certificate, to purchase the same property. The purpose panel on the Certificate naming John Citizen as the entitled applicant should read;
"to purchase a dwelling-house together with the holding on which it is built, with Jill Citizen as joint tenants".
The purpose panel on the Certificate naming Jill Citizen as the entitled applicant should read;
"to purchase a dwelling-house together with the holding on which it is built, with John Citizen as joint tenants".
Westpac will require the joint mortgagors/debtors to execute one first mortgage to cover situations where a separate loan is advanced to each mortgagor in his/her own name.
It is possible that each person will be entitled to a different amount of subsidised loan. This would be the case where at least one of the persons is entitled only to the balance of a previous portable loan. Westpac will maintain two separate loan accounts for concurrent loans. Therefore, individual balances will be known if the individuals eventually cease to require concurrent assistance.
On the death of one concurrent borrower, the debt transfers to the other owner/s by survivorship. The overall amount may continue to be paid off by the surviving person/s. A separate Instruction will be issued on the procedures to be followed where surviving spouses request further advances after the pooled use of entitlements.
The changes have no effect on divorced or separated persons where they are each eligible.
This Instruction should be read in conjunction with the attached document "Circumstances in Which Eligible Persons May Pool Their Entitlements on the One Property".
Effect on ss.26(4) of the Act
It is not intended that application of ss.26(4) of the Act will dramatically change because of acceptance of concurrent use of entitlements on the one property. The essential difference is that ss.26(4) relates to situations which involve two properties - only one of which will be occupied by the new couple. The other property, therefore, has the potential of being an investment property.
You are reminded that cancellation of subsidy under ss.26(4) is a discretionary provision and judgment should be exercised in deciding whether cancellation should be proceeded with depending on the circumstances of each individual case.
CELS
In order to process these applications, State Offices will need to create separate records on CELS. This will result in different file numbers for each of the eligible persons. CELS will be amended to allow for a link between these file numbers. This will mean that details of the other person/s file number/s will be available on any enquiry of the CELS database.
In the meantime, manual records will need to be kept so that these details can be input to CELS at a later date. Cross references to all relevant files should also be made on each person's paper file.
Implications for the Insurance Scheme are under consideration.
General Orders
GOs 6.12 and 6.13 are cancelled and this Instruction constitutes authority to process concurrent applications until the revised GOs are issued.
DON FAGET
Atg GENERAL MANAGER
29 August 1991
CIRCUMSTANCES IN WHICH ELIGIBLE PERSONS MAY POOL THEIR ENTITLEMENTS ON THE ONE PROPERTY
The purposes for which an initial or further advance can be made are governed by ss.18(2) of the DSH Act. The purposes are:
(a) to build a house;
(b) to buy land and build a house;
(c) to buy a house or unit;
(d) to complete a part built house;
(e) to enlarge a home;
(f) to refinance any mortgage on a home
[tests of serious financial hardship apply];
(g) to buy a right of residence in a retirement village;
(h) to complete a person's part built retirement village accommodation;
(j) to enlarge a person's retirement village accommodation;
(k) to refinance a debt raised to buy a right of residence in a retirement village
[tests of serious financial hardship apply].
If a person has held a DSH loan which was paid off before 9 December 1987, he/she has no further access to a DSH loan. Therefore, only eligible persons who have never used their DSH entitlement or who are entitled to the portable use of a previous loan may pool their entitlements.
Where neither person currently owns a home
Both persons can use their entitlements:
(a) to build a house;
(b) to buy land and build a house;
(c) to buy a house or unit;
(g) to buy a right of residence in a retirement village;
Where one person has a current DSH loan
The other person could use his/her entitlement:
(d) to complete a part built house
[where the home being built using the other persons entitlement has not been finished];
(e) to enlarge a home;
(f) to refinance any mortgage on a home
[tests of serious financial hardship apply];
(h) to complete a person's part built retirement village accommodation;
[where the retirement village accommodation being built using the other persons entitlement has not been finished];
(j) to enlarge a person's retirement village accommodation;
(k) to refinance a debt raised to buy a right of residence in a retirement village
[tests of serious financial hardship apply].
If the persons were to sell the current home and seek assistance in respect of another home, they would be in the same position as persons in the 'neither person owns a home' category.
Where the persons own a home not financed with a DSH loan
The persons could use their entitlement:
(d) to complete a part built house
[where there is no mortgage on the home or where any existing mortgagee agrees to surrender first mortgage security to Westpac];
(e) to enlarge a home
[where there is no mortgage on the home or where any existing mortgagee agrees to surrender first mortgage security to Westpac];
(f) to refinance any mortgage on a home
[tests of serious financial hardship apply];
(h) to complete a person's part built retirement village accommodation
[provided security acceptable to Westpac can be given];
(j) to enlarge a person's retirement village accommodation
[provided security acceptable to Westpac can be given];
(k) to refinance a debt raised to buy a right of residence in a retirement village
[tests of serious financial hardship apply].
If the persons were to sell the current home and seek assistance in respect of another home, they would be in the same position as persons in the 'neither person owns a home' category.
Where one person is eligible under the DSH Scheme and the other person is eligible under the ADFHLA Scheme.
At present an eligible person under the DSH Scheme cannot pool his/her entitlement with a person eligible under the ADFHLA Scheme.
Persons who have already lodged an election to revoke a DSH entitlement should get in touch with DSH.
Central Office Instruction
Instruction No. 13
Date of Effect: 25 June 1991
EXTENSION OF ELIGIBILITY PROVISIONS TO SPOUSES OF FEMALE MEMBERS AND VETERANS
Eligibility for Defence Service Homes benefits has been extended to spouses of female members of the forces and entitled female veterans with effect from 25 June 1991, being the date amending legislation received Royal Assent. These amendments are resultant from the announcement made by the Minister, Ben Humphreys on 22 January 1991.
Revised copies of both the Defence Service Homes Act (DSH Act) and the Veteran's Entitlement Act (VEA) will be despatched as soon as practicable.
The most significant changes involve the removal of discrimination ensuring that the dependants of service women who served in the Persian Gulf, as well as dependants of female veterans from earlier periods of conflict or service will be now entitled to apply for Defence Service Homes loan subsidy and insurance.
In order to implement this change, three areas of entitlement have been amended under the DSH Act:
Section 4 – Interpretation
An eligible person for the purposes of the DSH Act formerly included reference to a"female dependant" of an "eligible person". Under the new provisions the definition of "female dependant" has been omitted and replaced by "a widow, widower or dependant parent" of an "eligible person".
A "dependant parent" is defined as a parent of a person mentioned in paragraphs (a) to (g) of the definition of 'eligible person' if:
(a) the person so mentioned:
(i) is dead; and
(ii) at the time of death, was not legally married; and
one of the following sub-paragraphs applies:
(i) the parent is a widow or widower and was dependent on the person before the person became an eligible person;
(ii) the parent's husband or wife is so incapacitated as to be unable to contribute materially to that parent's support.
Section 20 – Criteria for issue of certificate of entitlement: widow/widower advances
Section 20 changes are primarily the omission of "widows advance" to the amended "widow or widower advance". Paragraph 20(1)(a) will now read as:
"(a) the person is:
(b) the person is a purchaser or a borrower in relation to land or land and a dwelling house; and,
(c) the widow or widower advance relates to that land or land and dwelling house ...
Section 23 – Certificate of entitlement: instalment relief
Section 23 changes are primarily the incorporation of the following paragraph:
"(a) the applicant is a purchaser or borrower who is:
Effective dates to be used in all cases, regardless of the date of lodgement of claim or application, cannot, as is the usual practice, precede the date of Royal Assent of the amendment to the DSH Act, being 25 June 1991.
FELICITY M. BARR
GENERAL MANAGER
25 June 1991
Central Office Instruction
Instruction No. 12
Date of Effect: 1 March 1991
REVOCATION OF DEFENCE SERVICE HOMES ENTITLEMENT
Purpose
The purpose of this instruction is to explain the arrangements for dealing with requests from eligible persons who wish to surrender their Defence Service Homes entitlement in favour of the Australian Defence Force Home Loan Assistance Scheme.
Background
The introduction of the Defence Force (Home Loans Assistance) Act 1990, has a consequential effect on the Defence Service Homes Act 1918 by the insertion of Section 4BA, which will commence by proclamation on 1 March 1991. Section 4BA provides as follows:
"4BA.(1) An eligible person who:
is a member of the Defence Force:
(i) whose first service in the Defence Force began on or before 14 May 1985; or
(ii) whose first service in the Defence Service began after that day but who is covered by paragraph (ga) of the definition of "Australian Soldier" in subsection 4(i); and
is not, and has not at any time been, a borrower; and
does not hold a certificate of entitlement that is in force in relation to subsidy on an initial advance;
may elect to surrender his or her status as an eligible person under this Act.
(2) An election must be:
in writing, signed by the person making it; and
given to the Secretary within the prescribed period.
(3) An election is irrevocable and takes effect on the day on which it is given to the Secretary.
(4) When an election takes effect, the person making it stops being an eligible person for the purposes of this Act.
(5) The Secretary must cause a copy of each election to be given to the Secretary to the Department of Defence.
(6) In this section:
prescribed period means the period of 6 months starting on the day on which this section commences."
As this section of the Act commences on 1 March 1991, the prescribed period will be 1 March 1991 to and including 31 August 1991.
Serving members who satisfy Section 4BA(1)(a)(i) and who are still serving as at 1 March 1991, will have dual service eligibility under both the DSH and ADFHLA schemes once they have served the basic service period. The Department of Defence has estimated that there could be a maximum of approximately 35,000 service personnel who may be eligible for assistance under either the DSH or ADFHLA schemes at 1 March 1991. They have further estimated that 18,000 have not utilised their DSH entitlement and so may be eligible to revoke in favour of ADFHLAS. The effect of Section 4BA is that these serving members will have a one-off opportunity to exercise their preference for assistance under ADFHLAS. Once having exercised their option or the prescribed period having expired, there will be no opportunity to move eligibility between schemes.
Implementation Arrangements
The Department of Defence's agent for the administration of ADFHLAS is the Defence Housing Authority (DHA). The DHA has prepared 18,000 information kits for despatch through Base Commanding Officers to members likely to be `dual eligibles' on 1 March 1991. We have had input to the kit preparation and have already forwarded to State Offices the items we have prepared as part of the exercise.
For your information the kits contain:
(i) a letter from the Chief of the Defence Force;
(ii) a DSH/ADFHLAS comparison question and answer sheet;
(iii) a letter from the General Manager DSH;
(iv) an election to revoke DSH entitlement form;
(v) a list of DSH addresses and phone numbers;
(vi) a DSH Insurance leaflet;
(vii) Westpac marketing material.
A Procedure Statement to assist in processing revocation elections has been prepared and is attached. Please note that the ADP specifications and programs have not been finalised as yet and are unlikely to be until at least 25 March 1991. As the ADFHLA scheme commences on 15 May 1991 that aspect of the exercise has not been the highest priority to date.
It is recognised that the revocation exercise may generate a lot of enquiries, both personal and telephone. In this regard, would you please maintain workload statistics as per the attachment and forward them to the Director Resources on a weekly basis commencing the week ending 8 March 1991, so that we can gauge any staffing impact.
This instruction has no effect on any previously issued COI.
FELICITY M. BARR
GENERAL MANAGER
28 February 1991
DEFENCE SERVICE HOMES
REVOCATION OF ENTITLEMENT
STEP NO — DESCRIPTION OF ACTION — PROCEDURE NO 19
REGISTRY STAFF
1. Receive form, election to revoke DSH entitlement [Annex A], in triplicate.
2. Ensure form is clearly date stamped in the space provided indicating date of lodgement.
N.B. All 3 copies require an original date stamp.
3. Conduct a search of salmon cards and any other local database facility e.g. CELS (current and discharged cases only) to ascertain whether DSH assistance has been granted either to member, or spouse as joint tenants.
If no records exist:
(a) Enter full name, service number and date of birth and date of revocation into CELS. Ensure that the information is entered into the revocation election screen.
N.B. The ADP revocation screen will not be available until approximately 25 March 1991.
N.B. Details will be downloaded electronically to CO ADP and forwarded to DHA as in Step 6.
(b) Remove confirmation copy of the revocation form (white duplicate) and send to member with covering letter [Annex B] and insurance brochure/leaflet.
(c) Place original and triplicate (yellow) forms onto separate daily batch files (as per date stamp).
(d) Arrange for triplicate batches to be forwarded to Defence Housing Authority on a regular basis.
N.B. Address for DHA is 2 Brisbane Avenue, Barton ACT 2600.
5. If records exist indicating previous DSH assistance:
Stamp all parts of the election form in red with a VOID stamp [Annex C].
(b) Return all parts of the election form to the member with a letter of rejection [Annex D] giving details of the previous assistance recorded.
N.B. It is not necessary to provide all the details in the spaces provided in the Schedule of the letter of rejection, just sufficient to clearly identify the previous assistance. This should limit the need to obtain files in many instances.
N.B. Where married eligible couples have been assisted in joint tenancy based on one partner's eligibility, each has been a DSH borrower and neither is therefore able to revoke.
(c) Place copies of the letters of rejection on a file for any further action when necessary.
DIRECTOR TECHNOLOGY
6. Prepare a consolidated tape from data entered in step 4(a) above and forward to DHA on request or on completion of the revocation exercise.
Annex A
STATUTORY DECLARATION
Election to revoke DSH entitlement
I elect to revoke my eligibility under the Defence Service Homes Scheme. Date received
Surname
Given names
Postal Address
Service number
Date of Birth
Date of enlistment
Have you ever had assistance under the Defence Service Homes Act? No Yes
Did you receive a Grant from Defence Service Homes Corporation in 1987? No Yes
Did you serve in Namibia in 1989/90? No Yes
Spouse's surname
(if same as yours write "same")
Spouse's given names
DECLARATION DECLARED AT
I
of the day of
do solemnly and sincerely declare that the particulars furnished by me in this election are true and correct in every detail. And I make this solemn declaration by virtue of the Statutory Declarations Act 1959 and subject to the penalties provided by that Act for the making of a false statement in Statutory Declarations conscientiously believing the statements contained in this Declaration to be true in every particular.
Signature (see note 1 below)
Note 1 A person who wilfully makes a false statement in a Statutory Declaration under the Statutory Declarations Act 1959 is guilty of an offence against that Act, the punishment for which is a fine not exceeding $200 or imprisonment for a term not exceeding six months or both if the offence is prosecuted summarily, or imprisonment for a term not exceeding four years if the offence is prosecuted upon indictment.
Before me
Signature (witness)
(occupation)
Qualification (see note 2 below)
Note 2 A Statutory Declaration under the Statutory Declarations Act 1959 may be made only before a Magistrate, a Justice of the Peace, a Commissioner for Affidavits, a Commissioner for Declarations, a Notary Public, a person before whom a Statutory Declaration may be made, or an Australian Consular Officer or an Australian Diplomatic Officer.
Annex B
Dear
I acknowledge receipt of your election to revoke DSH entitlement form. As a search of our records confirms that you have not utilised your entitlement, your revocation in favour of the Australian Defence Force Home Loans Assistance Scheme is effective. This means that you are no longer an eligible person for the purposes of the DSH Act. The entitlement cannot be reinstated, even if more than one period of qualifying service is, or has been served.
I enclose a "confirmed copy" of the revocation form. A further copy will be forwarded to the Defence Housing Authority for their records.
Comprehensive household insurance at competitive rates is available to all ADFHLAS applicants under the Defence Service Homes Insurance Scheme. I enclose a leaflet for your information. Please do not hesitate to contact this office if you have any queries.
Yours faithfully
State Manager
Annex C
VOID
PREVIOUS DSH
ASSISTANCE VERIFIED
Annex D
Dear
I acknowledge receipt of your form of election to revoke DSH entitlement. As a search of our records indicates that you have previously been a borrower under the DSH Act as detailed below, your request cannot be accepted and I am returning all copies of the election form.
Should you wish to discuss this rejection please do not hesitate to contact this office.
Yours faithfully
State Manager
SCHEDULE
1. DATE OF APPLICATION:
2. DATE OF CURRENT CERTIFICATE OF ENTITLEMENT:
3. NAMES) OF BORROWER(S):
4. PROPERTY ADDRESS:
5. AMOUNT OF LOAN:
6. DATE OF LOAN SETTLEMENT:
Annex E
REVOCATION OF DSH ENTITLEMENT
STATE:
WEEK ENDING:
TELEPHONE ENQUIRY RATE
COUNTER ENQUIRY RATE
5 ticks per box
Central Office Instruction
Instruction No. 11
Date of Effect: 8 January 1991
Purpose
The purpose of this Instruction is to clarify the impact of the recent amendments to the DSH Act on widows entitlement.
Background
The recent amendments to the DSH Act allow an eligible person who is or has been previously assisted with an initial advance (or an initial and further advance) based on the eligibility of their spouse, the right to receive an advance based on their own eligibility.
Sub-section 4(1) of the Act contains the revised definitions of "initial advance" and "further advance".
Another group affected by this amendment is the widows of "eligible persons" as specified in the Act.
Sub-section 4(1) of the Act contains the definition of "female dependant".
Implications / Implementation
There are essentially three 'categories' of widow.
The widow clearly was never a borrower for any reason other than merely because she joined in the advance granted to her eligible husband.
She is now entitled to an initial advance in her own right on the basis of her current status as a "female dependant" as defined in the Act.
Although there may be some argument that, at the time of her husband's death, the widow became a borrower in her own right, full consideration of the various issues leads us to the view that the provisions introduced by the revised definitions of initial and further advances must be applied equally regardless of the status of the loan at the time of the death of the male borrower.
Therefore, she is also to be granted an initial advance in her own right on the basis of her current status as a "female dependant" as defined in the Act.
It is important to counsel widows in this situation of the advantage of retaining the property in the name of their deceased husbands' estate until such time as they wish to exercise their own entitlements to acquire another home.
In counselling widows in this group, the following points should be covered:
* requesting a transfer of the home (and subsidy) to herself;
+ in which case she will receive only the outstanding balance and, if she ever chooses to move to another home, she will be entitled to portability of the reduced balance.
* preserving her entitlement to an initial advance of $25,000 for use when she next moves. This, of course, would be subject to her being able to meet Westpac's lending criteria at that time;
+ to preserve the entitlement she would have to choose to retain the home in the name of the estate.
However, while the home is still in the estate, she cannot obtain an additional advance nor a widows advance because she does not own the property and she is not a borrower. It is also probable that she may not qualify for a rates rebate from her local authority.
+ she should be reassured that she will continue to enjoy the benefit of the existing subsidy through the estate.
Widowers
The Minister has announced his intention to amend the legislation to remove sex discrimination from these provisions and extend them to cover widowers of eligible female persons. Further instructions will issue on this aspect when the amendment has been made.
General Orders
General Orders will be updated shortly to reflect the contents of this instruction.
FELICITY M. BARR
GENERAL MANAGER
1 March 1991
Central Office Instruction
Instruction No. 10
Date of Effect: 8 January 1991
AMENDMENTS TO THE DEFENCE SERVICE HOMES ACT 1918
BY THE VETERANS' AFFAIRS LEGISLATION AMENDMENT ACT 1990
PORTABILITY AND RETIREMENT VILLAGES
The purpose of this Instruction is to explain the amendments made by Part 2 of the Veterans' Affairs Legislation Amendment Act 1990 (VALA) which relates to the Defence Service Homes Act 1918. The Act implements the Government's initiatives extending the DSH Scheme to provide portability for existing loans and DSH loan availability to meet entry charges to retirement villages. The major new initiatives are found in the main body of the legislation. However, minor and technical amendments are found in Schedule 2 to the Act.
Also included in the legislation at Schedule 1 is the new Supplementary Agreement with Westpac which covers the business aspects of the new provisions. The effective date of the amendments is 8 January 1991.
The major changes can be broken down into five different areas. A brief description of the changes and the sections affected are given here and a more detailed outline is included in the attachment to this instruction.
Portability
Summary of major provisions
Sections affected:
s.4, definitions affected - further advance
s.19, criteria for issue of Certificate of Entitlement: further advance
s.25, maximum amounts for which subsidy is payable
s.34, rate of interest
s.36, maximum terms of advances
Married Eligible Applicants
The Act gives two eligible persons who are married, the right of access to an initial loan each, in turn. This replaces the previous discretionary policy approach embodied in the now repealed Second Assistance arrangements.
Section affected:
s.4, definitions - further advance and initial advance
Transfers to Ineligible Persons
The Act removes provisions enabling the transfer of DSH benefits to ineligible persons. This amendment is associated with portability in that benefits are preserved for the portable use by eligible persons.
No eligible person will lose. In marital breakdown cases, the decision as to property arrangements will be left to the family and Court. Careful implementation will ensure that the parties are aware that the benefit can continue so long as the eligible person remains on the title and mortgage.
Section affected:
s.22, C of E: transfer of property subject to the specified portfolio asset or advance
Abolition of Second Assistance
For most, second assistance is fully replaced by portability. But a small number of clients will lose those who might have received more than the balance of previous loan, especially those with two or more periods of service. However, all of these will benefit from the automatic, non-tested nature of the portability benefit.
Former borrowers who discharged their loans before 9 December 1987 lose but, in practice, would rarely have obtained second assistance so long after the sale of the first DSH home.
Sections affected:
s.19, criteria for issue of Certificate of Entitlement: further advance
s.25, maximum amounts for which subsidy is payable
s.34, rate of interest
s.36, maximum terms of advances
Retirement Villages
Summary of main provisions
Sections affected:
s.4, definitions
s.18, criteria for issue of C of E, advances other than widows advances and advances for essential repairs
s.20, criteria for issue of C of E: widows advances
s.21, criteria for issue of C of E: essential repairs
s.24, subsidy payable to the Commonwealth
s.26, cancellation of subsidy
s.29, recovery of subsidy
s.38, insurance
s.38C, insurance of dwelling houses, etc.
s.38FA, (new section) applies to s.38E
s.45A, bankruptcy of purchaser or borrower
Other Amendments
The following other amendments are included in the Act:
Westpac Agreement
A Supplementary Agreement has been entered into with Westpac, covering the purchase by Westpac of the rights to the new DSH lending business arising from the portability and retirement village initiatives;
Westpac will pay $400 for each person who utilises one of the new loans for the first time. There is also some scope for increasing this amount in the future;
The Supplementary Agreement is Schedule 1A of the Act. A number of adjustments to the current Agreement are also included to overcome operation difficulties and to include references to retirement village arrangements.
Hardship Guidelines
The terms financial hardship and serious financial hardship are currently used in the Act in connection with tests to be made by the Secretary in considering applications for:
financial hardship
serious financial hardship
The Act provides that the Minister will table before the Parliament his approved guidelines for the Secretary to use in assessing the degree of hardship. They are subject to a motion of disallowance.
General Orders
An update of the GOs will be undertaken at an early date.
FELICITY M. BARR
GENERAL MANAGER
8 January 1991
IMPLEMENTATION ARRANGEMENTS
FOLLOWING AMENDMENTS TO THE
DEFENCE SERVICE HOMES ACT 1918
SECTION A - Introduction of portability for all loans current on 9 December 1987
Sections of the DSH Act affected
Sections 4, 19, 25, 34 & 36.
Description of change
Section 19 has been repealed and a new section inserted to:
Sub-section 4(1) - definitions of "initial advance" and "further advance", section 25 - maximum amounts for which subsidy is payable, section 34 -interest rate, and section 36 - maximum terms of advances, have also been amended.
These amendments give effect to the Government's decision to extend the DSH Scheme to make DSH loans in force at 9 December 1987 portable. Further loans will be available up to the outstanding principal exclusive of arrears and excess credits (i.e. the limit) of the previous DSH loan at discharge. The interest rate is 6.85% per year (rather than the previous section 34 specification which has been repealed) and the total portable loan term will be as specified in section 36, generally 25 years.
Section 36 has been amended, consistent with the Government's decision when portability was introduced in 1987 that portability be offset by a shorter loan term. Accordingly, all applications for portability by applicants with previously non-portable loans will have a reduced loan term. Loans that have been in existence for at least 25 years will have a zero loan term, resulting in an inability to utilise portability. In this context it is important to note that discretion to extend the term has been removed.
Portability is not available to persons who had been assisted previously and discharged the loan before 9 December 1987. In addition, the abolition of the Ministerial power from section 19 will negatively affect some clients. A further period of qualifying service does not entitle any client to further assistance. The test for portability is: Was the loan current on 9 December 1987?
A savings clause has been inserted specifying that section 19 approvals for second assistance in force at the date of enactment remain effective but a formal application for a Certificate of Entitlement must be received by 8 January 1992. An applicant's right of appeal has also been preserved. Current appeals on second assistance matters before the Administrative Appeals Tribunal will not be affected. However, each case should be reviewed under the new provisions and the client advised of whatever entitlement is available.
Process of implementation
Applications will fall into the following categories:
Transitional arrangements
Requests lodged for second assistance under the previous rules which have received section 19 approval should be processed according to those rules. In most cases it will be to the applicant's advantage because certain benefits are no longer available under the revised legislation, viz.:
There will be other cases which could not be admitted under the previous provisions. Where these have not been finalised, they may be considered under the amended legislation. Even though some second assistance requests which would otherwise have been declined may be admitted under the new portability provisions, they should not be denied access to the normal appeal facilities against the unfavourable denial of second assistance under the savings provisions.
Where an application can be admitted, the applicant should receive written advice in terms of Attachment 1 explaining the reduced term.
Loans that have been in existance for at least 25 years will have no further repayment period available - resulting in an inability to utilise portability. Where an application is declined because there is no term available, the applicant should receive written advice in terms of Attachment 2.
There is no provision in the legislation for former borrowers who discharged their loans prior to 9 December 1987 to be considered for any further assistance.
Possible problem areas
Loss of access to second assistance
Discharge of liability before 9 December 1987
All clients who discharged their DSH liability before 9 December 1987 no longer qualify for further assistance benefits under the DSH Scheme.
All clients in this category who apply for or make written inquiries regarding further assistance should receive written advice in terms of Attachment 3. Any oral information given should be consistent with the terms of Attachment 3, and should be followed up in writing.
Two periods of Qualifying Service
Many clients in this category will be aware of the previous policy allowing them to lodge a further application and may consider they are disadvantaged by this decision.
Clients who discharged their liability prior to 9 December 1987 cannot be considered for further assistance. All clients in this category who enquire regarding further assistance should receive written advice in terms of Attachment 4. Any oral information given should be consistent with the terms of Attachment 4, and should be followed up in writing.
Clients who had a loan in force on 9 December 1987 are entitled to further assistance (portability) subject to the terms and conditions set out in the DSH Act. The fact of having served a second period of qualifying service does not entitle clients to additional consideration in respect of further assistance. All clients in this category who enquire regarding further assistance should receive written advice in terms of Attachment 5. Any oral information given should be consistent with the terms of Attachment 5, and should be followed up in writing.
Shortened term of loan
The amendment of section 36 to maintain consistency with the Government's decision when introducing portability in 1987 will impact on those clients seeking to utilise portability.
Loan terms in excess of a total of 25 years
Those clients whose loan(s) have been in existence for 25 years or more will not be able to utilise portability. Under the terms of section 36, the potential term of a portable loan would be zero or a minus figure.
Loan terms under a total of 25 years
Clients who are able to utilise portability may have to pay an increased instalment as a result of the reduced loan term.
Interest rate
All newly portable loans attract an interest rate of 6.85% per year.
The majority of clients exercising portability will probably have a three tier interest rate which will translate with little or no impact on the amount of instalment to be paid.
Clients whose loan has a single tier or two tier interest rate will be paying a higher rate when they exercise portability. This factor will increase the amount of instalment payable.
Maximum advance
The maximum advance permitted on portability will be the amount outstanding on discharge of the previous liability, excluding arrears and excess credits. There is no provision for a loan in excess of the previous liability.
Post Implementation
Section 19 approvals
The savings provisions in the amending legislation provide that any outstanding section 19 approvals given under the Minister's discretion will have until 8 January 1992 by which to lodge a formal application for a Certificate of Entitlement.
State Managers will need to ensure that all clients are aware of the implications of the section 19 approval lapsing.
Register of new portable loans
Under the terms of the Supplementary Agreement between the Commonwealth and Westpac Banking Corporation, the Bank will pay a unit fee of $400 for the first use of a newly portable loan arising from the introduction of the new provisions. Loans which are already portable will not attract a unit fee.
Accordingly, State Managers should ensure that each Certificate of Entitlement issued for the first use of a newly portable loan is identified by a "P" at the end of the file number at the top of the form. Such Certificates of Entitlement will need to be recorded when they are returned by the Bank. This information is to be forwarded to C.O. for collation each year.
The Commonwealth will invoice Westpac each year for the period 1 May to 30 April specifying the cases assisted under the new provisions. Any omissions will result in a loss of revenue to the Commonwealth.
This manual system will operate until the appropriate modifications have been made to the CELS system.
Complaints
State Managers should ensure that complaints are recorded by type (e.g. loss of entitlement, shortened loan term, etc.) and details of complaints are included in the monthly report to the G.M.
SECTION B - Extension of the Scheme to allow an eligible person to acquire a permanent right to reside in a retirement village
Sections of the DSH Act affected
Sections 4, 18, 20, 21, 22, 24, 26, 29, 38C & 45A
Clause 8 of the Commonwealth/Westpac Agreement
Description of change
Sub-section 18(2) has been amended to include the acquisition of a permanent right to reside in a retirement village as a purpose for which a subsidised advance may be applied.
Section 4 has introduced concepts of what constitutes retirement village accommodation:
"retirement village" means:
Sub-section 35(1) of the Veterans' Entitlement Act 1986 defines "retirement village" as meaning:
"residential premises the accommodation in which is primarily intended for persons who are at least 55 years old, being premises consisting of:
(i) self-care units;
(ii) serviced units;
(iii) hostel units; and
and includes residential premises that, in the Commission's opinion, have similar functions to those first-mentioned residential premises."
Further instructions will issue regarding retirement villages which meet the Commission's requirements.
The retirement village must be registered under applicable State or Territory legislation approved by the Minister for DSH purposes. At this time only the Retirement Villages Acts of NSW, Vic., Qld, and SA will be approved. (A copy of the Instrument will be forwarded when endorsed by the Minister).
Note: A "retirement village" does not include a property covered under strata title legislation. These are already covered in the Act and are not treated as retirement villages in the DSH Act.
These amendments give effect to the Government's decision to introduce loans to fund entry into retirement villages. Loans made to persons acquiring a right, licence or lease to occupy a retirement village are portable and are made on the same terms and conditions as other DSH loans.
It should be noted the legislation does not specify what form the security must take and it does not require the definition of "holding" to be met. As a consequence the Bank is free to determine the nature of the security (if any).
Other relevant sections of the DSH Act have been amended as a consequence of the above amendments. They maintain a consistent approach in interpretation and application, e.g. the tests of ownership of another dwelling; intention to occupy; purposes for additional advances, etc.; and undertaking of insurance.
Process of implementation
Applications for assistance to obtain a permanent right to reside in a retirement village should be made on the Subsidy Application (Form DSHL2). Pending revision of this Form, the existing Form will need to be suitably modified.
A self-adhesive label detailing the new purpose should be affixed to the front of the Form as "Part D - Retirement Village".
Assistance is available for the payment of the one-off in-going contribution that the applicant is required to make in order to secure a permanent right to reside in the village. However, any costs associated with obtaining this right may be included subject to the maximum advance not exceeding $25,000.
It is important to remember that the full range of benefits available under the Act apply equally to retirement village accommodation.
There may be a small group of clients who will seek assistance to discharge a debt incurred in gaining access to the retirement village. Such applications will be processed under the normal rules applying to discharge of mortage requests.
Certificates of Entitlement issued as a result of applications for advances in respect of retirement villages should have the purpose expressed in the same terms as the Act.
Possible problem areas
Misinterpretation
Clients may have a perception that the retirement village purpose is available notwithstanding a client has previously been assisted and has discharged the liability before 9 December 1987. This is not the case; the rules applying to further assistance for a property apply equally to retirement village accommodation.
Special Accommodation
A retirement village may comprise individual units, hostel or hospital accommodation. The DSH loan can be used to acquire rights to entry to residential accommodation, i.e. individual units/hostel even if the person eventually is transferred into a hospital section. However, it is not available to gain direct access into a hospital section. Such entry is covered by different State legislation such as Health Acts.
Discharge of debt
Paragraph 18(2)(k) of the Act requires that for a debt to be refinanced, that debt must have been incurred in acquiring entry into a retirement village. Therefore, clients are required to provide reasonable evidence that the debt they are requesting to be refinanced was in fact incurred for that purpose.
Post implementation
Register of retirement village cases
Under the terms of the Supplementary Agreement between the Commonwealth and Westpac Banking Corporation, the Bank will pay a unit fee of $400 for the first entry into a retirement village loan arising from the introduction of the new provisions. Loans for villages under strata title legislation are not to be included.
Accordingly, State Managers should ensure that each Certificate of Entitlement issued for the first entry into a retirement village is identified by an "R" at the end of the file number at the top of the form. Such Certificates of Entitlement will need to be recorded when they are returned by the Bank. This information is to be forwarded to C.O. for collation each year.
The Commonwealth will invoice Westpac each year for the period 1 May to 30 April specifying the cases assisted under the new provisions. Any omissions will result in a loss of revenue to the Commonwealth.
This manual system will operate until the appropriate modifications have been made to the CELS system.
Complaints
State Managers should ensure that complaints are recorded by type (e.g. misinterpretation, special accommodation, etc.) and details of complaints are included in the monthly report to the G.M.
SECTION C - Recognition of the special circumstances of married eligible applicants
Section of the DSH Act affected
Section 4
Description of change
Sub-section 4(1) has been amended to exclude from the definition of "further advance" applications involving married eligible applicants. Where a husband and wife are both eligible and they have jointly received a DSH loan on the basis of the eligibility of one, the person whose eligibility has not been utilised previously will be entitled to receive a subsidised advance on initial terms and conditions, and to further advances where appropriate.
This amendment is a statutory recognition of the special circumstances of a husband and wife who are both eligible in their own right. However, this does not mean that both entitlements can be used at the same time in respect of the same property.
Process of implementation
All current requests for second assistance should be examined to see if there is an unused entitlement by a spouse. If this is the case, the client should be given the option of proceeding with the second assistance request or changing to this new provision where the spouse has the right to a loan on initial loan terms.
Post implementation
State Managers should ensure that complaints are recorded by type (e.g. misinterpretation, etc.) and details of complaints are included in the monthly report to the G.M.
SECTION D - Removal of the discretionary provision in respect of transfers to ineligible persons
Section of the DSH Act affected
Section 22
Description of change
Sub-section 22(3) has been amended to provide that a Certificate of Entitlement under section 22 can be issued only to a proposed transferee who is an eligible person.
This implements the Government's decision that transfers of the estate or interest of a purchaser or borrower in land, land and dwelling-house, or rights of retirement village residence to ineligible persons are no longer to be permitted.
A savings clause has been inserted permitting the Secretary to issue a Certificate of Entitlement to a proposed ineligible transferee where:
Process of implementation
It is important to note that no further requests to transfer to an ineligible person can be processed, even if the request was lodged before the enactment of the amending legislation. Only those cases which have been given written notice that a Certificate of Entitlement would most likely issue, may continue to be processed.
State Managers should ensure that all such cases are monitored and the proposed ineligible transferee informed that the formal application for a Certificate of Entitlement must be lodged before 8 January 1992.
All clients in this category should receive written advice in terms of Attachment 6. Any oral information given should be consistent with the terms of Attachment 6, and should be followed up in writing.
Applications for transfer of ownership should be made on the Transfer Application (Form DSHL3). Pending revision of this Form, the existing Form will need to be suitably modified.
A self-adhesive label detailing the new provision should be affixed to the front of the Form over the old paragraph regarding transfers to ineligible persons.
Family court registries, legal practitioners, marriage counsellors and other affected parties will need to be informed of the prohibition on subsidies being transferred to ineligible spouses so that they may devise alternative property settlement arrangements. C.O. is working on a planned approach on how to disseminate this information. Further instructions will be provided shortly to enable the State Manager to inform relevant groups in your State.
Possible problem areas
Family Court orders
The prohibition of transfers to ineligible persons will impact on the operations of the Family Court and legal practitioners. The options available to the property settlement process may be altered by the loss of the ability to transfer the DSH subsidy when a property is transferred to the ineligible spouse. Options which may be available to an ineligible spouse are:
Tenancy in common
Section 4A of the DSH Act gives the Secretary a discretionary power to treat an eligible person and the husband or wife of that eligible person together as an eligible person for the purposes of the DSH Act. The Secretary is specifically prohibited from applying this section to any land or land and dwelling-house that is not held by the eligible person and his/her spouse as joint tenants.
This section forms the basis for not permitting applicants to be granted DSH loans as tenants in common. However, a subsequent transfer to a tenancy in common, in some instances, has been approved subject to the requirements of section 22 being met.
The removal of the power to transfer to an ineligible person means that a transfer to a tenancy in common situation can now be effected only if the transferees are eligible persons.
Post implementation
State Managers should ensure that complaints are recorded by type (e.g. misinterpretation, tenancy in common, etc.) and forwarded to C.O. monthly report to the G.M.
SECTION E - Power to implement review decisions
Section of the DSH Act affected
Sub-section 18(5A)
Description of change
New sub-section 18(5A) has been inserted into the Act to give effect to a review decision to authorise a subsidy in respect of an advance by Westpac where a person has proceeded to acquire a home pending internal or AAT review of a decision.
The new sub-section will enable the Secretary to give effect to an AAT direction or a decision made by internal review by issuing a Certificate of Entitlement where the mortgage, charge or encumbrance was raised without the approval of the Secretary.
SECTION F - Hardship Guidelines
Sections of the DSH Act affected
Widows advances – sub-sections 20(3) & (4)
Instalment relief – sub-sections 23(5) & (6)
Essential repairs – sub-sections 21(2) & (3)
Other advances – sub-sections 18(58) & (5C)
Description of change
The DSH Act provides that the Minister may approve guidelines to which the Secretary is to have regard when deciding whether a person is suffering Financial Hardship or Serious Financial Hardship for the purposes of certain paragraphs of the Act. The Act also provides that the approved guidelines must be tabled before both Houses of Parliament within 15 Sitting days and be subject to disallowance.
The terms Financial Hardship or Serious Financial Hardship each appear in two sections of the Act as follows.
FINANCIAL HARDSHIP
Widows advances
Section 20 of the DSH Act provides that the Secretary may issue a Certificate of Entitlement in relation to subsidy on a widows advance for the purposes of:
The Secretary is prevented from issuing a Certificate of Entitlement by sub-section 20(2) of the DSH Act unless satisfied that it would cause financial hardship to the person if she were to bear the cost of the repairs or she were to pay the outgoings.
Sub-section 20(3) of the DSH Act makes provision for the Secretary to have regard to any guidelines approved by the Minister when deciding whether a person is suffering financial hardship for the purposes of sub-section 20(1) of the DSH Act. Sub-section 20(4) of the DSH Act provides the authority for the Minister to approve guidelines setting out matters to be taken into account by the Secretary when deciding whether a person is suffering financial hardship for the purposes of sub-section 20(1) of the DSH Act.
Instalment Relief
Sub-section 23(1) of the DSH Act provides that the Secretary may issue a Certificate of Entitlement in relation to instalment relief that a person may seek from the Bank where the person is a purchaser or borrower who is:
Where the Secretary is satisfied that it would cause financial hardship to the applicant if he or she were to to pay the instalments in full, the Secretary can reduce the instalments payable for a period of time.
Sub-section 23(5) of the DSH Act makes provision for the Secretary to have regard to any guidelines approved by the Minister when deciding whether a person is suffering financial hardship for the purposes of sub-section 23(1) of the DSH Act. Sub-section 23(6) of the DSH Act provides the authority for the Minister to approve guidelines setting out matters to be taken into account by the Secretary when deciding whether a person is suffering financial hardship for the purposes of sub-sections 23(1) of the DSH Act.
SERIOUS FINANCIAL HARDSHIP
Advances other than widows advances and advances for essential repairs
Sub-section 18(2) of the DSH Act provides that the Secretary may issue a Certificate of Entitlement in relation to subsidy on an advance for the purpose of discharging any mortgage charge or encumbrance which already exists on a person's holding or for the purpose of discharging a debt in relation to obtaining a right of residence in a retirement village. Sub-section 18(3) of the DSH Act makes similar provision where the advance is an additional advance.
The Secretary is prevented from issuing a Certificate of Entitlement by sub-sections 18(4) and (4A) of the DSH Act unless satisfied, inter alia, that:
Sub-section 18(5B) makes provision for the Secretary to have regard to any guidelines approved by the Minister when deciding whether a person is suffering serious financial hardship for the purposes of paragraphs 18(4)(c) or (d) of the DSH Act. Sub-section 18(5C) of the DSH Act provides the authority for the Minister to approve guidelines setting out matters to be taken into account by the Secretary when deciding whether a person is suffering serious financial hardship for the purposes of sub-sections 18(4) or (4A) of the DSH Act.
Advances for essential repairs
Section 21 of the DSH Act provides that the Secretary may issue a Certificate of Entitlement in relation to subsidy on an advance for essential repairs.
The Secretary is prevented from issuing a Certificate of Entitlement by paragraph 21(d) of the DSH Act unless satisfied that it would cause serious financial hardship to the person if he or she were to bear the cost of essential repairs to keep the buildings, fences, fixtures and other improvements on the land in good order and repair.
Sub-section 21(2) of the DSH Act makes provision for the Secretary to have regard to any guidelines approved by the Minister when deciding whether a person is suffering serious financial hardship for the purposes of sub-section 21(1) of the DSH Act. Sub-section 21(3) of the DSH Act provides the authority for the Minister to approve guidelines setting out matters to be taken into account by the Secretary when deciding whether a person is suffering serious financial hardship for the purposes of sub-sections 21(1) of the DSH Act.
GUIDELINES
The guidelines approved by the Minister form the basis for all future decisions on what constitutes financial hardship or serious financial hardship. A copy of the guidelines will be forwarded when endorsed by the Minister.
In respect of financial hardship, there is a dual level of hardship based on income level. Those persons whose basic income is a pension are considered to be in hardship at a level of 20% commitments to income ratio; while persons with higher income are considered to be able to meet a 25% ratio. Pension recipents are allowed to earn additional income (called the Basic Income Limit) before their pension is reduced. Persons at the lower level may receive the Basic Income Limit in addition to a pension before the higher test is invoked. At 10 January 1991 the Basic Income Limit was:
$80 for a single veteran;
$70 each for a married couple; and
$70 for a widow or a married woman.
Appendix E of the GOs is hereby cancelled. As a general rule, clients obtaining instalment relief or a widows advance will be expected to contribute the percentage of income used in the Minister's guidelines to determine the point at which hardship is deemed to begin. You should use your discretion to require a lower amount if the situation warrants it - especially when reviewing current recipients who are contributing to their commitments below this level.
SECTION G - Eligibility
Section of the DSH Act affected
Sub-section 4(1) - definition of "Australian soldier"
Middle East Service
The definition of "Australian soldier" has been amended to include in new paragraph (gb) any person who, as a member of the Australian Defence Force, was allotted for duty in the Middle East in the area described in the new item 10 of Schedule 2 to the Veterans' Entitlements Act during the period specified in the item and whose first service in the ADF began on or before 14 May 1985.
The area in which a member of the ADF must have been allotted for the purpose of DSH and VEA entitlements is:
The member must have been allotted during the period on or after 2 August 1990.
Any person who satisfies the requirements of the new paragraph (gb) is entitled to assistance on the same basis as any other person who satisfies the definition of "Australian soldier".
Clarification of Allotment for Duty
Sub-section 5(12) of the Veterans' Entitlements Act has been amended to overcome the Federal Court decisions in which the Court construed the phrase "allotted for duty" as being equivalent to "posted for duty". Such a construction resulted in an unintended extension of benefits to all service personnel who were in an operational area during a relevant period irrespective of the duration of that service, of the purpose of their presence in the area, of the actual duties undertaken during that period and of the fact that the ADF, apart from posting them to that area, had not formally allotted them for service in that area.
The concept of "allotment for duty" is a special one which was developed to cater for and identify service which attracted Repatriation and DSH benefits. It has been developed in respect of service undertaken in response to the war-like situations that have arisen since the Second World War and in respect of which there has been no formal declarations of war by Australia.
No action will be taken which would disadvantage any persons in respect of whom final determinations have been made to grant eligibility on the basis of the Federal Court decisions.
ATTACHMENT 1
The following should be included in the approval letter.
To be used in those cases which permit portability, i.e. there is a term available.
Refer Page 2 Implementation Arrangements.
A portable loan is limited to the amount owing on the previous loan at the time of discharge. The interest rate is 6.85% per year and the total term of all loans must not exceed 25 years.
When the Government decided to introduce portability for new loans from 9 December 1987, it was also decided that all portable loans would be repayable over a maximum term of 25 years. Legislation now allows all loans that were current as at 9 December 1987 to be made portable. These loans also have a maximum term of 25 years. Therefore, the total of all the terms of each loan may not exceed 25 years. As an example, a person who received a DSH loan in 1976 may, in 1991, have a loan on another home over a maximum of 10 years.
In respect of interest rates, the Government's commitment to portability in 1987 was offset by the shorter loan period and the increase in the interest rate to 6.85% per year. Now that portability has been extended to all loans current at 9 December 1987, the interest rate will increase to 6.85% per year in line with new loans, once a request for portability is exercised. Borrowers who do not wish to move will not have their existing loan conditions affected.
I note that your DSH loan has been running for approximately ?? years and if you were to exercise portability, your new loan term would be over ?? years.
ATTACHMENT 2
The following should be included in the written advice enclosing the Statement of Reasons.
To be used in those cases which do not permit portability, i.e. there is no term available.
Refer Page 2 Implementation Arrangements
A portable loan is limited to the amount owing on the previous loan at the time of discharge. The interest rate is 6.85% per year and the total term of all loans must not exceed 25 years.
When the Government decided to introduce portability for new loans from 9 December 1987, it was also decided that all portable loans would be repayable over a maximum term of 25 years. Legislation now allows all loans that were current as at 9 December 1987 to be made portable. These loans also have a maximum term of 25 years. Therefore, the total of all the terms of each loan may not exceed 25 years. As an example a person who received a DSH loan in 1976 may, in 1991, have a loan on another home over a maximum of 10 years.
Loans which were taken out with 32 and 45 year terms have had the benefit of reduced instalments as a result of the longer terms. Portable loans have higher instalments due to the 25 year term. To permit portability on loans which had already run 25 years or more would be to permit a double benefit to be conferred - the reduced instalment/longer term and the advantage of portability.
I note that your DSH loan has been running for approximately ## years and that, accordingly, you will be unable to utilise portability since your loan term has exceeded 25 years.
I am sorry that I have no better news for you on this occasion.
ATTACHMENT 3
The following should be included in the written advice enclosing the Statement of Reasons, or in response to a general inquiry.
To be used in those cases which are not portable, i.e. they discharged the previous loan before 9 December 1987.
Refer Page 2 Implementation Arrangements.
On 9 December 1987 the Government introduced portability for all new loans. At that time, further assistance remained available to applicants who had a current non-portable loan if they were compelled to move from the DSH-subsidised house. The granting of further assistance was at the discretion of the Minister.
Under revised legislation introduced on 8 January 1991, the benefits flowing from the DSH Scheme are available only where a DSH subsidised loan existed at 9 December 1987. In your case, the DSH loan was discharged before 9 December 1987, and the legislation does not permit such a loan to be portable.
I am sorry I do not have better news for you.
ATTACHMENT 4
The following should be adopted as the written advice in response to a general inquiry.
To be used in those cases which are not portable, i.e. they discharged the previous loan before 9 December 1987, but have a further period of qualifying service.
Refer Page 3 Implementation Arrangements
I refer to your recent inquiry regarding the portability provisions in the DSH Scheme as they affect a further period of qualifying service.
On 9 December 1987 the Government introduced portability for all new loans. At that time, further assistance remained available to applicants who had a current non-portable loan if they were compelled to move from the DSH-subsidised house. Where the applicant had a further period of qualifying service, the criterion of compulsion to move was applied less stringently in recognition of the extra service. The granting of further assistance was at the discretion of the Minister.
The further assistance policy in force before 1991 allowed some persons who had completed more than one period of qualifying service to pay out the first loan, and apply for a further loan several years later. However, policy and legislation are subject to change, and most applicants in this category would have been advised accordingly.
Revised legislation on 8 January 1991 introduced portability for all loans that were current on 9 December 1987. Accordingly, the portability provisions have fully replaced the earlier further assistance provisions. The revised legislation does not provide any additional benefits for person with further qualifying service.
Portability is intended to provide continuity of benefit from home to home, and to ensure parity with those loans granted since 9 December 1987.
Under the revised legislation, the benefits flowing from the DSH Scheme are available only where a DSH-subsidised loan existed as at 9 December 1987.
ATTACHMENT 5
The following should be adopted as the written advice in response to a general inquiry.
To be used in those cases which are portable i.e. they had a loan current on 9 December 1987, but have a further period of qualifying service.
Refer Page 3 Implementation Arrangements
I refer to your recent inquiry regarding the portability provisions in the DSH Scheme as they affect a further period of qualifying service.
On 9 December 1987 the Government introduced portability for all new loans. At that time, further assistance remained available to applicants who had a current non-portable loan if they were compelled to move from the DSH-subsidised house. Where the applicant had a further period of qualifying service, the criterion of compulsion to move was applied less stringently in recognition of the extra service. In addition, access to additional finance to maximum of $25,000 was available. The granting of further assistance was at the discretion of the minister.
Revised legislation on 8 January 1991 introduced portability for all loans that were current on 9 December 1987. Accordingly, the portability provisions have fully replaced the earlier further assistance provisions. The revised legislation does not provide any additional benefits for persons with further qualifying service.
Automatic access to a continuing subsidy will benefit a greater number of persons. Portability is intended to provide continuity of benefit from home to home, and to ensure parity with those loans granted since 9 December 1987.
A portable loan is limited to the amount owing on the previous loan at the time of discharge. The interest rate is 6.85% per year and the term of all loans must not exceed 25 years.
In respect of interest rates, the Government's commitment to portability in 1987 was offset by the shorter loan period and the increase in the interest rate to 6.85% per year. Now that portability has been extended to all loans current at 9 December 1987, the interest rate will increase to 6.85% per year in line with new loans, once a request for portability is exercised. Borrowers who do not wish to move will not have their existing loan conditions affected.
I note that your DSH loan has been running for approximately ?? years and if you were to exercise portability, your new loan term would be over ?? years.
ATTACHMENT 6
The following should be adopted as the written advice in respect of a transfer to an ineligible person.
To be used in those cases which have not received a Certificate of Entitlement.
Refer Page 9 Implementation Arrangements.
I refer to previous correspondence regarding the transfer of an interest in a property subject to a DSH subsidised loan.
Legislative changes were introduced on 8 January 1991 which prevent the Secretary consenting to a transfer of a subsidy where the transferee is not an eligible person as defined in the DSH Act.
Previously, the Secretary had a discretion in issuing a Certificate of Entitlement to a proposed transferee who was not an eligible person.
However, as I indicated in my previous letter that I would most likely approve your request on satisfaction of various criteria, the amending legislation allows your request to proceed provided you apply for a Certificate of Entitlement before 8 January 1992.
In the event that an application is not received by this date the proposed transfer will not be able to proceed. Therefore, it is in your interest to proceed as soon as possible.
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[2] https://clik.dva.gov.au/user/login?destination=node/18703%23comment-form
[3] https://clik.dva.gov.au/user/login?destination=node/18704%23comment-form
[4] https://clik.dva.gov.au/user/login?destination=node/18681%23comment-form
[5] https://clik.dva.gov.au/user/login?destination=node/18700%23comment-form
[6] https://clik.dva.gov.au/user/login?destination=node/18671%23comment-form
[7] https://clik.dva.gov.au/user/login?destination=node/18702%23comment-form