Last amended: 21 March 2014
7.18.1 — A debt may be waived where it is considered inappropriate to pursue recovery, even though recovery may be possible, e.g. by limitations to current payments or where a person has the funds available to make a repayment. Waiver action is also taken where a debt is irrecoverable in law, for example where proceedings to commence recovery of the debt are delayed beyond the statutory six year period after the debt is identified (the Statute of Limitations provision). Action is necessary to permanently extinguish the irrecoverable debt, and this is achieved by waiver.
7.18.2 — The effect of waiving a debt is to forego recovery action permanently. Waiver is a permanent bar to the recovery of a debt and means that the debt effectively ceases to exist. Once a debt has been waived, recovery can no longer be pursued.
7.18.3 — Under paragraph 206(1) (b) [2] VEA, the Commission may waive the right of the Commonwealth to recover:
The following two class of debts have been specified at this time:
7.18.4 — As PIPS automatically calculates overpayments, and DMRS allows for the automatic generation of advice letters and recovery action, all overpayments raised on the system are recovered. Automatic overpayments may be waived where the debt is less than $50 and the debtor is no longer in payment with DVA. The $200 Ministerial waiver applies in situations where debts require manual calculation, data entry and generation of advice letters (consideration must be given to the cost effectiveness of the recovery).
7.18.5 — Where a person has incurred an overpayment of less than $50 and the debtor is no longer in payment, the delegate may consider writing off the debt if there is a high probability that the debtor will resume receiving income support payments.
7.18.6 — Unless the debt falls within a class specified by the Minister, a delegate may exercise the discretion to waive recovery of a debt, or part of a debt only where he/she is satisfied that:
7.18.7 — The debtor must never be given the impression that recovery may be waived before a decision is made by the delegate.
The following categories of waiver are covered in this section:
Note:That the waiver guidelines will generally not be required where an overpayment is being automatically recovered by DMRS. However, the waiver guidelines are available and should be employed if waiver action is deemed necessary under any circumstances. For more information on DMRS, the DMRS systems manual may be obtained from the Department's intranet site.
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7.18.8.1 — Three conditions must be met for a debt to be waived under this criteria:
What constitutes 'Good Faith'?
In Falconer and SDSS (1996) 41 ALD 187, the Federal Court held that the question to ask in determining whether a client has received a payment in good faith is: '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:
7.18.8.2 — A debt should be waived where 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.
7.18.8.3 — Circumstances where it may be appropriate to waive recovery are as follows:
Note:These examples are not exhaustive. There may be other situations that constitute extreme or unusual circumstances. A delegate should apply his/her discretion in determining whether circumstances are extreme or unusual.
7.18.8.4 — Where an overpayment is increased because the Department failed to action an advice from a pensioner regarding a change in circumstances in a timely manner, the portion of the overpayment caused by the administrative delay may be waived. The portion of the overpayment caused by administrative delay is taken to be the portion occurring more than six weeks after the Department receives advice of the change in circumstances.
7.18.8.5 — The part of the amount owing caused by administrative delay may be waived only if all four of the following conditions have been met:
7.18.8.6 — In practice, this means that debts exacerbated by administrative delay, in most cases, will still be recovered. This is because the pensioner concerned will normally be aware that their entitlement should have been reduced due to the event causing the notification.
7.18.8.7 — A debt cannot be waived under this criteria where a pensioner does not notify of an event that would reduce their payments, and this event is not discovered until some departmental action is taken, e.g. data matching, a denunciation, a third party, or a Departmental Initiated Action (DIA). This exemption applies even where administrative delay compounds the amount of overpayment. In these cases, prior to 13 July 1999 the overpayment is calculated from the day following the event to the day the payment is reduced to the correct rate, and must be fully recovered. From 13 July 1999, the overpayment is calculated from the date of event, up to and including the day before the day that the payment is reduced to the correct rate.
Note:These guidelines replace DI B18/95.
Example 1 – notification within the notification period
The pensioner's circumstances change on 9 October 2006. As a result, he is entitled to a slightly lower rate of pension. The notification period ends on 23 October. He notifies of the change in circumstances on 12 October, and his pension is reassessed on 20 December. A debt is raised for the period 24 October to 18 December. The portion from 5 December (ie 6 weeks after 24 October) to 18 December is waived because the payment was received in good faith and the pension was not reassessed within 6 weeks of notification.
Example 2 – notification received outside the notification period
The pensioner's circumstances change on 9 October 2006. As a result, he is entitled to a slightly lower rate of pension. The notification period ends on 23 October. He notifies of the change in circumstances on 30 October, and his pension is reassessed on 20 December. A debt is raised for the period 10 October to 18 December. The portion from 11 December (ie 6 weeks after 30 October) to 18 December is waived because the payment was received in good faith and the pension was not reassessed within 6 weeks of notification.
7.18.8.8 — The part of the amount owing which has been discounted must be waived only if:
7.18.8.9 — Where a person has been overpaid income support pension that has been repaid in full, and:
that amount of the debt equivalent to any tax 'overpaid' by the debtor must be refunded under the act of grace provisions (section 33 in the Financial Management and Accountability Act 1997 refers).
7.18.8.10 — Where a person has been overpaid income support pension that has not yet been fully recovered, the amount of the debt equivalent to any tax 'overpaid' by the debtor that is attributable to the 4-year rule, is to be waived.
Note:For detailed procedures relating to the waiver of overpaid tax please refer to DI C22/96.
7.18.8.11 — Where a cancelled pensioner has a notional entitlement to another income support payment, the notional entitlement may be offset against the overpaid pension. For example, a partner service pensioner who is divorced without his or her knowledge, but continues to receive PSP for some time may have a concurrent entitlement to age pension under the SSA. If Centrelink grants the person a pension, their 'notional entitlement' may be considered as established and an equivalent amount for the period in question may be offset against the VEA debt by waiving that amount.
7.18.8.12 — Where a debt does not fit into any of the above categories but a delegate believes that it would be otherwise unreasonable for the Department to pursue recovery, waiver of the debt may be considered. However, it should be noted that under this category of waiver, delegation to exercise discretion is limited only to the President, Deputy President, Deputy Commissioner, Division Head Compensation and Support, Branch Head Income Support and Branch Head Disability Compensation. For information on the standardised national waiver delegations, refer to this manual's Section 7.20 'VEA Delegations' in this chapter.
7.18.8.13 — Where a debt is, or appears likely to be, less than $200, consideration should be given to whether or not it is cost effective to pursue. This provision only applies to manually processed debts which require manual calculation and generation of advice letters. In practice, all debts calculated automatically through PIPS processing can be recovered because it is cost effective to do so. A debt which is less than $50 may be waived if the debtor is no longer in receipt of income support.
7.18.8.14 — The decision to waive debts in this category is taken because the administrative cost of establishing, maintaining and recovering the debt is considered to be greater than the value of the debt. The delegate should consider in each case, whether the amount involved is worth the overall cost to the Commonwealth. Factors to be considered include:
7.18.8.15 — Generally, where the debtor has a continuing entitlement to a DVA payment it will be cost effective to raise the debt because it can be recovered by limitations. However, other considerations, as mentioned above, must be taken into account.
7.18.8.16 — It is not appropriate to take account of 'possible' costs of a request for review or appeal. However, if there is insufficient documentation to sustain a debt and it would be costly to obtain it, the debt should be waived.
7.18.8.17 — Legislative Instrument R49/2009 Veterans' Entitlements (Class of Debts – Victorian Bushfires) Specification 2009 enables the Commission to waive the Commonwealth's right to recover debts under the VEA, incurred by persons who were adversely affected by the 2009 Victorian bushfires.
7.18.8.18 — A debt is in the specified class if:
7.18.8.19Adversely affected by the bushfires in Victoria is defined in the Specification and means, if, as a direct result of the bushfires:
7.18.8.20 — Debts incurred by a person who knowingly made a false or misleading statement to the Commission or to a person who worked for the Commission, or who knowingly provided false information to the Commission or to a person who worked for the Commission, in relation to that debt; or a debt incurred under Division 3 or 4 of Part IIIC [2] of the VEA (Compensation recovery) are not covered by the Specification.
7.18.8.21 — The Specification only covers debts under the VEA. Debts under MRCA must be considered on a case by case basis for waiver by the MRCC. Debts under SRCA must be considered on a case by case basis for waiver by the Secretary, for the Commonwealth.
7.18.8.22 — Where a debt is raised due to the restructure of a non-compliant self managed superannuation or small APRA fund 100% asset-test exempt income stream, the debt may be waived if the circumstances which created the debt meet the criteria set out in the Veterans' Entitlements (Class of debts – Self Managed Superannuation and Small APRA Funds) Specification 2009. This waiver is being provided in recognition of the impact of the global financial crisis of 2008 and 2009 on financial markets. The relief arrangements are in place for the 2008/09 and 2009/10 financial years and expire on 30 June 2010.
7.18.8.23 — Generally, if an asset-test exempt income stream sourced from a self managed superannuation fund or small APRA fund is restructured to form a market-linked income stream, the income stream should be retrospectively reclassified as an asset-tested (long term) income stream. A retrospective debt to the Commonwealth would be raised if the pension the person received exceeds what they would have received if the income stream had always been assessed as asset-tested (long term).
7.18.8.24 — Under the temporary relief arrangements, the debt may be waived if the following criteria are met:
7.18.8.25 — The debt relief will only apply to an income stream that;
7.18.8.2 — 6 — All cases should be referred to the Investment Database Unit, NSW Office.
System Guides – DMRS Manual
http://sharepoint/programsandprojects/systemguides/view/dmrs/Pages/DMRS%20Online%20Help.aspx [5]
Links
[1] https://clik.dva.gov.au/user/login?destination=comment/reply/24167%23comment-form
[2] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[3] https://clik.dva.gov.au/user/login?destination=comment/reply/24128%23comment-form
[4] https://clik.dva.gov.au/book/export/html/24167#tgt-csref_manual_ftn26
[5] http://sharepoint/programsandprojects/systemguides/view/dmrs/Pages/DMRS%20Online%20Help.aspx
[6] https://clik.dva.gov.au/book/export/html/24167#ref-csref_manual_ftn26