Under section 429 of the MRCA or section 114D of the DRCA, the MRCC can decide in writing to waive the right to recover an overpayment. Waiver of a debt means the debt is extinguished and no longer exists. The waiver of the debt could be full or partial. Where partial waiver is made, the remaining amount of debt will still be subject to the recovery process.
A determination under section 429 of the MRCA to waive a debt (or to not take these actions) is not an original determination (subsections 345(2)(m)). As such this decision cannot be the subject of an own motion review or reviewed by the VRB. However, any determination as to the amount that should be waived is an original determination as defined (subsection 345(2)(m)) and may be the subject of an own motion review or review by the VRB.
Determinations under section 114D of the DRCA to waive a debt are not merits reviewable.
A determination under section 429 of the MRCA or section 114D of the DRCA will however be reviewable under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act), as they are administrative decisions made under an enactment and reviewable by a court on the basis that the decisions involved an error of law.
Only EL1 level and above are authorised to waive an overpayment under the DRCA and MRCA.
The same instruments of delegation for write offs applying to the waiver of debt (see above). These instruments place the following limits on the waiver of debt:
The total amount of the debt should be used to determine who should exercise the delegated power e.g. if a client has a $200,000 debt but $60,000 is being waived, an EL2 can exercise the delegation, not an EL1, as the total debt exceeds the EL1’s $100,000 financial limit.
The delegate performing the waiver must always be a person other than the delegate initiating and managing the recovery process.
It should be noted that a decision not to waive a debt must also only be made by a person who holds the necessary financial delegation.
The MRCC has broad discretionary powers to waive debts under the MRCA and the DRCA. There are no legislative criteria that must be met before a debt can be waived.
As a matter of policy, a debt should only be waived if all appropriate recovery action has been considered and a write off is not appropriate.
A decision to waive an overpayment is very rare and generally should only be applied to overpayments involving relatively small amounts, or in cases of financial hardship where it is clearly an appropriate course of action. A decision to waive is based on its own merits. Extensive investigation should be done, with dutiful consideration first being given to write off.
There is no specific criteria for waiver and the power is not limited to any set of special circumstances. Cases are examined individually, and an approval for waiver will only be given where the circumstances are judged to be of such a compelling nature that the Commonwealth should waive the debt. Common examples of where circumstances may warrant the waiver of debt include where the:
There are further circumstances under which an overpayment may be waived:
These are the circumstances under which an overpayment should be waived include:
In addition, if the delegate has provided the client with a discount for a one-off payment, then the discounted amount must be waived.
A debt should be waived if a delegate determines that extreme or unusual circumstances apply and it would be unreasonable to pursue recovery of the debt. For this provision to apply, the circumstances need to be unusual, uncommon or exceptional. The following are examples of such circumstances:
If a debt does not fit into any of the foregoing categories but a delegate considers it would be otherwise unreasonable for DVA to pursue recovery, waiver of the debt may be considered.
Under this category of waiver, a decision can only be made by the MRCC.
For a debt to be waived because of an administrative error on the part of DVA, two conditions must be met:
When an overpayment is increased because DVA failed to act on a client’s advice about a change in circumstances in a timely manner, the portion of the overpayment caused by the administrative delay may be waived. That portion of the overpayment is taken to be the portion commencing on the day immediately following DVA receiving notification of the change in circumstances.
The part of the amount owing that was caused by administrative delay may be waived only if the four following conditions are all met:
A debt cannot be waived under the administrative delay criterion when a client fails to notify DVA of an event that would reduce their payments and this is not discovered until action is taken—for example, data matching, a denunciation, a third party notification, or a department-initiated action. The overpayment is calculated from the date of the event up to and including the day before the payment is reduced to the correct rate.
Notional entitlement is a special circumstance in which a waiver may be applied to an overpayment.
Notional entitlement refers a benefit which a person would have been entitled to receive had they made a claim for it.
When calculating a client’s debt arising from an overpayment of a benefit, it is important to establish whether the client had a notional entitlement to another type of benefit during the same period of the overpayment. A client might be overpaid payment A because of a loss of eligibility to receive payment A and yet be eligible for another payment, payment B, during that period. This is called a notional entitlement, and it may be used to offset the debt. The debt will be the difference between payment A and payment B for the relevant period.
For example, a partner service pensioner (PSP) who is divorced but continues to receive PSP pension might have had a concurrent entitlement to age pension under the Social Security Act for the same period he or she was overpaid the PSP pension (overpayment period). If Centrelink grants the person an age pension, provided they would have been entitled to receive the age pension during the overpayment period, their ‘notional entitlement’ may be considered as established and an equivalent amount for the period in question may be offset against the debt by waiving that amount.
However, careful consideration needs to be given to the particular circumstances of each individual case when deciding whether to waive a debt arising from an overpayment of a benefit on the basis that a person had a notional entitlement to another benefit during the same period. If the overpayment was obtained by fraud or misrepresentation or a failure to comply with a requirement of the legislation, it may not be appropriate to waive the debt, even if there was a notional entitlement to another benefit in the same period as the overpayment.
A waiver should not be considered where the overpayment arose because of:
If the client knew they were not entitled to a payment or could reasonably be expected to have known that, they cannot be said to have received the payment in good faith.
In Falconer and SDSS (1996) 41 ALD 187, the Administrative Appeals Tribunal found that the question to ask in determining whether a client has received a payment in good faith is, essentially: 'did the client know that the amount had been paid contrary to the Act?'
If a client knows that he or she is not entitled to a payment he or she has received, the client cannot be said to have received the payment in good faith.
There must be evidence to support a decision to accept good faith, and the matter may need to be discussed with the client. The decision maker must look to what the client was reasonably expected to have known. Knowledge or notice of an irregularity in the payment is not enough to establish that the client lacked good faith. It is essential to consider all the circumstances of the case, including:
For any other policy matters that are not covered in this document, please contact Policy Development Branch for assistance.
Links
[1] https://clik.dva.gov.au/user/login?destination=comment/reply/19230%23comment-form