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C58/2002 Assessment of Income Streams of Divorcing Couples under the Family Law Act 2002 and Consequential VEA Amendments

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DATE OF ISSUE:  24 DECEMBER 2002

Assessment of Income Streams of Divorcing Couples under the Family Law Act 2002 and Consequential VEA Amendments

Purpose

This DI provides an overview of the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2002, which has been enacted to provide for the splitting of superannuation interests on marriage breakdown.

The DI sets out the revised income and assets treatment of the income streams of divorcing couples, which are split according to a superannuation agreement or court order under Part VIIIB of the Family Law Act 1975.

The amendment Act also removes the existing rules regarding the assessment of profit arising from early withdrawals from a superannuation fund.  These rules were applicable to a person withdrawing from a superannuation fund prior to age 55.  From 28 December 2002, the profit rules will no longer apply to any pensioner.

Background

Prior to the amendments to the Family Law Act, the determination of superannuation interests on marriage breakdown was a difficult procedure.  Problems included the lack of court authority to divide superannuation or to impose obligations on the trustees of superannuation funds, to flag (or 'freeze') superannuation until an agreement is reached, or to provide information about a member's superannuation entitlement to a spouse.

The amending Act authorises the Family Court, or the parties to a property settlement, to split a superannuation interest on marriage breakdown.  This authority is now included in Part VIIIB of the Family Law Act 1975 (the FLA), with court orders being binding on the trustees of superannuation funds.

Courts may also flag a superannuation interest for future splitting, to prevent trustees from paying out a superannuation entitlement until an agreement is reached between the divorcing parties.  This subsequent agreement (a flaglifting agreement) allows a couple to split the superannuation interest.

Trustees will also be required to provide financial information to non-member spouses, so that they may be properly informed of a superannuation interest in order to assist, where possible, with the private settlement of property division on divorce.

Additionally, the amended Superannuation Industry (Supervision) Regulations enable the parties to a marriage separation to achieve a clean financial break, for common types of superannuation (most commonly, the fully vested accumulation plans).  Trustees can now create a new interest, transfer or roll-over the benefit, or in certain circumstances make a lump sum payment to the non-member spouse where a condition of release is satisfied.

Date of effect

The amendment Act received Royal Assent on 2 December 2002.  The consequential amendments to the VEA contained within the legislation commence on 28 December 2002, immediately after the primary changes to the FLA take effect.

The legislation has no retrospective effect, and any property settlements finalised, by mutual agreement or court order, prior to 28 December 2002 will not be covered under the amended rules.

Transitional Arrangements

Specific rules exist in the amending legislation for transitional arrangements, where settlement proceedings have commenced but are yet to be finalised.  Advice may be sought from this Office as necessary, if transitional cases arise.

The scope of this Departmental Instruction

The wide variety of superannuation schemes and the many options for superannuation splitting results in some complexity, requiring that each case that arises be carefully considered and dealt with on an individual basis.   Attachment C summarises several of the most common superannuation splitting scenarios that may arise, and how they should be assessed.

This DI does not attempt to deal with every possible scenario that may be encountered.  It does however flag:

  • the need to recognise:
  • new cases; and
  • affected cases, when processing variations;
  • the need to refer certain affected cases to the appropriate area for action;
  •       in what circumstances existing cases need be referred; and
  •       the availability of policy assistance.

This DI provides information in the following areas:

  1. General information about splitting superannuation
  2. Overview of changes to the VEA
  3. Specific changes to the VEA
  4. Other general information
  5. Processing of cases
  6. Removal of profit rules
  7. System changes
  8. Guidelines

In addition, there are several Attachments.

Attachment A: provides general reference information about income streams.

Attachment B: includes some common examples, with calculations, of pension reassessments where superannuation interests are split.

Attachment C: is a Question and Answer document.

Contact

Enquiries regarding reassessments arising out of the splitting of superannuation interests as part of a property settlement on marriage breakdown can be referred to the Income Support Policy Section in National Office.

JEANETTE RICKETTS

Branch Head

Income Support

24 December 2002

1.  General Information about splitting superannuation

Splitting of superannuation by agreement of the parties or by court order

The methods by which superannuation interests can be split, for the purposes of the Act, are -

  1. The parties can agree by mutual consent to the splitting of any superannuation interests.  Failing a mutual agreement, then:

  1. Under the amended Part VIIIB of the FLA, a court may exercise jurisdiction to split a superannuation interest.

The types of superannuation splitting are –

  • A percentage payment split – this occurs where the superannuation agreement or court order specifies a percentage split to the member spouse's superannuation entitlements; or

  • A base amount payment split – where the superannuation agreement or court order specifies the dollar amount that the non-member spouse is entitled to receive from the member spouse's base amount of superannuation, that is, as a lump sum payment.

Splitting of superannuation by the fund trustee, under regulation 14G

Fund trustees are bound by a court's decision on superannuation splitting. Once a court decision is made, a trustee will have the discretion (subject to any contrary instructions), under regulation 14G of the Family Law (Superannuation) Regulations 2001, to either –

  • Pay a lump sum to the non-member spouse – the value must be at least equivalent to that agreed to or ordered by the court; or

  • Create a new interest (income stream) in the same fund in favor of the non-member spouse with a value at least equivalent to the value of that agreed to or ordered by the court; or

  • Transfer or roll-over an amount at least equivalent to the value of that agreed to or ordered by the court over to another fund or Retirement Savings Account to be held for the non-member spouse.

In the above cases, the non-member spouse would not be entitled to any further payments.

Superannuation fund trustees are provided with the above discretion under regulation 14G, in view of restrictive fund rules that frequently require that monies remain within a fund.  A trustee decision under 14G will require a DVA reassessment of a pensioner's circumstances.


The difference between percentage payment and base amount splits

A basic principle of the new rules is that the asset value and the deduction amount (the amount by which a purchased asset-test exempt or an asset-test (long-term) income stream will be reduced, for income test purposes) applying to income streams payments will be split between the spouses.  The split will be in the proportions agreed by the parties, or as decided by court order.

As outlined, a superannuation agreement or court order will specify that the non-member spouse is entitled to be paid either:

  • a percentage of each future income stream payment; or
  • a base amount.

For a percentage payment split, the member spouse's income stream will be split between both parties in the proportion resulting from the agreement or order.  In this case, the asset value and the deduction amount applying to the continuing income stream payments will be split between the spouses in the same proportion.

For a base amount split, the entitlement of the non-member spouse is specified as a dollar amount, rather than a proportion of future income stream payments.  In this case, the non-member spouse may be able to take the base amount (in whole or in part) as a commuted amount from the income stream.  Both parties will be assigned a proportion of the asset value and the deduction amount that would have applied to the continuing income stream payments of the member spouse if there had been no payment split.  For each spouse, the proportion will be equal to the proportion of these original income stream payments that are payable to that spouse.


2.  Overview of changes to the VEA

Consequential amendments to the VEA

The changes to the Family Law Act 1975 have means-test implications for both DVA and Centrelink payments.  The required consequential changes to both the VEA and the SSA were made as part of the Family Law Legislation Amendment (Superannuation)(Consequential Provisions) Act 2002.

The splitting of superannuation interests will affect the assessment of superannuation income under the income stream rules contained in both the VEA and the SSA.

The changes will also affect the existing rules in the VEA and the SSA that apply to withdrawals from superannuation funds made by persons under the age of 55 years.  The existing rules are being repealed, so as not to disadvantage divorcing couples who are required to withdraw from a superannuation fund as part of a property settlement.  Pensioners will therefore be able to make withdrawals prior to age 55 without affecting their income support payments.

Objectives of amendments

The changes to the VEA will ensure that superannuation entitlement splits will be assessed fairly and consistently under the means test, with no unintended consequences for persons who have their superannuation entitlements split as part of a property settlement.

Underlying principle of changes

An underlying principle of the amendments is that the assessment for means test purposes will be based on the actual respective legal entitlement of each party (following the application of Part VIIIB of the FLA and the Family Law (Superannuation) Regulations 2001).

3.Specific changes to the VEA

Specific changes to the VEA

The legislative changes to the VEA are:

(1)    Amendments to the definitions and to the sections relevant to income streams, to take account of superannuation interests that are income               streams subject to an agreement or court order splitting the               superannuation interest.

The new definitions include a definition of a:

  • family law affected (FLA) income stream;
  • original FLA income stream;
  • primary FLA income stream; and
  • secondary FLA income stream.

  1.                  Isolating the existing income streams rules into a new Subdivision B               of Division 4 of Part IIIB of the VEA; and

  1.               Establishing, specifically for family law affected income streams, a               new Subdivision C of Division 4 of Part IIIC.  The rules for the               adjustment of family law affected income streams will, on finalisation,

be found in guidelines to be determined by the Commission pertaining to three sections:

  • Sections 46ZA and ZB which both apply to the income test; and
  • Section 52BA, which applies to the assets test.

      All three sets of guidelines are disallowable instruments, which are legally binding instruments that are required to be tabled in both               Houses of Parliament and are subject to disallowance.  Once               promulgated, the guidelines will be available through the Legislation               library on CLIK.

The inclusion of the new subdivisions B and C of Division 4 of Part IIIB of the VEA merely clarify that the pre-existing rules for assessing               the income and asset value of income streams do not apply to family               law affected income streams.

  1.               Repeal of the rules that apply to penalties for early withdrawals from

superannuation funds by persons under the age of 55 years.

Specific changes to the VEA cont.

(5)  Guidelines determined by the Commission for dealing with family law affected income streams, that will contain the method to apply               when working out the annual rate of:

  • Ordinary income from:
  • Asset-test exempt income streams – a new section 46ZA
  • Asset-tested income stream (long term) – a new section 46ZB
  • Asset value from:
  • asset-test exempt income streams – a new section 52BA

New terminology under the legislation

The original family law affected income stream is the income stream acquired or purchased by a person (called the member) from a relevant superannuation fund.  This is the income stream that is subject to an agreement by the parties, or an order of the court, splitting it between the former parties to a marriage.

The payments resulting from the splitting order are known as:

  • the primary FLA income stream, when paid to the member; and
  • the secondary FLA income stream, when paid to the member's spouse or former spouse (the non-member).

Both the primary and secondary FLA income streams are family law affected income streams.

The diagram below indicates the resulting income streams which will require a reassessment in the light of the application of the new family law:

Other effects of the amendments

The amendments to the Act also include amendments to:

  • determine when a 'split superannuation interest' becomes assessable;
  • ensure 'split income streams' are income streams for pension purposes;
  • ensure that payments to the original owner of an asset test exempt (ATE) income stream retain their asset test exempt status following the split; and
  • include guidelines for the valuation of the assessable income and assets of a pensioner whose superannuation is split, or who receives a superannuation entitlement due to property settlement.

Sections 46Q and 46R of the VEA (relating to the treatment of superannuation fund investments, including withdrawals, before pension age) are repealed.  This will ensure that a split of a superannuation interest in the 'growth phase' is not treated as a realisation of the investment, and therefore potentially assessable as income.


4.  Other general information

Assessments will usually affect the member spouse (veteran)

It is expected that in most cases the income and assets reassessment arising out of a split income stream will reflect the proportion of the original income stream remaining with the pensioner in question.  Under the VEA, where the pensioner is a veteran receiving service pension, the necessary reassessment will be restricted to the veteran, as their partner will no longer be payable under the VEA unless the partner is also a veteran in his or her own right.

Treatment of commuted amounts

If either spouse receives a commuted amount as part of the base amount payment split and this amount is not rolled over, the commuted amount will be treated as a lump sum payment, not as income.  In accordance with normal means test rules, if the amount received is used to purchase an asset, or invested, it may be treated as an assessable asset.  Under the income test, the asset may be deemed or actual income may be assessed, depending on the nature of the asset.

If either spouse uses the amount commuted to purchase another income stream, the income stream will be treated as a new income stream (with a new commencement day and relevant number) for means test purposes.

Treatment of  continuing income stream payments

The trustee of the superannuation fund may create a new interest in the fund, transfer or roll over an amount to another superannuation fund, or pay an amount in satisfaction of the non-member spouse's entitlement.  If this occurs, the:

  • new asset value; and
  • new deduction amount,

of the reduced income stream payments of the member spouse will reduce in the same proportion as the reduction that applied to their original income stream payment.

Continuity of asset test exemption (ATE) status

For a percentage payment split:

  • both the member spouse's and the non-member spouse's split income streams will retain the asset test exempt status of the member spouse's original income stream.

For a base amount split:

  • the non-member spouse's split income stream will retain the asset test exempt status of the member spouse's original income stream.  The member spouse's split income stream will also retain the asset test exempt status of the original income stream, provided the amount commuted does not exceed the amount required to meet the entitlement of the non-member spouse under the payment split.

Treatment of funds split during the growth phase

The guidelines under section 46ZA (as well as those under section 46ZB and section 52BA) will not apply to assessments where the superannuation interest is split during the growth phase.

This is because a person's interest in a superannuation fund during the growth phase is not assessed under the income streams rules.  An interest at this stage is not an income stream, as no payments are being made by the fund to the member.  A person's investments in a superannuation fund are effectively quarantined from assessment until they reach the relevant pension age.

It is only necessary to assess the superannuation of a person not yet receiving superannuation pension or annuity (i.e. in the growth phase) if they are still making fund contributions beyond their relevant pension age.

In these cases, it will be necessary to rely upon the method of assessing the value of the superannuation investments under the Family Law (Superannuation) Regulations 2001.  Actuarial advice is likely to be required in this situation, to properly value the superannuation interest.  Revised values can be entered into a person's assessment when they satisfy the minimum conditions for release, i.e. at the earliest retirement age.  As these circumstances are expected to rarely arise, policy advice should be sought from the Income Support Policy Section before seeking actuarial advice.

Circumstances in which actuarial valuation may be required

Actuarial valuation may be required to extrapolate superannuation amounts and interests through to retirement age, where the option to flag a superannuation interest is not taken up.

The deferral of the actual splitting of payments until retirement age, whether payments are by ongoing pension or lump sum, will simplify the process of valuing the interest concerned, as it will avoid the need for costly actuarial valuations.

Treatment of the first income stream payment, for means test purposes

Where an income stream is:

  • not an allocated pension, and
  • the first income stream payment is also the first splittable payment after the payment split, and
  • a base amount split has been awarded,

then the first payment after a base amount split is treated differently from the subsequent payments from the income stream.

The first splittable payment after a base amount split has been awarded may also be:

  • the first income stream payment; or
  • a lump sum payment separate from the income stream.

Where the first splittable payment:

  • equals or exceeds the base amount awarded to the non-member spouse OR the combined base amount split, the non-member spouse is entitled to be paid the base amount from that payment.  The non-member spouse will not be entitled to any further payments.  Where the non-member spouse's base amount exceeds the first splittable payment, the non-member spouse is entitled to be paid all of the first splittable payment.  In this case the member spouse will not receive any part of the first splittable payment.  All payments will usually go to the non-member spouse until that person has been paid out in full;

  • is also the first income stream payment, no income will be assessed for either spouse before the date of the first income stream payment.  This is because the member spouse will not usually receive the first splittable payment.  The amount paid to the non-member spouse from this payment will form part of the base amount and will be assessed as an exempt lump sum, not as income;

  • is a lump sum separate from the member spouse's original income stream, the first and subsequent 'split' payments from the original income stream will be split in the proportion necessary to meet the non-member spouse's entitlement to the outstanding portion of the base amount.  The first income stream payment will be assessed in the same manner as subsequent income stream payments.

5.  Processing of cases

Frequency of cases

The number of cases of superannuation splitting following marriage breakdown is difficult to estimate.  Currently there are approximately 21,000 married DVA clients receiving income stream payments.  Australian Bureau of Statistics data indicate an annual divorce rate for married males, age 60, of 0.28%.  These figures suggest that approximately 60 cases of superannuation splitting will occur annually, across all DVA Offices.  Many of the non-member spouses will be on partner service pension, and hence will leave the repatriation system.  This level of anticipated workload will minimise the exposure of any one State Office or individual examiner to the complexities of the revised assessments.

Processing of cases centrally being canvassed

Many of the possible superannuation splitting scenarios are likely to arise infrequently, with complex features and formulas needing to be applied.  The infrequency of these cases combined with their complexity results in little opportunity to develop expertise, unless processing is undertaken within a centralized area or by specific individuals.

Input was sought from States on this issue via the Stateline issued on 13 November 2002.  Further advice on the outcome of this consultation will be provided, when all State Office responses are received.

Interim measures

In the interim, cases of superannuation splitting should be notified, as they arise, to the Income Support Policy Section.  Notification of cases will assist in developing and refining the guidelines and policy statements, for the assistance of local examiners.  The contact person for case notification is Brian Butler, Income Support Policy Section, on (02) 6289 6110.

Manual override of the PIPS income streams rules is likely to be required

For both percentage payment splits and base amount payment splits, the commencement day of the split income streams for the purpose of recording on the income streams screen will be taken to be the commencement day of the member spouse's original income stream.  However, many of these cases are likely to have the income streams rules in-built into the system turned off by use of the drop box option that disables the rules, allowing for full manual input to be undertaken without edits occurring.

Effective PIPS date for superannuation split

The operative date of the superannuation split will be contingent on:

  • the date when a superannuation fund trustee elects to exercise the splitting options available under regulation 14G; or

  • the implementation date of the court's splitting order.

Review procedure

The asset values of the split income streams will be reassessed at the usual six or twelve monthly intervals.


6.  Removal of Profit Rules

Deletion of profit rules

From 28 December 2002, the profit rules pertaining to withdrawals from superannuation investments by persons under 55 years of age will cease to apply.  Profit will still remain assessable for affected pensioners up until that date.

These changes ensure that the provisions that were only applicable to those persons aged under 55 years cease to apply to all pensioners from 28 December 2002.  It should be noted that these sections still apply to any profit on withdrawals made by persons under the age of 55 years before 28 December 2002.  Profit remains assessable up to and including 27 December 2002.

VEA amendments regarding profit calculation

The following sections of the Veterans' Entitlements Act 1986 have been repealed:

  • 46Q  - Treatment of superannuation fund investments before pension age;
  • 46R  - Early withdrawal from superannuation fund; and
  • 46S   - Adjustment of ordinary income for investment losses

The repeal of these sections ensures that a split of superannuation interest in the growth phase is not treated as the realisation of the investment, and therefore is not potentially assessable as income.

In addition, the definitions of 'assessable growth period' and 'assessable period' have been removed from section 5J(1) of the VEA.

Existing profit  assessments

As these changes become effective on 28 December 2002, there are currently some cases that will still have profit in the assessment as at that date.  These cases will require existing profit assessments to be removed from the pension assessment.  Affected cases can be identified through the Ad Hoc Inquiry System (AIS), for manual processing.  A recent AIS interrogation by this Office, using the “Profit Amount” query, identified 64 cases where held profit amounts will need to be removed.

Reassessing existing profit cases

State Office processing staff should follow these steps to reassess existing cases which are affected by these changes:

Step

Action

1

Register a DIR (Departmentally Initiated Review) using CMS screen CM.CP.

2

Create a PIPS PC worksheet, selecting 'Date of Effect Rules Do Not Apply' and enter the relevant date of effect, as specified on the lists of affected cases.

3

Delete the relevant profit entry from the PIPS PC Profit data collection screen.

4

Add the following suggested 'Free Text' to the PIPS PC Advices screen:

"Under new rules, from 28 December 2002, profit will no longer be counted as income when a withdrawal is made from a super fund investment.  As a result of these changes your existing profit income has been removed from your pension assessment."

CLIK & FACT sheets

The affected policy statements in the Consolidated Library of Information and Knowledge (CLIK), and the DVA Fact Sheets, will be examined and revised to ensure that all references to the assessment of profit for early withdrawal from superannuation fund investments by persons age 55 or over have been removed.

Pre Pension Age Super Fund Withdrawals Worksheet

The 'Pre Pension Age Super Withdrawals Worksheet' will remain in use for the time being, but will only be relevant for retrospective calculations involving withdrawals where the assessment period pre-dates the implementation date of 28 December 2002.


7.          SYSTEM CHANGES

Pending system changes

Identified systems changes at this stage are:

  • to PIPS PC to prevent the addition or inclusion of profit post 28/12/2002;

  • to $FORT Profit Delete sub program, to be removed after 28/12/2002; and

  • to Advices, to remove reference to profit being assessed or deleted.

A separate Stateline will be issued when the required system changes are identified and finalised.


8.          GUIDELINES

Guidelines to assist determinations

The guidelines set out in the following table are divided into a number of different categories, depending on:

  • the type of assessment being considered, that is, income or assets;

  • the type of superannuation product;
  • whether the product is in the growth phase or the payment phase; and

  • the type of split occurring, that is whether it is a percentage payment split or a base amount split.

The examples in Attachment B outline the common scenarios that are likely to be encountered.  Many of the other scenarios outlined in the guidelines are unlikely to be commonly encountered.

Assistance is available from the Income Support Policy Section if cases arise which do not fall within the scenarios outlined in Attachment B.  State Office advice of these cases will assist in refining the guidelines over time.

A summary of general income stream terminology and categories has been included at Attachment A, for reference purposes.


ATTACHMENT A

General reference information about income streams

What are income streams?

Under the VEA, an income stream is defined to include the following categories of superannuation:

  1. an income stream raising under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993; or
  2. an income stream arising under a public sector scheme, within the meaning of the same Act.

This means that in the majority of cases, superannuation interests that have been split by agreement or court order will be assessed under the income streams rules.

What is an Asset Test Exempt (ATE) income stream?

An income stream is an ASSET TEST EXEMPT (ATE) income stream only if it is:

  • paid for life; and
  • meets all of the characteristics listed in subsection 5JA(2) of the VEA;

OR

  • paid to life expectancy; and
  • is purchased or acquired on or after pension age; and
  • meets all of the characteristics listed in subsection 5JB(2) of the VEA

OR

  • paid for a fixed term of 15 years or more; and
  • is purchased or acquired on or after pension age; and
  • the person's life expectancy is 15 years or more; and
  • the term is not greater than the person's life expectancy; and
  • meets all of the characteristics listed in subsection 5JB(2) of the VEA.

ANY INCOME STREAM THAT DOES NOT MEET THESE CRITERIA WILL BE AN ASSET TESTED INCOME STREAM.

Types of ATE income streams

The VEA provides for two broad categories of ATE income streams:

  • Defined benefit income streams – section 46V;
  • Non-defined benefit income streams – section 46U

What is a defined benefit income stream?

An income stream is a defined benefit income stream if the amount of the payments under it:

  1. is not fully determined by the purchase price; but
  2. is determined by:
  1. reference to the purchaser's salary before retirement or the purchaser's years of service; or
  2. the governing rules.

What is a Asset Tested income stream (long term)

An income stream is an asset-tested long term income stream (ATLT) if it:

  • is not an ATE income stream; and
  • has a term greater than 5 years;

OR

  • is not an ATE income stream; and
  • has a term of 5 years or less that is equal to or greater than the person's life expectancy.

What is an Asset Tested income stream (short term)

An income stream is an asset tested short term income stream (ATST) only if it is:

  • not an ATE income stream; and
  • not an Asset Tested Long term income stream.

Allocated income streams

Allocated pensions are income streams purchased with a lump sum eligible termination payment (superannuation money) into a personal account to which investment earnings are added and from which payments are drawn regularly.

Growth phase

The growth phase of superannuation arises typically whilst a person is employed and making contributions to it, or whilst the person's investment in the fund and is not being drawn down by regular payments.

Payment phase

The payment phase arises when a person commences to receive ongoing pension payments out of the fund.


ATTACHMENT B

Examples of common scenarios requiring reassessment of  superannuation interests split under Part VIIIB of the FLA

(a)(i) ATE income streams (non-defined benefit) – split during payment phase

Prior to split

Prior to the operation of the new family law, section 46U applies to working out the income from an ATE income stream that is not a defined benefit income stream (refer example below).

Example of how rules apply prior to split

The following example from the legislation explains how section 46U operates:

Mark is 65 years old and married. He receives superannuation payments of $380.58 per fortnight from rolling over $100,000 into a non-defined benefit superannuation fund with a term based on life expectancy (i.e. 15.41 years, which he chooses to round up to 16 years).  The annual payment from the superannuation fund held in the assessment is $9,895. Mark's assessable income from this income stream prior to the operative date of the split is:

where:

  • annual payment means the amount payable to the person for the year under the income stream.
  • purchase price has the meaning given by subsection 5J(1).
  • relevant number has the meaning given by subsection 5J(1).

= the assessable income.

Application of amended procedures

The annual income from the income stream will be determined in accordance with the guidelines to be issued under section 46ZA.  The guidelines will provide that the original family law affected income stream will be reduced in accordance with the percentage payment split.

Example

In the above example Mark divorces, and in a settlement with his ex-spouse agrees to split his ATE income stream 50/50.

The guidelines then apply to determine the annual rate of income from the split income stream (known as the primary FLA affected income stream).

The annual rate of income from the primary FLA income stream is determined by multiplying the amount of the “annual payment” and the “purchase price” held in the assessment under section 46U by 0.5 to reflect the percentage of the original family law affected income stream retained by Mark, as follows:

The relevant number remains unchanged in the assessment.

Comments

This scenario is likely to be the most common type of split likely to arise.

Procedures

Follow the steps below to reassess the income stream for the member spouse (MS) and non-member spouse (NMS) (if necessary) below:

Steps

Actions

1.

Determine the percentage split awarded to the MS and the NMS by agreement or court order.

2.

Adjust the “annual payment” and the “purchase price” held in the assessment on PIPS PC to take account of the proportion awarded to the MS (and the NMS if necessary).


(a)(ii) ATE income streams (defined benefit) – split during payment phase

Prior to split

The value of a defined benefit ATE income stream is worked out in accordance with section 46V of the VEA.

Section 46V states that if the asset-test exempt income stream is a defined benefit income steam, the amount that the person is taken to receive from the income stream each year is worked out as follows:

The deductible amount is defined in subsection 5J(1) and is the amount that would be a deductible amount calculated under subsection 27H(2) of the Income Tax Assessment Act. 1936 (ITAA).

The deductible amount is an amount by which the gross income payments from a defined benefits income stream are reduced in order to determine the assessable income for pension purposes.

The deductible amount is worked out by using the ITAA definition, being –

Undeducted Purchase Price (UPP) ? Relevant Number ? 26 = deductible amount per fortnight.

Example of how rules apply prior to split

Mark is 65 years old and married to Betty. He received superannuation payments of $200 per fortnight ($5,200 pa) from a defined benefit income stream prior to his divorce.  The relevant number is in this case 20, and the Undeducted Purchase Price is $10,000.  The deductible amount is therefore 500.

Section 46V states that if the asset-test exempt income stream is a defined benefit income steam, the amount that the person is taken to receive from the income stream each year is worked out as follows:

Mark's assessable income for pension purposes from this income stream is:

$

                      = $ 4,700 ($180.77 per fortnight)

Application of amended procedures

Mark and Betty divorce, and in a property settlement they agree to a 50/50 split of the income from the above ATE defined benefits income stream.

The guidelines under section 46ZA are applicable.

Example

The new income streams are:

$100 pf to the member spouse (MS)

$100 pf to the non-member spouse (NMS)

Therefore the assessable income from the above income stream attributed to member spouse (Mark) is -

$100 per fortnight ? 26

Comment

(1). This example scenario is also likely to occur.

(2) The income stream created as a consequence of the splitting order for the non-member spouse (NMS), Betty, is a defined benefits income stream by definition and should be assessed as either a ATE or an ATLT income stream depending upon its relevant number.

(3) The Australian Taxation Office is determining, under section 27H of the ITAA 1936, the deductible amounts for a new pension that is deemed to have commenced when a pension is split on divorce or separation.

Procedures

Follow the steps below to assess an ATE defined benefits income stream that has been subject to a splitting order:

Step

Action

1.

Confirm the percentage payment split made to the MS and the NMS (if necessary).

2.

Determine the assessable income for pension purposes by entering the new deductible amount and revised pension payments from the defined benefit income stream into PIPS PC.


(b)(i) ATE income streams (non-defined benefit) split during payment phase – base amount split

Example

The only difference between this scenario and scenario (a)(i) is that the agreement or court order will specify an amount to be paid to the non-member spouse.

Application of guidelines

The treatment of this case is similar to that of scenario (a)(i), with adjustments being made to the “purchase price” to reflect the payment to the ex-spouse.  The annual payment to be held in the assessment for the MS can be determined by dividing this new revised purchase price by the same relevant number held in the assessment.

Full range of possible scenarios

The three example scenarios outlined above are expected to most commonly occur.  The full range of possible superannuation splitting permutations is summarised in the following table.


INCOME TEST guidelines

Guidelines under section 46ZA, VEA

Asset Test Exempt (ATE) income stream

(a)

(b)

(c)

(d)

Split during Payment Phase:

Percentage payment split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Base amount split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Split during Growth Phase:

Percentage payment split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Base amount split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Guidelines under section 46ZB, VEA

Asset Test Long Term (ATLT) income stream

(e)

(f)

(g)

(h)

Split during Payment Phase:

Percentage payment split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Base amount split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Split during Growth Phase:

Percentage payment split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Base amount split;

(i) Non-defined benefit income streams

            (ii) Defined benefit income streams

Asset Tested Short Term (ATST) income stream

(i)

(j)

Split during Payment Phase:

Percentage payment split.

Base amount split.

(k)

(l)

Split during Growth Phase:

Percentage payment split.

Base amount split.


ASSET TEST guidelines

Guidelines under section 52BA, VEA

Asset Tested Long Term (ATLT) income stream

(m)

(n)

Split during PAYMENT PHASE:

Percentage payment split;

Base amount split;

(o)

(p)

Split during GROWTH PHASE:

Percentage payment split

Base amount split.

Asset Tested Short Term (ATST) income stream

(q)

Split during PAYMENT PHASE:

Percentage payment split.

ATTACHMENT C

MEANS TEST TREATMENT OF SUPERANNUATION FOLLOWING A FAMILY LAW PROPERTY SETTLEMENT

Questions and Answers

  1. What are the new super splitting laws?

Legislation has been passed to deal with the problem of division of superannuation, on marriage separation.  The new laws give the Family Court, or the parties to a property settlement, the power to split superannuation interest on marriage breakdown.  It also provides the Court with the power to flag a superannuation interest for future splitting, in order to prevent trustees from paying out any superannuation entitlement until a further agreement is reached.

  1. What does this mean for income support purposes?

The Veterans' Entitlements Act 1986 has been amended to ensure that there are no unfair outcomes or unintended consequences for veterans who receive superannuation, or have their superannuation entitlements split, as part of a property settlement following divorce.

  1. When will these changes take effect?

The changes come into effect on 28 December 2002.

  1. What changes have been made to the Veterans' Entitlements Act 1986 (the Act) as a result of the new super splitting laws?

The changes to the Veterans' Entitlements Act 1986 (the Act) will ensure that superannuation entitlement splits will be assessed fairly and consistently under the means test.  The Act has been altered to:

  • determine when a 'split superannuation interest' becomes assessable in the hands of the recipients following the split of a superannuation interest;

  • ensure that 'split income streams' are themselves income streams for income support purposes;

  • allow for the valuation of the assessable income and assets of a veteran whose superannuation is split, or who receives a superannuation entitlement due to property settlement;

  • ensure that, where payments to the original owner of an asset test exempt (ATE) income stream are commuted or reduced following the 'split' of a superannuation interest, the payments to the divorcing or separating parties retain their asset test exempt status;

  • repeal sections 46Q, 46R and 46S of the Act, to ensure that the 'split' of a superannuation interest in the 'growth phase' is not considered to be a realisation of a superannuation investment by a fund member.

  1. How will superannuation interests be split under the new super splitting laws?

A superannuation split can be a 'percentage payment split' or a 'base amount payment split'.

  • A 'percentage payment split' is where the superannuation agreement or court order specifies that a percentage split is to be applied to the member spouse's superannuation entitlements. 
  • A 'base amount payment split' is where the superannuation agreement or court order specifies the entitlement of the non-member spouse in terms of a base (dollar) amount. 

Following the split, in order to satisfy the entitlement of the non-member spouse, the trustee of the superannuation fund may –

  • create a new interest in the fund for the non-member spouse;
  • transfer or rollover to another superannuation fund an amount to be held for the non-member spouse; or
  • pay an amount to the non-member spouse.  In this case, the non-member spouse would not be entitled to any further payments.

  1. If the member spouse's income stream payments are to be split between the member spouse and the non-member spouse as a result of the payment split, how will the split income stream payments be treated for means test purposes?

    The superannuation agreement or court order will specify whether the non-member spouse is entitled to be paid a percentage of each future income stream payment, or whether the entitlement of the non-member spouse will be defined in terms of a base amount.

    The basic principle is that the asset value and the deduction amount applying to the continuing income streams payments will be split between the spouses in the proportions resulting from the agreement or court order.

    For a percentage payment split, the member spouse's income stream will be split between the member spouse and the non-member spouse in the proportion resulting from the agreement or order.  In this case the asset value and the deduction amount applying to the continuing income stream payments will be split between the spouses in the same proportion.

    For a base amount split, the entitlement of the non-member spouse is specified as a dollar amount, rather than a proportion of future income stream payments.  In this case, the non-member spouse may be able to take the base amount (in whole or in part) as a commuted amount from the income stream.  Each spouse will be assigned a proportion of the asset value and the deduction amount that would have applied to the continuing income stream payments of the member spouse if there had been no payment split.  For each spouse, the proportion will be equal to the proportion of the original income stream payments that are payable to that spouse.

    For both percentage payment splits and base amount payment splits, the commencement day of the split income streams will be taken to be the commencement day of the member spouse's original income stream.  The asset values of the split income streams will be reassessed at the usual six or twelve monthly intervals.
     
  2. If either spouse receives a commuted amount as part of the base amount payment split, how will that commuted amount be treated for means test purposes?

    The commuted amount will be treated as a lump sum payment, not as income.  In accordance with normal means test rules, if the amount received is used to purchase an asset, or invested, it may be treated as an assessable asset.  Under the income test, the asset may be deemed or actual income may be assessed, depending on the nature of the asset.

If either spouse uses the amount commuted to purchase another income stream, the income stream will be treated as a new income stream (with a new commencement day and relevant number) for means test purposes.

  1. If the trustee of the superannuation fund creates a new interest in the fund, transfers or rolls over an amount to another superannuation fund or pays an amount in satisfaction of the non member spouse's entitlement, how are the continuing income stream payments to the member spouse to be treated?
     

The asset value and deduction amount applying to the member spouse's reduced income stream payments will be reduced in the same proportion as the member spouse's income stream payments are reduced.

  1. If the member spouse's original income stream is asset test exempt, will the split income streams also be asset test exempt?

    For a percentage payment split, the member spouse's and the non-member spouse's split income streams will retain the asset test exempt status of the member spouse's original income stream.

    For a base amount split, the non-member spouse's split income stream will retain the asset test exempt status of the member spouse's original income stream.  The member spouse's split income stream will also retain the asset test exempt status of the original income stream providing the amount commuted does not exceed the amount required to meet the entitlement of the non member spouse under the payment split.

     
  2. Who is the contact for further details?

Queries regarding the Family Law Act changes to the splitting of superannuation interests on divorce can be directed to the Income Support Policy Section in National Office, at the email address of NAT Policy Advisings Income Support.

Telephone enquiries can be directed to –

Brian Butler — Policy Section — 02 6289 6110

Joel Kitto — Policy Section — 02 6289 6658

1


AGREEMENT OR ORDER SPECIFIES “PERCENTAGE PAYMENT SPLIT” OF A FLA INCOME STREAM

PURCHASED

SUPER PENSION

OR

ALLOCATED PENSION

Definition of MS PROP & NMS PROP

MS PROP

Member Spouse Proportion is:

  • the proportion of the member spouse's income stream awarded to the member spouse (eg.  60%).

NMS PROP

Non-Member Spouse Proportion is:

  • the proportion of the member spouse's income stream awarded to the non-member spouse (eg.  40%).

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x MS PROP
  • Purchase Price x MS PROP
  • RCV x MS PROP (if applicable)
  • CAB X MS PROP (if applicable)

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Apply existing asset formula using the new combination of original & adjusted details.

Non-Member Spouse

Secondary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x NMS PROP
  • Purchase Price x NMS PROP
  • RCV x NMS PROP (if applicable)
  • CAB X NMS PROP (if applicable)

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Apply existing asset formula using the new combination of original & adjusted details.

Effective Date

Record:

  • Primary FLA Income Stream in the member assessment

and

  • Secondary FLA Income Stream in the non-member assessment

From

  • Operative Time

Future Commutations

If the member spouse commutes an amount in the future, then that amount is also apportioned between the member and non-member as per the MS PROP and NMS PROP.

Review

  • Gross income (ie. if it changes).
  • Asset Value (ie. ? yrly or yrly using existing depletion formula).
  • Commutation (ie. by subtracting the amount commuted in relation to the member spouse from the  adjusted purchase price).

Review

  • Gross income (ie. if it changes).
  • Asset Value (ie. ? yrly or yrly using existing depletion formula).
  • Commutation (ie. by subtracting the amount commuted in relation to the non-member spouse from the adjusted purchase price).


AGREEMENT OR ORDER SPECIFIES “PERCENTAGE PAYMENT SPLIT” OF A FLA INCOME STREAM

DEFINED BENEFIT SUPER PENSION

Definition of MS PROP & NMS PROP

MS PROP

Member Spouse Proportion is:

  • the proportion of the member spouse's income stream awarded to the member spouse (eg.  60%).

NMS PROP

Non-Member Spouse Proportion is:

  • the proportion of the member spouse's income stream awarded to the non-member spouse (eg.  40%).

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x MS PROP
  • UPP x MS PROP

*** Check ATO ruling / position on UPP and relevant number ? ***

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Not required, as all defined benefit income streams are asset test exempt under a disallowable instrument.

  • If disallowable instrument was repealed, calculate asset value using existing PVF asset formula and the member's PVF at the operative time.

Non-Member Spouse

Secondary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x NMS PROP
  • UPP x NMS PROP

*** Check ATO ruling / position on UPP and relevant number ? ***

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Not required, as all defined benefit income streams are asset test exempt under a disallowable instrument.

  • If disallowable instrument was repealed, calculate asset value using existing PVF asset formula and the member's PVF at the operative time.

Effective Date

Record:

  • Primary FLA Income Stream in the member assessment

and

  • Secondary FLA Income Stream in the non-member assessment

From

  • Operative Time

Future Commutations

If the member spouse commutes an amount in the future, then that amount is also apportioned between the member and non-member as per the MS PROP and NMS PROP.

Review

  • Gross income (ie. if it changes).
  • Asset value (ie. only if disallowable instrument was ever repealed) every 12 months on anniversary of commencement date, using the member's PVF.

Review

  • Gross income (ie. if it changes).
  • Asset value (ie. only if disallowable instrument was ever repealed) every 12 months on anniversary of commencement date, using the member's PVF.


AGREEMENT OR COURT ORDERS “BASE AMOUNT SPLIT” OF A FLA INCOME STREAM

INTERIM ASSESSMENT FROM OPERATIVE TIME TO FIRST SPLITTABLE PAYMENT

ALLOCATED PENSION

Definition of MS PROP & NMS PROP

NMS PROP

Non-Member Spouse Proportion is:

  • the base amount divided by the  value of the superannuation interest obtained from the Court or Trustee.

  • eg.  (            base amount             )

                    value of super interest

MS PROP

Member Spouse Proportion is:

  • 1 minus the NMSPROP as calculated above.

  • eg.  (1 – NMSPROP)

  • The Base Amount is the total dollar amount of the super interest awarded to the non-member spouse as specified in the agreement or court order.

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number
  • Purchase Price

Adjust member's original income stream:

  • Gross Payment = 0.00

Income Test:

  • record 0.00 income as an interim assessment until the first splittable payment.

Asset Test:

  • MS PROP x CAB as an interim assessment until the first splittable payment.

Non-Member Spouse

Secondary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number
  • Purchase Price

Adjust member's original income stream:

  • Gross Payment = 0.00

Income Test:

  • record 0.00 income as an interim assessment until the first splittable payment.

Asset Test:

  • NMS PROP x CAB as an interim assessment until the first splittable payment.

Effective Date

Record:

  • Primary FLA Income Stream in the member assessment

and

  • Secondary FLA Income Stream in the non-member assessment

From

  • Operative Time

Review

  • on the date of the first splittable payment.  Interim income and asset assessment must cease.

Review

  • on the date of the first splittable payment.  Interim income and asset assessment must cease.


AGREEMENT OR COURT ORDERS “BASE AMOUNT SPLIT” OF A FLA INCOME STREAM

INTERIM ASSESSMENT FROM OPERATIVE TIME TO FIRST SPLITTABLE PAYMENT

PURCHASED SUPER PENSION

Definition of MS PROP & NMS PROP

NMS PROP

Non-Member Spouse Proportion is:

  • the base amount divided by the  value of the superannuation interest obtained from the Court or Trustee.

  • eg.  (            base amount             )

                    value of super interest

MS PROP

Member Spouse Proportion is:

  • 1 minus the NMSPROP as calculated above.

  • eg.  (1 – NMSPROP)

The Base Amount is the total dollar amount of the super interest awarded to the non-member spouse as specified in the agreement or court order.

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number
  • Purchase Price
  • RCV

Adjust member's original income stream:

  • Gross Payment = 0.00

Income Test:

  • record 0.00 income as an interim assessment until the first splittable payment.

Asset Test:

  • MS PROP x Asset Value as calculated under existing asset formula. This is an interim assessment using the member's original income stream details.

Non-Member Spouse

Secondary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number
  • Purchase Price
  • RCV

Adjust member's original income stream:

  • Gross Payment = 0.00

Income Test:

  • record 0.00 income as an interim assessment until the first splittable payment.

Asset Test:

  • NMS PROP x Asset Value as calculated under existing asset formula. This is an interim assessment using the member's original income stream details.

Effective Date

Record:

  • Primary FLA Income Stream in the member assessment

and

  • Secondary FLA Income Stream in the non-member assessment

From

  • Operative Time

*** Check Application of Deeming Exemption provisions where Original Member's FLA income stream was Asset Tested Short Term (ATST) ***

Review

  • on the date of the first splittable payment.  Interim income and asset assessment must cease.

Review

  • on the date of the first splittable Payment.  Interim income and assessment must cease.


AGREEMENT OR COURT ORDERS “BASE AMOUNT SPLIT” OF A FLA INCOME STREAM

INTERIM ASSESSMENT FROM OPERATIVE TIME TO FIRST SPLITTABLE PAYMENT

DEFINED BENEFIT SUPER PENSION

Definition of MS PROP & NMS PROP

NMS PROP

Non-Member Spouse Proportion is:

  • the base amount divided by the  value of the superannuation interest obtained from the Court or Trustee.

  • eg.  (            base amount             )

                    value of super interest

MS PROP

Member Spouse Proportion is:

  • 1 minus the NMSPROP as calculated above.

  • eg.  (1 – NMSPROP)

The Base Amount is the total dollar amount of the superannuation interest awarded to the non-member spouse as specified in the agreement or court order.

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number
  • UPP (if applicable)

Adjust member's original income stream:

  • Gross Payment = 0.00

Income Test:

  • record 0.00 income as an interim assessment until the first splittable payment.

Asset Test:

  • Not required, as all defined benefit income streams are asset test exempt under a disallowable instrument.

  • If disallowable instrument was repealed, calculate asset value using MSPROP x Asset Value as calculated using existing PVF formula and the member's PVF at the operative time.

  • This is an interim assessment until the first splittable payment.

Non-Member Spouse

Secondary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number
  • UPP (if applicable)

Adjust member's original income stream:

  • Gross Payment = 0.00

Income Test:

  • record 0.00 income as an interim assessment until the first splittable payment.

Asset Test:

  • Not required, as all defined benefit income streams are asset test exempt under a disallowable instrument.

  • If disallowable instrument was repealed, calculate asset value using NMSPROP x Asset Value as calculated using existing PVF formula and the member's PVF at the operative time.

  • This is an interim assessment until the first splittable payment.

Effective Date

Record:

  • Primary FLA Income Stream in the member assessment

and

  • Secondary FLA Income Stream in the non-member assessment

From

  • Operative Time

Review

  • on the date of the first splittable payment.  Interim income and asset assessment must cease.

Review

  • on the date of the first splittable payment.  Interim income and asset assessment must cease.


AGREEMENT OR COURT ORDERS “BASE AMOUNT SPLIT” OF A FLA INCOME STREAM

ASSESSMENT FROM FIRST SPLITTABLE PAYMENT – PAYMENTS ARE SPLIT TO SATISFY THE BASE AMOUNT

PURCHASED

SUPER PENSION

Definition of MS PROP

MS PROP

Member Spouse Proportion is:

  • the member spouse's first split income stream payment after the first splittable payment divided by the member spouse's original income stream payment assuming the split had not occurred:

  • eg.  (    member's split payment     )                                

                 original member's payment

NMS PROP

Non-Member Spouse Proportion is:

  • the non-member spouse's first split income stream payment after the first splittable payment divided by the member spouse's original income stream payment assuming the split had not occurred:

  • eg.  ( non-member's split payment )                                

                 original member's payment

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x MS PROP
  • Purchase Price x MS PROP
  • RCV x MS PROP (if applicable)

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Apply existing asset formula using the new combination of original & adjusted details.

Non-Member Spouse

Secondary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x NMS PROP
  • Purchase Price x NMS PROP
  • RCV x NMS PROP (if applicable)

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Apply existing asset formula using the new combination of original & adjusted details.

Effective Date

Record:

  • Primary FLA Income Stream in the member assessment

and

  • Secondary FLA Income Stream in the non-member assessment

From

  • Date of the first splittable payment

Future Commutations

If the member spouse commutes an amount in the future, then that amount is also apportioned between the member and non-member as per the MS PROP and NMS PROP.

Review

  • Gross income (ie. if it changes).
  • Asset Value (ie. ? yrly or yrly using existing depletion formula).
  • Commutation (ie. by subtracting the amount commuted in relation to the member spouse from the  adjusted purchase price).

Review

  • Gross income (ie. if it changes).
  • Asset Value (ie. ? yrly or yrly using existing depletion formula).
  • Commutation (ie. by subtracting the amount commuted in relation to the non-member spouse from the adjusted purchase price).


AGREEMENT OR COURT ORDERS “BASE AMOUNT SPLIT” OF A FLA INCOME STREAM

ASSESSMENT FROM FIRST SPLITTABLE PAYMENT – BASE AMOUNT COMMUTED FROM ALLOCATED PENSION

ALLOCATED

PENSION

(in all cases the non-member will be paid the base amount commuted from the member account balance from the date of the 1 — st  Splittable Payment)

Definition of MS PROP

MS PROP

Member Spouse Proportion is:

  • 1 minus the base amount payable from the allocated pension divided by the account balance immediately before the first splittable payment.

  • eg.  ( 1 -        base amount      )                                

                         account balance

  • The Base Amount is the total dollar amount of the superannuation interest awarded to the non-member spouse as specified in the agreement or court order.)

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment to new amount
  • Purchase Price x MS PROP
  • CAB x MS PROP

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Adjust CAB to reflect new amount (ie. CAB x MS PROP)

Non-Member Spouse

Investigate how base amount was re-invested or disposed of ?

As the non-member spouse has been paid the base amount as a lump sum, there is no Secondary FLA Income Stream.

The base amount lump sum payment itself is not assessed as income as it is an exempt lump sum payment.

Effective Date

Record the Primary and FLA Income Stream details in the member spouse assessment from the:

  • Date of the first splittable payment

Record the re-invested or disposed base amount proceeds in the non- member spouse assessment from the:

  • Date of the first splittable payment

Review

  • Gross income (ie. if it changes).
  • Asset Value (ie. ? yrly or yrly on current account balance review.
  • Commutation (ie. by subtracting the amount commuted in relation to the member spouse from their  adjusted purchase price).

Review

  • Not applicable – base amount fully paid out as a lump sum.


AGREEMENT OR COURT ORDERS “BASE AMOUNT SPLIT” OF A FLA INCOME STREAM

ASSESSMENT FROM FIRST SPLITTABLE PAYMENT – PAYMENTS ARE SPLIT TO SATISFY THE BASE AMOUNT

DEFINED BENEFIT SUPER PENSION

Definition of MS PROP

MS PROP

Member Spouse Proportion is:

  • the member spouse's first split income stream payment after the first splittable payment divided by the member spouse's original income stream payment assuming the split had not occurred:

  • eg.  (    member's split payment     )                                

                 original member's payment

NMS PROP

Non-Member Spouse Proportion is:

  • the non-member spouse's first split income stream payment after the first splittable payment divided by the member spouse's original income stream payment assuming the split had not occurred:

  • eg.  ( non-member's split payment )                                

                 original member's payment

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x MS PROP
  • UPP x MS PROP

*** Check ATO ruling / position on UPP and relevant number ? ***

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Not required, as all defined benefit income streams are asset test exempt under a disallowable instrument.

  • If disallowable instrument was repealed, calculate asset value using existing PVF asset formula and the member's PVF at the operative time.

Non-Member Spouse

Secondary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment x NMS PROP
  • UPP x NMS PROP

*** Check ATO ruling / position on UPP and relevant number ? ***

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Not required, as all defined benefit income streams are asset test exempt under a disallowable instrument.

  • If disallowable instrument was repealed, calculate asset value using existing PVF asset formula and the member's PVF at the operative time.

Effective Date

Record:

  • Primary FLA Income Stream in the member assessment

And

  • Secondary FLA Income Stream in the non-member assessment

From

  • Date of the first splittable payment

Future Commutations

If the member spouse commutes an amount in the future, then that amount is also apportioned between the member and non-member as per the MS PROP and NMS PROP.

Review

  • Gross income (ie. if it changes).
  • Asset value (ie. only if disallowable instrument was ever repealed) every 12 months on anniversary of commencement date, using the member's PVF.

Review

  • Gross income (ie. if it changes).
  • Asset value (ie. only if disallowable instrument was ever repealed) every 12 months on anniversary of commencement date, using the member's PVF.


TRUSTEE SETTLES NON-MEMBER ENTITLEMENT (WHETHER OR NOT IT WAS A % SPLIT OR BASE AMOUNT) BY CREATING A NEW INTEREST, TRANSFERRING / ROLLING OVER or PAYING AN AMOUNT FROM TO FLA INCOME STREAM

PURCHASEDSUPER PENSION

Definition of MS PROP

MS PROP

Member Spouse Proportion is:

  • the member spouse's first income stream payment after the creation of the new interest, transfer, roll over  or payment to the non-member spouse divided by the member spouse's original income stream payment assuming the split had not occurred:

  • eg.  (    new payment     )                                

                 original payment

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment to new amount
  • Purchase Price x MS PROP
  • RCV x MS PROP (if applicable)

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Apply existing asset formula using the new combination of original & adjusted details.

Non-Member Spouse

Investigate how base amount was re-invested or disposed of ?

As the non-member spouse has been paid an amount as a lump sum, there is no Secondary FLA Income Stream.

The lump sum payment itself is not assessed as income as it is an exempt lump sum payment.

Effective Date

Record the Primary and FLA Income Stream details in the member spouse assessment from the:

  • Date of the creation of the new interest, transfer, roll over or payment was made to the non-member spouse

Record the re-invested or disposed lump sum proceeds in the non- member spouse assessment from the:

  • Date of the creation of the new interest, transfer, roll over or payment was made to the non-member spouse

Review

  • Gross income (ie. if it changes).
  • Asset Value (ie. ? yrly or yrly using existing depletion formula).
  • Commutation (ie. by subtracting the amount commuted in relation to the member spouse from their  adjusted purchase price).

Review

  • Not applicable – base amount fully paid out as a lump sum.


TRUSTEE SETTLES NON-MEMBER ENTITLEMENT (WHETHER OR NOT IT WAS A % SPLIT OR BASE AMOUNT) BY CREATING A NEW INTEREST, TRANSFERRING / ROLLING OVER or PAYING AN AMOUNT FROM TO FLA INCOME STREAM

ALLOCATED

PENSION

Definition of MS PROP

MS PROP

Member Spouse Proportion is:

  • the portion of the account balance on which the member spouse's income stream payments will be based immediately after the creation of the new interest, transfer, roll over or payment to the non-member spouse divided by the account balance the member spouse's income stream payments were based assuming the split had not occurred.

  • eg.  (       new account balance      )                                

                   original account balance

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment to new amount
  • Purchase Price x MS PROP
  • CAB x MS PROP

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Asset Test:

  • Adjust CAB to reflect new amount (ie. CAB x MS PROP)

Non-Member Spouse

Investigate how base amount was re-invested or disposed of ?

As the non-member spouse has been paid an amount as a lump sum, there is no Secondary FLA Income Stream.

The lump sum payment itself is not assessed as income as it is an exempt lump sum payment.

Effective Date

Record the Primary and FLA Income Stream details in the member spouse assessment from the:

  • Date of the creation of the new interest, transfer, roll over or payment was made to the non-member spouse

Record the re-invested or disposed lump sum proceeds in the non- member spouse assessment from the:

  • Date of the creation of the new interest, transfer, roll over or payment was made to the non-member spouse

Review

  • Gross income (ie. if it changes).
  • Asset Value (ie. ? yrly or yrly on current account balance review.
  • Commutation (ie. by subtracting the amount commuted in relation to the member spouse from their  adjusted purchase price).

Review

  • Not applicable – base amount fully paid out as a lump sum.


TRUSTEE SETTLES NON-MEMBER ENTITLEMENT (WHETHER OR NOT IT WAS A % SPLIT OR BASE AMOUNT) BY CREATING A NEW INTEREST, TRANSFERRING / ROLLING OVER or PAYING AN AMOUNT FROM TO FLA INCOME STREAM

DEFINED BENEFIT SUPER PENSION

Definition of MS PROP

MS PROP

Member Spouse Proportion is:

  • the member spouse's new income stream payment immediately after the creation of the new interest, transfer, roll over or payment to the non-member spouse divided by the old income stream payment assuming the split had not occurred:

  • eg.  (     new  payment     )                                

                     old payment

Member Spouse

Primary FLA Income Stream

Retain member's original income stream:

  • Classification
  • Commencement Date
  • Relevant Number

Adjust member's original income stream:

  • Gross Payment to new amount
  • UPP x MS PROP

*** Check ATO ruling / position on UPP and relevant number ? ***

Income Test:

  • Apply existing income formula using the new combination of original and adjusted details.

Calculate Asset:

  • Not required, as all defined benefit income streams are asset test exempt under a disallowable instrument.

  • If disallowable instrument was repealed, calculate asset value using existing PVF asset formula and the member's PVF.

Non-Member Spouse

Investigate how base amount was re-invested or disposed of ?

As the non-member spouse has been paid the as a lump sum, there is no Secondary FLA Income Stream.

The lump sum payment itself is not assessed as income as it is an exempt lump sum payment.

Effective Date

Record the Primary and FLA Income Stream details in the member spouse assessment from the:

  • Date of the creation of the new interest, transfer, roll over or payment was made to the non-member spouse

Record the re-invested or disposed base amount proceeds in the non- member spouse assessment from the:

  • Date of the creation of the new interest, transfer, roll over or payment was made to the non-member spouse

Review

  • Gross income (ie. if it changes).
  • Asset value (ie. only if disallowable instrument was ever repealed) every 12 months on anniversary of commencement date, using the member's PVF.

Review

  • Not applicable – base amount fully paid out as a lump sum.

C57/2002 Changes to PIPS and IPS - Single Orphans Pension

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DATE OF ISSUE:  17 DECEMBER 2002

Changes to PIPS and IPS – Single Orphans Pension

Purpose

The purpose of this Departmental Instruction is to outline the procedures to follow to ensure that single orphans pension is correctly paid.

Background

Single Orphans pension can be paid through PIPS or through IPS. When a single orphan turns 16, they continue to be eligible for orphans pension while they remain in full-time study and are under age 25. Orphans pension is cancelled at age 16 if the person in receipt of orphans pension also receives VCES Education Allowance or Youth Allowance.

A number of cases have been identified throughout Australia where the child is over 16 and still in receipt of orphans pension. A number of these cases have been restored in error due to confusion regarding PIPS PC and IPS processing procedures.

System changes have been made to reduce the likelihood of single orphans pension being inadvertently restored.

PIPS problem

Orphans pension can be restored through the PIPS system. A warning message appears whenever a worksheet is opened. “Client X is older than 16. Do you want DP refreshed/continued?”  By selecting  “Yes”, the orphans pension is put back into payment.

System Changes to PIPS

The warning message that appears for single orphans in PIPS has been changed to alert the user that selecting “Yes” will grant single orphans pension. Where Single Orphans pension is not payable staff processing Income Support actions must select “NO” to ensure that single orphans pension is not restored.

IPS problem

The IPS system allows payment of single orphans pension to be cancelled using Unauthorised Manual Assessments. However, when this happens, the child may still be active in the Income Support assessment and the payment is therefore restored the next time a batch process, such as a Statutory Increase, is run.

Confusion exists when a single orphan continues to receive orphans pension as a result of the batch processing run and PIPS assessment when it appears that the payment has been cancelled through IPS.

System Changes to IPS

An edit has been put into the Unauthorised Manual Assessments folder in IPS (accessed via the Payabilities tab in VIEW.) If an attempt is made to cancel a PIPS single orphans pension using Unauthorised Manual Assessments, an error message will appear and the user will not be able to be finalise the case in IPS. These cases must be processed through PIPS PC.

Contact Officer

Any queries should be directed to Warren Walsh, who can be contacted on (03) 9213 7254 or by email.

JEANETTE RICKETTS

Branch Head

Income Support

17 December 2002

C56/2002 Saved Child-Related Payments

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DATE OF ISSUE:  17 DECEMBER 2002

Saved Child-Related Payments

Purpose

The purpose of this Departmental Instruction is to:

  1. provide a list of saved child-related payment cases that require manual action to pay indexation increases by ex gratia payments, which will
    re-align them with similar payments of Family Tax Benefit (FTB);
  2. advise of a breakdown in work practices that is resulting in overpayments of saved child-related payments; and
  3. re-state the policy and procedures for cancellation of saved child-related payments for children turning 16 years.

Issue 1 - Indexation

Background

The indexation anomaly was outlined in the Stateline of 20 December 2001, titled Saved Child Related Payments - January 2002 Indexation Anomaly.

The Stateline advised that until an amendment was made to the Veterans' Entitlements Act 1986, the movement in the CPI could not be applied to the saved child-related payments.

Status

The minor and technical amendment is contained in Veterans' Affairs Legislation Amendment Bill (No.3) 2002, which has just been introduced into Parliament.  To bring these payments into alignment with similar FTB payments, a retrospective commencement date of 1 July 2001 (being the introduction of the new Family Tax Benefit) has been sought.

Due to the busy Parliamentary schedule and  the time lapse since these pensioners have received their intended child payment rate, Prime Minister and Department of Finance and Administration (DoFA) approval was obtained to pay the increases by way of ex-gratia payments until the legislation is passed.

Ex-gratia funding

DoFA has approved ex-gratia payments pending corrective legislation.  This will allow arrears payments and correct fortnightly payments to be made to existing saved child-related cases.

If the corrective legislation is not passed before 1 July 2003, further approval will be sought from the Minister for Finance to meet the shortfall.

The approval is based on the number of eligible saved child-related payments cases.  It is critical to the funding calculation that saved cases for children who have reached their 16 — th birthday are cancelled as detailed in this DI.

Issue of Funds

The funding is from existing service pension allocation.

The existing IPS payabilities for Dependant Child Add On (DCAO) and Guardian Allowance (GA) will apply:

Payment Type — Codes

GA — A11100 85420

DCAO — A11100 85425.

Current saved cases

An AIS run has identified DVA pensioners receiving 'saved' child-related payments (data as at 23 November 2002).  The records were cross-checked against VIEW and a list of cases needing manual action was compiled.

The number of 'saved' child-related payments cases  by State are:

NSW  9

QLD  7

VIC  4

TAS  9

SA  4

WA  1

Trusts & Companiesnil

(note: some cases have more than one child in the assessment)

A listing of file numbers will be e-mailed separately to all IS Managers.

(Note:  This list also contains names of children who are over 16 years and still incorrectly in payment.  Please refer to Issues 2 and 3 for further information about these cases.)

Impact of non-
alignment with FTB

As notified in the earlier Stateline, indexation was applied without legislative authority to the saved child-related payments in January 2001.  Thus, the rates of DVA payments exceeded the FTB equivalents from that time, until the FTB rates were indexed in July 2001.  The DVA saved child-related payments have been under paid since then.

A comparison of the amounts payable are shown in the following table.

Date

Child payment component

DVA saved rate p.f.

Similar FTB

payment

Difference

1/1/01

under 13 years

$81.30

$78.82

$2.48

13 – 15 years

$113.40

$109.90

$3.50

*Guardian Allowance

$40.10

$38.90

$1.20

1/7/01

under 13 years

$81.30

$83.44

-$2.14

13 – 15 years

$113.40

$116.34

-$2.94

*Guardian Allowance

$40.10

$41.20

-$1.10

1/7/02

under 13 years

$81.30

$85.96

-$4.66

13 – 15 years

$113.40

$119.98

-$6.58

*Guardian Allowance

$40.10

$42.47

-$2.37

Note:  Guardian Allowance reflects the CPI movement – there is no equivalent FTB payment

Action required – arrears

Manual action is required to pay amounts owed to the pensioners due to the indexation anomaly of DVA saved child-related payments.  These arrears amounts will be made by way of ex-gratia payments.

State Offices will need to calculate any arrears payable by comparing the differences advised in the above tables and offsetting any initial overpayments (due to DVA's Jan 2001 incorrect indexation) from subsequent underpayments (due to the July 2001 and July 2002 FTB indexation).

Action required – ongoing payments

Ongoing payments are to be processed using the manual rate screen in PIPS to apply the correct rates of child-related payments.  These adjustments are also covered by way of ex gratia payments.

The processing officer should include a paragraph in the free text to inform the pensioner of the indexation correction.  Suggested wording of advice:

“The {payment type/s} in respect of {child/ren's name/s} has/have been adjusted to align with the indexed rates of the equivalent Family Tax Benefit payments.  The new rates of payments are outlined below.”

Manual action will no longer be necessary once the legislative correction to this anomaly is enacted and the relevant rates can be updated in PIPS.  The legislation is currently proposed to commence on 1 July 2003.  Further advice will be provided when this legislation is passed and receives Royal Assent.


Issue 2 - Corrective Action - Cancellation of saved child payments for children over 16 years

Background

Effective 1 January 1998, the responsibility of paying child-related payments was transferred to Centrelink with the intention of simplifying and rationalising family assistance.  At that point, approximately 250 pensioners were identified as being financially disadvantaged by the transfer of payments.  Accordingly, special savings provisions were introduced to allow these pensioners to continue to receive their child-related payments from DVA.  The savings provisions continue until the child becomes ineligible or the new rate payable by Centrelink exceeds the current 'saved' rate.

From 1 July 1998 most payments made by Centrelink for dependent children 16 years and over were replaced by the youth allowance (YA).  DVA saved child-related payments should be cancelled from the date of the child's 16 — th birthday as the child would then be entitled to apply to Centrelink for YA.

The Veterans' Children Education Scheme was excluded from the payments integrated into YA.

Issue

There are 12 cases nationally identified as incorrectly in payment of dependent child add-on (DCOA) and/or guardian allowance (GA) in respect of 'saved' children over the age of sixteen years.  These cases are marked on the listing provided to IS managers.

Action required – Overpayment recovery

In most of these cases, an overpayment will have occurred as the payments  should have been cancelled from the date of the child/student's 16 — th birthday.

Care should be taken with these cases to offset any arrears payable from the indexation correction (prior to the child's 16 — th birthday), against any subsequent overpayment of pension.

Normal overpayment procedures will apply.  There is an existing IS Standard Letters - “routine OP letter” – which can be amended to notify the pensioner if an overpayment is to be recovered.


Issue 3 - Policy and procedures for children 16 years and over in Income Support assessments

Ongoing assessment

Saved child-related payments are not payable once the dependent child turns 16 years.  Refer to DI C40/98 [5] for details.

An automatic report is generated for child reviews at 16 years at which time the system generated student review form should be issued.

If on review the child no longer meets the definition of dependent child, then the saved payment should be cancelled from the 16 — th birthday.  If the child is continuing in full-time education and continues to satisfy the relevant eligibility criteria, then the child details screen in PIPS should be updated with the appropriate indicators, i.e. student, receiving youth allowance etc.

It is important that the above indictors are noted correctly to ensure that the veteran and/or partner receive the benefit of the additional income free area and additional income limit for treatment eligibility.

Eligibility for a child 16 years and over

Under the VEA, a dependent child has the same meaning as in the SSA.   Eligibility for a child 16 years and over is as follows:

A young person who has turned 16 years but is under 22 years can still be a dependent child of the pensioner if:

  • they are wholly or substantially dependent on the pensioner, AND
  • their income in the financial year will not exceed the personal income limit, AND
  • they are receiving full-time education at a school, college or university.

A young person over 16 years cannot be considered a dependent child if:

  • they receive a social security pension or benefit such as Youth Allowance, or
  • their personal income is more than $7,706.20 per annum.  Income includes earning from casual, part-time or full-time earnings, or
  • they have turned 22 years of age.

Legislative references:VEA: section 5F

SSA: sections 5(1) to 5(4).

Children  remain in the DVA pension  assessment

Although the child-related payments are cancelled, dependent children continue to impact on the assessment of income support pensions from DVA:

Additional income free area

  • The additional income free area for each child is still included in the pension assessment until the child's 18th birthday, whilst the child continues to be either a dependent child (including a prescribed student i.e. receiving VCES) or a YA recipient.

  • The additional income free area in respect of a dependent child, who is not receiving YA and is not a prescribed student, is included in the pension assessment until the child turns 22 years.

Additional threshold for DVA treatment eligibility

Section 53E(2A) of the VEA provides the authority to consider a YA child to be a dependent child for the purposes of calculating the veteran's income/assets reduction limit for treatment eligibility.  Thus, the treatment benefits income levels for Gold Card continue to include the treatment income reduction amount until the child's 22 — nd birthday for each dependent child or YA recipient.

Pensioner Concession Card

  •       Dependent children (including YA recipients and prescribed student child) continue to be included on the DVA Pensioner Concession Card until the child's 22 — nd birthday.

Further Information

Priority action requested

Once the lists are received, priority action on processing is required to correct the payments for the affected pensioners.

Contact

For further information in relation to the above mentioned changes please contact Cheryl Oliver, Income Support Policy Section, on (02) 6289 6078.

JEANETTE RICKETTS

Branch Head

Income Support

  1. December 2002

C55/2002 VETERANS' CHILDREN EDUCATION SCHEME (VCES) - RATES OF EDUCATION ALLOWANCE EFFECTIVE FROM 1 JANUARY 2003

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DATE OF ISSUE:  17 DECEMBER 2002

VETERANS' CHILDREN EDUCATION SCHEME (VCES) - RATES OF EDUCATION ALLOWANCE EFFECTIVE FROM 1 JANUARY 2003

The purpose of this instruction is to advise the rates of education allowance for VCES in 2003.

Attachment A sets out the increased rates of education allowance.  These rates are effective on and from the first payday in January 2003.

Attachment B sets out the methods used to set the education allowance rate for the age/education level categories.

The contact officer for enquiries on these rates is Ann Donnelly, Disability Compensation Branch, National Office on (02) 6289 6439.

R Winzenberg

Division Head

Compensation and Support

13 December 2002


Attachment A

VETERANS' CHILDREN EDUCATION SCHEME

EDUCATION ALLOWANCES EFFECTIVE 1 JANUARY 2003

Primary Students

The annual education allowance for primary students is $186.90

Secondary/Tertiary Students (fortnightly rates)

Students

At Home

$

Living Away from Home  $

Homeless

$

Under 16 years

38.40

205.00

310.10

16 – 17 years

169.70

310.10

310.10

18 years and over

204.20

310.10

310.10

Secondary/Tertiary Double Orphans (fortnightly rates)

Double Orphans

$

Under 16

169.10

16 - 20 years

310.10

21 years and over

376.70


Attachment B

Age/Education Level

Method of Indexation / Increase

Primary students

indexed annually in line with CPI for the previous financial year (in accordance with the provisions of section 1191(1) table item 3A of the Social Security Act 1991)

Secondary/tertiary students aged under 16 and living at home

indexed annually in line with CPI for the previous financial year (in accordance with the provisions of section 1191(1) table item 3A of the Social Security Act 1991)

Secondary/tertiary students aged under 16 and living away from home

aligned with the rate for Assistance to Isolated Children (AIC) as determined by the Department of Education, Training and Youth Affairs

Secondary/tertiary students aged over 16 and living at home or away from home

increased annually and aligned with the maximum rates for Youth Allowance as determined by the Department of Family and Community Services under part 3.5 of the Social Security Act 1991

Secondary/tertiary homeless students

increased annually and aligned to the maximum rate for Youth Allowance for people who are independent as determined by the Department of Family and Community Services under point 1067G-B3 of the Social Security Act 1991

Double orphans aged under 16

set by using formula:  VCES double orphan education allowance rate for 16 to 20 year olds less the amount of the double orphan's pension

Double orphans aged 16 to 20

the equivalent of  the Youth Allowance rate for 18 years and over living away from home

Double orphans aged 21 and over

the equivalent of the maximum rate of Youth Allowance Special Rate

Double orphans at “frozen” rates

students on “frozen rates” remain on that rate until such time as the frozen amount is equivalent to, or less than, the DO rate that they would be entitled to due to age

(Refer to C31/98 [7] for origin of and need for “frozen” rates)

C54/2002 Veterans' Affairs Legislation Amendment Act (No.1) 2002

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DATE OF ISSUE:  6 DECEMBER 2002

Veterans' Affairs Legislation Amendment Act (No.1) 2002

Purpose

This departmental instruction provides information about the minor and technical amendments contained in the Veterans' Affairs Legislation Amendment Act (No. 1) 2002 (VALA No. 1 2002).

VALA No. 1 2002 includes six schedules which contain measures relating to income support matters:

Schedule 1 – amendments to the Social Security Act 1991, which are consequential to the introduction of Income Support Supplement (ISS) payments under the Veterans' Entitlements Act 1986 in 1994;

Schedule 2 – amendments to the Social Security (Administration) Act 1999 which are also consequential to the introduction of ISS payments;

Schedule 3 – amendments to the Aged Care (Consequential Provisions) Act 1997 clarifying the definition of principal home for the purposes of the assets test, and the determination of a couple as a respite care couple;

Schedule 4 – a technical amendment to the Social Security and Veterans' Affairs Legislation Amendment (Family and Other Measures) Act 1997 in respect of the definition of rent;

Schedule 5 – technical amendments to the Veterans' Affairs Legislation Amendment (Budget and Compensation Measures) Act 1997; and

Schedule 6 – minor and technical amendments to the Veterans' Entitlements Act 1986.

The technical amendments contained in Schedule 7 do not relate to income support matters.

Link to
VALA 1 2002

The link to VALA No 1 2002 is available through the Scaleplus web site situated at: http://scaleplus.law.gov.au/ [9]

Commencement Dates

The date of commencement for Schedules 1 and 2 is 6 September 2002, being the date of Royal Assent.

The date of commencement for Schedule 3 is 20 September 1998, being the date immediately after the commencement date of the Aged Care (Consequential Provisions) Act 1997.

The date of commencement of Schedule 4 is 1 January 1998, being the date immediately after Schedule 19 to the Social Security and Veterans' Affairs Legislation Amendment (Family and Other Measures) Act 1997 commenced.

The date of commencement of Schedule 5 is 3 November 1997 (first amendment), and 20 September 1998 (second amendment).

The date of commencement of the items contained in Schedule 6 vary, generally being either the date of Royal Assent, or the date immediately after the various Acts amended by Schedule 6 came into effect.

The commencement date of the individual amendment items contained in VALA No 1 2002 can be confirmed by reference to Clause 2 of the Act (Commencement), as shown on the Scaleplus web site.

Details of changes

Details of the changes contained in the six schedules to the Act are attached.

Contact

For further information in relation to the above mentioned changes please contact Brian Butler, Income Support Policy Section, on (02) 6289 6110.

Authorised by

Jeanette Ricketts

Atg Branch Head

INCOME SUPPORT

5 December 2002


index

Veterans' Affairs Legislation Amendment Act (No.1) 2002......................................

1.Amendment of the Social Security Act 1991.........................................4

2. Amendment of the Social Security (Administration) Act 1999.............................6

3. Amendment of the Aged Care (Consequential Provisions) Act 1997..............................7

4. Amendment of the Social Security and Veterans' Affairs Legislation Amendment (Family

    and Other Measures) Act 1997...................................................9

5. Amendment of the Veterans' Affairs Legislation Amendment (Budget and Compensation

    Measures) Act 1997..........................................................11

6. Amendment of the Veterans' Entitlements Act 1986...................................12


Schedule 1 – Amendment of the Social Security Act 1991

Background

The amendments to the Social Security Act 1991 are consequential to the introduction of the payment of Income Support Supplement (ISS) under the VEA in 1995.

Issue

At the time of introduction of ISS payments in 1995, the Social Security Act 1991 (the SSA) was amended to prevent a war widow/er from receiving a social security payment (unless they elected to do so).  Other consequential changes to the SSA relating to ISS have also since been made.  However, the overall position is that the required consequential amendments to the SSA are not yet complete.  This situation has resulted in some anomalies arising, occasionally requiring that Centrelink approve "Act of Grace" payments to rectify.  An example is where a person has been ruled ineligible to receive a bereavement payment under the SSA, on the basis that ISS is not a qualifying partner payment.

Legislative changes

Schedule 1 contains 111 amendments, which give effect to all the remaining consequential amendments that are required to the SSA, in respect of ISS payments.

Most amendments take the form of –

  • Adding the phrase “or income support supplement” after the words “service pension” already appearing in the SSA; or

  • Adding the word “supplement” after the word “pension” already appearing in the SSA.

The amendments generally fall into the following categories –

  • References to ISS payments are now included within the definitions contained within the SSA, such as family relationship, income test, financial asset and income stream, assessable period, pensioner couple, asset test, social security recipient status, and payday;

  • One substantive change is that the income test definition within the SSA now excludes ISS payments;

Legislative changes cont
  • ISS is now a qualifying payment for a surviving partner to receive a bereavement payment, and for continued pension payments on the death of a partner;

  • The multiple entitlement exclusion provisions of the SSA now provide that social security payments are prevented, or are cancelled, if ISS is granted;

  • ISS is included as a qualifying payment, when determining payments which establish eligibility for a partnered social security benefit;

  • ISS is added to the eligible VEA payments which attract payment of Pensioner Education Supplement (which is required in order to make payments of Education Entry Payment);

  • The Rate Calculation Modules in the SSA now make references to ISS payment; and

  • ISS payments to a partner may establish that a person has a partner with a rent increased pension.

Systems Changes

No required systems changes have been identified.

Procedural Changes

None identified.  The consequential amendments to ISS align the Social Security Act 1991 with the VEA.

Fact Sheets/ CLIK

Required revisions will be made as identified.

Schedule 2 – Amendment of the Social Security (Administration) Act 1999

Background

This Schedule amends the Social Security (Administration) Act 1999 (the SSAA) consequential to the introduction of ISS payments under the VEA in 1995.

Issue

The amendments give effect to all the remaining consequential amendments that are required to the SSAA, in respect of ISS payments.

Legislative changes

The amendments to the SSAA relate to –

  • The automatic cancellation of a benefit, on a person transferring to a new payment type;

  • The recognition of ISS as an eligible partnered benefit, for the purposes of suspension of disability support pension;

  • Automatic rate reductions, when a person's partner starts receiving a new benefit; and

  • The date of effect calculations, on the death of a partner.

System Changes

No required system changes have been identified.

Procedural Changes

None identified.

Fact Sheets/CLIK

No amendments required.

Schedule 3 – Amendment of the Aged Care (Consequential Provisions) Act 1997

Background

This Schedule contains two items which amend Schedule 4 of the Aged Care (Consequential Provisions) Act 1997, which itself amends the Veterans' Entitlements Act 1986.

Issue

The two amendments are technical in nature, to correct earlier amendments which were misdescribed and which did not result in the intended amendments occurring.

Legislative changes

The first amendment relates to the definition of principal home, for the purposes of section 5L of the VEA (Assets test definition).

Paragraph 5L(7)(d) provides that a residence of a person is taken to continue to be the person's principal home during periods of care, for a period of up to two years.  Paragraph 5L(7)(d) currently states that this two-year period begins at the time when the person's partner or non-illness separated spouse “started to be in a relevant care situation”.  This is now amended to read “...started to be either in a care situation or an aged care resident”.

The effect of this amendment is to more carefully define the care circumstances during which a residence can continue to be regarded as a person's principal home.

The second amendment relates to a determination under section 5R of the VEA that a couple is a respite pair couple.

Paragraph 5R(6)(c) provides that the determination of a couple as a respite care couple can be made where one member “has entered the approved respite care...”.  This wording is now replaced with the wording “...is in respite care...”.

System changes

No required system changes have been identified.

Procedural changes

Determining staff should be aware of the revised definitions and effective starting periods.

Fact Sheets/CLIK

Amendments to the appropriate CLIK chapters and Fact Sheets will be made.

Schedule 4 – Amendment of the Social Security and Veterans' Affairs Legislation Amendment (Family and Other Measures) Act 1997

Background

This amendment changes the VEA (through a change to the above amending Act), regarding the definition of rent.

Issue

The current definition of rent in section 5N of the VEA does not allow for the payment of Rent Assistance to people who live in premises for which another person pays Government rent.  This is because the second tenant is himself regarded in these circumstances as paying subsidised government rent, and is therefore ineligible for Rent Assistance.

This amendment provides for two exempt circumstances to be recognised, which will allow Rent Assistance to be paid where a second tenant pays rent for premises for which government rent is already paid.

Legislative changes

This amendment adds a new sub-section 5N(4) to the VEA (Rent definitions).  The sub-section reads  -

  1. If a person pays, or is liable to pay, rent for living in premises in respect of which another person pays Government rent, the rent paid or payable by the person for living in those premises is taken to be Government rent, unless:

  1. the rent paid by the other person is at or above a rate that the authority receiving the rent has told the Department is the market rate; or

  1. the person shares the premises with that other person and the person's income has been taken into account in calculating the amount of Government rent payable in respect of those premises.

Legislative changes cont

That is, the sub-section allows for two exempt circumstances, where a person would be regarded as not paying Government rent.  They are (i) if the rent was at or above the market rate; or (ii) where the premises are shared and the secondary tenant's income is taken into account when calculating the amount of Government rent.

This is a beneficial change, giving some tenants greater opportunity to satisfy circumstances where they would not be regarded as paying Government rent, and would therefore be eligible for rent assistance.

System changes

No required system changes have been identified.

Procedural changes

Determining staff should be aware of the revised circumstances where a

person may be regarded as not paying Government rent, thereby being eligible for Rent Assistance.

Fact Sheets/ CLIK

Amendments to the appropriate CLIK chapters and Fact Sheets will be made.

Schedule 5 – Amendment of the Veterans' Affairs Legislation Amendment (Budget and Compensation Measures) Act 1997

Background

This Schedule makes two minor technical amendments to the above Act, relating to the date of effect of a provision, and a misdescribed reference, within the VEA.

Issue

The two technical amendments correct earlier amendments which were misdescribed and which did not result in the intended amendments occurring.

Legislative changes
  • the first amendment is to sub-section 5H(8)(zm) of the VEA, which provides that advance payments of pension and ISS are excluded amounts, when determining income under the Act.  The Schedule provides that the renumbering of this sub-section as (zm) is taken to have commenced on 4 July 1996, rather than on 20 March 1996;

  • the Amendment Act omitted a note to section 56J(1) of the VEA (Pension may be cancelled at a pensioner's request).  However, this note appears following section 56J(2).  The second amendment corrects this misdescribed reference.

System changes

No required system changes have been identified.

Procedural changes

None identified.

Fact Sheets/ CLIK

None identified.

Schedule 6 – Amendment of the Veterans' Entitlements Act 1986

Background

This Schedule contains 89 minor and technical amendments, which correct incorrect legislative references, redundancies, omissions and typographical errors identified within the VEA.

Issue

No identified issues.

Legislative changes

General house-keeping changes made to the VEA arising out of this Schedule include:

  • the addition, repeal, and amendment of the sections dealing with definitions, including some amended references.  The new definitions primarily relate to compensation matters;
  • misdescribed references within the VEA have been corrected;
  • non-existent references have been deleted;
  • minor typographical errors, and grammatical errors, have been corrected; and
  • the wording of some Division and section headings has been changed.

More substantial changes include:

  • Income Support Supplement has been included as a payment which is covered by the disposition rule (disregard if more than 5 years old), the definition of assessable period, and the cancellation determination rule;

  • Eligibility for the Education Entry Payment has been extended to include those receiving invalidity service pension; and

  • The definition of partner with rent increased pension can now include those receiving income support supplement.

System changes

No required system changes have been identified.

Procedural changes

Determining staff should be aware of the extended eligibility for Education Entry Payment.

Fact Sheets/ CLIK

Amendments to the appropriate CLIK chapters and Fact Sheets will be made.

C53/2002 DEATH PROCESSING SYSTEM - AUTOMATION OF PARTNERED AND ILLNESS SEPARATED SOCIAL SECURITY AGE PENSIONERS

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DATE OF ISSUE:  3 DECEMBER 2002

DEATH PROCESSING SYSTEM - AUTOMATION OF PARTNERED AND ILLNESS SEPARATED SOCIAL SECURITY AGE PENSIONERS

Purpose

The purpose of this Departmental Instruction is to provide information about system changes to automate the processing of partnered and illness separated Age Pensioners through the Death Processing System (DPS).

This change automates the processing, bereavement payment calculations and making of payment to the survivor of the deceased.

Structure of document

This document contains the following sections:

  1. Background.
  2. The application of the new Centrelink rules applying to bereavement payments for married couples.
  3. The application of the new Centrelink rules applying to bereavement payments for illness separated couples.
  4. The application of the new Centrelink rules applying to new single rate – surviving partner.
  5. Examples of cases processed using the new rules.
  6. Scenarios demonstrating how the rules apply regardless of when the case is processed.

Start date

The changes were implemented for the DPS run on the evening of Friday 22 November 2002.

Background

Reason for change

Automatic processing of Age Pensioners has been an issue since Date of Effect legislation was introduced.  The Department is required to process Age Pensioners under rules defined in the Social Security Act rather than in accordance with the Veterans' Entitlements Act 1986 (VEA).  Given the complexity of the Social Security rules, all Age Pension deaths have in the past been processed as “manuals”.  However, a recent reinterpretation of the rules by Centrelink has meant that it is now possible to program DPS to process these cases automatically.

Summary of Old System

Prior to this enhancement DPS identified if the deceased was a Social Security Age Pensioner and if so turned off the deceased's eligibility for treatment.  It then reported the case for manual termination and calculation of bereavement payment.

Related changes

The automation of Age Pension cases has been divided into a two part enhancement:

The first change affected Single Age Pensioners and was implemented on 27 July 2002 (DI C36/2002 [11] refers).

The second change (covered in this DI) deals with the automation of Age Pensioners who are married or illness separated couples.

Which cases are affected?

The method of assessment (MOA) types affected by this change are :

  •     Married Age Pensioner, Spouse eligible as a Dependant (MOA 34) and
  •     Married Age Pensioner, Illness Separated, Spouse eligible as a Dependant (MOA 38)

This will mean 95% of Age Pension Assessments will now be automated.

Expected savings

Based on the information available through AIS2000 it is expected that more than 95% of Age pension assessments will be automated by the enhancement of single, married and illness separated Age pensioner death processing.  The table below provides a breakdown of the case types affected by this change and indicates which will now be automated.

Bereavement Payment for married Social Security Aged Pensioners

Overview

This Section contains a description of the Centrelink rules relating to the calculation of bereavement payments for married aged pensioners and the application of these rules to partnered and illness separated aged pensioner couples within DVA.

Interpretation

Centrelink has advised that they interpret the above rule as follows:

The surviving partner of an Age Pensioner is entitled to receive as a lump sum a bereavement payment equivalent to the combined married rate of pension less the survivors new rate of pension, from the date of death to the end of the period that death occurred plus 6 fortnights (84 days) and also to be reassessed at the single rate from the date of death.

Centrelink Rule

Bereavement Payment for married couples - a surviving partner can claim a bereavement payment until the end of the 'bereavement period' (ie 98 days from date of death).

The Bereavement Payment is calculated using the following formula:

LBP = (7 minus NEPED) multiplied by (CMR minus NSR)
            (except where NEPED equals zero.  See Exception Rule below)

Where:

LBP is the lump sum bereavement payment.

NEPED is the number of entitlement period end days for which the deceased customer was paid after and including the date of death. If NEPED equals zero see exception below.

CMR is the combined fortnightly married rate. That is, the combined fortnightly amount that would have been payable to the couple if not for the death.

NSR is the new single fortnightly rate paid to the surviving customer.

Exception rule  -  NEPED equals zero

LBP Exception:  Calculation of the lump sum when NEPED equals zero

Where death is notified and actioned during the entitlement period in which the person died, NEPED equals zero. In this instance the following formula applies:

LBP = (6 multiplied by (CMR minus NSR)) plus (NDEP multiplied by
            (CMR minus NSR) then divided by 14).

Where:

NDEP is the number of days from and including the date of death until and including the end of the entitlement period.

Note:There are Age Pension notification Rules that require the notification of death to be within 28 days of death.  If the notification is outside the 28 days then the reassessment of the survivor could be from a different date.  The BP is still calculated the same however.

DVA Manual Action Required to process

Should a death relating to a married Age Pensioner require manual action the following rules should be followed:

  1. Cancel the deceased's assessment and payments from day of death (or day after death if the survivor becomes a war widow)
  2. Cancel deceased's entitlements to fringe benefits from day after death
  3. Identify if date of processing is during the pension period in which death occurred (see following paragraphs)

Processing during period of death

If processing is during the pension period in which death occurred:

  1. Calculate the number of days remaining from the day of death to last day of entitlement period (period in which the person dies)
  2. Calculate the number of fortnights remaining in the Bereavement period (if processing in the death period then the number of fortnights will be 6 or 84 days)
  3. Add that number of days remaining in the death period to the number of fortnights remaining and total as a number of days.
  4. Identify the combined married rate of payment immediately prior to the death
  5. Identify the new survivors rate of Age pension
  6. Subtract the survivors' rate of pension from the combined rate.  Divide by 14 to get a daily rate and multiply by the number of days previously calculated.  ie. 87 x CMR – NSR =  87 x  (450-385)/14.  This is the lump sum bereavement payment (LBP).
  7. Pay the LBP as lump sum amount to survivor's default bank account using the payability type of Age Pension Bereavement Payment.

Processing after the period in which death occurred

If processing is after the pension period in which death occurred:

  1. Calculate number of pension periods since date of death (A).  It is easiest to count the number of the end days of each pension period that have gone by.  Ie the Monday before the payday.
  2. Subtract the number of pension periods paid from 7 (B)
  3. Identify the combined married rate of payment immediately prior to the death
  4. Identify the new survivors rate of Age pension

Subtract the survivors' rate of pension from the combined rate. Multiply this by the number of pension periods remaining (B)     ie. (7 – 1)  x CMR – NSR =  6 x  (450-385).  This is the lump sum bereavement payment (LBP).

Disability Pension for Age Pensioners

There is no requirement to change any existing Rules for the calculation of Bereavement Payment for the Disability Pension component as a result of the death.  eg:

  • There continues to be a LBP of 6 x Veterans DP rate capped at 100%.
  • No DP is payable for and after the pension period in which the death occurs.
  • Pay the LBP as lump sum amount to the survivor's default bank account using the payability type of Disability Pension Bereavement Payment.
  • Where WW and Domestic Allowance is granted automatically, the grant is made on a daily basis with any spouse's dependant DP being cancelled on a daily entitlement as well.

Differences between SP and AP

To assist in identifying the differences in how to treat a Service Pensioner and an Age Pensioner see below:

Married Service Pensioner

Married Age Pensioner

Bereavement notification period

98 days

28 days

LBP Calculation

98 x CMR – NSR

7 – NEPED x CMR – NSR

or

(6 x CMR – NSR) + (NDEP x CMR – NSR/14)

War Widow Grant

97 x CMR – NSR

7 – NEPED x CMR – NSR

or

(6 x CMR-NSR)  +  [(NDEP – 1)  x  (CMR-NSR)/14]

Illness separated and respite care couples

If the members of a couple were being paid at the single rate because they were an illness separated or respite care couple, bereavement payments are worked out as if they were living together.

In this case, an adjustment to the LBP is required using the following formula:

LBP = [(7 - NEPED) x (CMR - NSR)] - {[(combined single rates - CMR)
           x NEPED] - [(combined single rates - CMR) ? 14 x (14 - NDEP*)]}

*  For war widow grants the calculation must replace NDEP with (NDEP-1)

Where:

LBP is the lump sum bereavement payment.

NEPED is the number of entitlement period end days that elapse before conversion to the new single rate.

NSR is the survivor's new single rate after conversion.

CMR is the combined married rate. That is, the sum of the amounts that would have been payable to the couple if not for the death.

NDEP is the number of days from and including the date of death until and including the end of the entitlement period.

The LBP exception rule

If NEPED equals 0 then the same calculation used for ordinary married couples should be used (ie. “The  LBP Exception Rule described above**”) as there has not been any monies released at the incorrect rate.

** For war widow grants the calculation must replace NDEP with (NDEP-1)

Explanation: The amount subtracted at the end of the formula represents the 'overpaid' difference between the combined illness separated couple rates and the combined partnered rate.

Overview

This Section contains a description of the Centrelink rules relating to the calculation of the new single rate for the surviving partner of aged pensioners and the application of these rules to partnered and illness separated aged pensioner couples within DVA.

Staff in the past have had difficulty manually calculating the bereavement payment and new rate for the surviving aged pension partner.  Since in future it will be rare for staff to manually process an aged pension case, for the benefit of staff a restatement of the rules is provided in this Section.

Centrelink Rule

Centrelink Rules  -  New single rate - surviving partner (as described in Social Security Guide 3.1.5.30)

Following notification of the partner's death, the survivor's rate is immediately adjusted to the single rate from the LATER of the following, if the customer and their partner were in receipt of a benefit or pension:

  • The day of the partner's death, OR
  • The day after the date paid to, of the combined married rate, OR

if the customer's partner was NEITHER a long term social security recipient or a pensioner:

  • the payday on or after the death, provided the department was notified of the death within 4 weeks of the day after the person died, OR
  • the date of notification if the department was notified outside the 4 week period.

Application of Centrelink rules

Given the complexities of Assessment Histories and the provision of Treatment Benefits, it has been determined that DVA will always reassess the survivor's rate from the day of the partner's death (or the day after death for War Widow grants).  Therefore, the date of death (or day after death) will always be used for the creation of the death Assessment History.

Note 1:As a continuation of existing DPS practices, any overpayment or arrears amounts will be taken into account in the final payment made as the LBP and passed as DPS Bereavement Payment to IPS.  (ie IPS will not calculate any overpayments or arrears as a result of DPS processing.)

Note 2:It is still possible that batch processing will identify a client who was in a valid assessment after the date of death and action it according to its own rules, possibly reinstating payment to the deceased.  However, the new IPS enhancement to prevent payment of recurring payments to someone who has a date of death recorded will identify these cases for subsequent action.

Future assessment history cases

A decision was made previously on how DPS should handle cases with future assessment histories where the pension rate changed on a date after the date of death.  These future assessment history cases were processed prior to the date of death being recorded.  (eg. A reduction that had a date of effect as 14 days after notification.)

With SP clients, DPS takes any payments that have been made after the date of death into account in the calculation of bereavement payment and arrears paid to the survivor.  The reassessment of the survivor from date of death then also follows through and the new single assessment is updated with the change effective after the date of death.

AP to adopt SP rules for future assessment history cases.

It has been determined that AP should take into account any changes in pension paid after death in the BP calculation.  DPS will therefore apply the above SP rule for Age Pension cases.

This decision is believed to impact on only a very small number of cases.  The majority of deaths are notified within 3-5 days of death.

Note:  this issue is only about cases processed prior to the date of death being recorded.  It is not related to any cases processed after the Department has been notified of death.  Social Security rules state “If the Lump Sum Bereavement Payment has already been made, it(the survivors assessment) is NOT adjusted for subsequent changes in income and assets.”  See also DI 21/99 relating to the Retrospective Reassessment of Age Pension.

Contact for further enquiries

Contact

Any enquiries relating to this topic should be directed in the first instance to Steve Claypole, System Delivery, on 02 6289 6792.

JEANETTE RICKETTS

Branch Head

INCOME SUPPORT

3 December 2002


Attachment A - Examples and Scenarios

Example 1

Veteran dies Day 1

Processed in pension period #1

Veteran on $280 pf Age Pension

$140 pf Disability Pension

Spouse on $280 pf Age Pension    NR = $400pf Age Pension

Veteran reduced to 0 on day of death

Spouse increased to $400 on day of death

Exception rule applies

6  x  (CMR – NR)  + 14  x  (CMR – NR/14)

6  x  160  +  14  x  (560 – 400/14)

6  x  160  +  14  x  11.428571

= 960  +  160

= 1120

Veteran gets 0 on payday #1

Spouse gets $400 on payday #1

Example 2

Veteran dies on Day 9

Processed in pp#1

Veteran reduced to 0.00 on day of death

Spouse increased to $400 on day of death

Exception rule applies

  1. x  (CMR – NR)  + 6  x  (CMR – NR/14)
  1. x  (560 – 400)  +  6  x  (560 – 400/14)

6  x  160  +  6  x  11.428571

= 960  +  68.57

= 1028.57

Veteran gets $160  on payday #1  (8 days @ 280pf)

Spouse gets $331.42 on payday #1 (8 days @ 280pf and 6 days @ 400pf)

Example 3

Veteran dies on day 6 of PP #1

Processed in PP #2

Veteran was paid $280pf on payday #1

Spouse was paid $280pf on payday #1

7 – NEPED  x  (CMR – NR)

= 7 – 1 — x  (560 – 400)

= 6 — x — 160

= 960

Example 4

Veteran dies on day 6 of PP #1

Processed in PP #5

Veteran was paid $280pf on payday #1, 2, 3, and 4

Spouse was paid $280pf on payday #1, 2, 3, and 4

7 – NEPED  x  (CMR – NR)

= 7 – 4 — x  (560 – 400)

= 3 — x — 160

= 480

Note:   if the notification of death is greater than 28 days after the actual death then specific rules apply to the reassessment of the survivor and the date of effect of that reassessment.

Example 5

WAR WIDOW GRANT

Veteran dies on day 6 of PP #1

Processed in PP #2

Veteran was paid $280pf on payday #1

Spouse was paid $280pf on payday #1

Spouse eligible for ISS of 124.90

7 – NEPED  x  (CMR – NR)

= 7 – 1 — x  (560 – 124.90)

= 6 — x — 435.10

= 2610.60

DP

WW Arrears of 8 days x 446.80pf

Veteran DP o/p of 14 days at the DP rate

Dependent DP o/p of 8 days at the DP rate

LBP of 6 x 100%(capped)DP rate

Example 6

WAR WIDOW GRANT

Veteran dies on day 14 of PP #1

Processed in PP #2

Veteran was paid $280pf on payday #1

Spouse was paid $280pf on payday #1

Spouse eligible for ISS of 124.90

7 – NEPED  x  (CMR – NR)

= 7 – 1 — x  (560 – 124.90)

= 6 — x — 435.10

= 2610.60

DP

No WW Arrears

DP o/p of 14 days at the DP rate

No Dependent DP o/p

Example 7

WAR WIDOW GRANT

Veteran dies on day 6 of PP #1

Processed in PP #1

CMR-NR)  +  [(NDEP – 1)  x  (CMR-NR)/14]

= 6 — x  (560 – 124.90)  + [(9 – 1) x (560 – 124.90)/14

= 6 — x — 435.10  +  (8 x 31.08)

= 2610.60  +  248.64

= 2859.24

DP

No WW Arrears

No Veteran DP o/p

No Dependent DP o/p

LBP of 6 x 100% (capped) DP rate

Attachment B  -  Illness Separated Examples

Example 1

Veteran on 416.30 (max single rate)

Spouse on 416.30

Spouse New Rate 416.30

Veteran dies day 6 and processed in period #2

Veteran received on pday#1 — 14 days @ 29.7357  416.30

Spouse received on pday#1 — 14 days @ 29.7357  416.30

Spouse receives next 6 pays — 6 x 416.30 — 2497.80

[7 – NEPED x (CMR – NR)]  -  {[(CSR – CMR)  x  NEPED] –
[(CSR – CMR)/14 x (14 – NDEP)}

=6 x 274.70-(141.60 – 50.57)

=1648.20- 91.03=1557.17

Total paid for 7 fortnights 4887.57

Example 2

Veteran on 416.30

Spouse on 416.30

Spouse New Rate 416.30

Veteran dies day 6 and processed in period #3

Veteran received on pday#1,2 — 28 days @ 29.7357  832.60

Spouse received on pday#1,2 — 28 days @ 29.7357  832.60

Spouse receives next 5 pays — 5 x 416.30 — 2081.50

[7 – NEPED x (CMR – NR)]  -   {[(CSR – CMR)  x  NEPED] – [(CSR – CMR)/14 x (14 – NDEP)}

=5 x 274.70- (283.20 – 50.57)

=1373.50-232.63=1140.87

Total paid for 7 fortnights 4887.57

Example 3

Veteran on 421.80 (max single rate)

Spouse on 421.80

Spouse New Rate 124.90 (War Widow and ISS)

Veteran dies day 12 and processed in period #2

Veteran received on pday#1 — 14 days @ 30.1286  421.80

Spouse received on pday#1 — 14 days @ 30.1286  421.80

Spouse receives next 6 pays — 6 x 124.90   749.40

[7 – NEPED x (CMR – NR)]  -   {[(CSR – CMR)  x  NEPED] – [(CSR – CMR)/14 x (14 – NDEP-1)}

=6 x 579.30-(139.40 – 119.49)

=3475.80-19.91=3455.89

Total paid for 7 fortnights 5048.89

Example 4

Veteran on 421.80 (max single rate)

Spouse on 421.80

Spouse New Rate 124.90 (War Widow and ISS)

Veteran dies day 12 and processed in period #1

Use War Widow Exception rule

6 x CMR – NR + {(NDEP-1) x CMR – NR/14}

=  6 x 704.20 – 124.90  +  2 x 41.38

=  6 x 579.30  +  82.76

=  3558.56

Veteran paid 12 days @ 30.1286  361.54

Spouse paid 12 days @ 30.1286  361.54

Spouse (WW) paid 2 days @ 8.9214    17.84

Spouse gets 6 payments @ 124.90  749.40

LBP3558.56

TOTAL paid over 7 pays5048.88

Attachment C - Scenarios

Overview

The following scenarios demonstrate how the rules apply regardless of when the case is processed.

For each scenario the total of all payments (not including DP) made for the Bereavement period is the same.

For all following scenarios the veteran and spouse were on 266.55 AP and 2.90 PA.  The reassessed rate for spouse is 300.70 AP and 5.80 PA

Clarification – weeks vs days

Note that the Centrelink legislation talks in terms of weeks while in DVA we use days and days are the figure included in the reports.

6 weeks equals 84 days.

The scenario calculations follow the Centrelink rules and use weeks.

Scenario 1

Veteran dies day 3 of pp#1.  Processed in pp#1.

Veterans AP is stopped from day of death and spouse is reassessed from day 3.  Payments are passed to RECORD and CRASS with no arrears calculated.

Veteran receives on pday#1 — 2 days @ 19.2464    38.50

Spouse receives on pday#1 — 2 days @ 19.2464    38.50

Spouse receives on pday#1 — 12 days @ 21.8928  262.71

Spouse receives next 6 pays — 6 x 306.501839.00

              2178.71

BP=6 x CMR – NR**

=12 x (CMR-NR)/14 — 6 x 232.40=  1394.40

=12 x 232.40/14=  199.20

              1593.60

Total paid for 7 fortnights 3772.30

(266.55 + 2.90) x 2 x 7 = 3772.30

Display on Processing Report

Scenario 2

Veteran dies day 3 of pp#1.  Processed in pp#2.

Veterans AP is terminated from day of death and spouse is reassessed from day 3.  Payments are passed to RECORD and CRASS with no arrears or overpayment calculated by CRASS.

Veteran received on pday#1 — 14 days @ 19.2464  269.45

Spouse received on pday#1 — 14 days @ 19.2464  269.45

Spouse receives next 6 pays — 6 x 306.501839.00

              2377.90

BP =6  x CMR – NR**

=6  x 232.40 — 1394.40

Total paid for 7 fortnights 3772.30

Display on Processing Report

Scenario 3

Veteran dies day 3 of pp#1.  Processed in pp#4

Veterans AP is terminated from day of death and spouse is reassessed from day 3.  Payments are passed to RECORD and CRASS with no arrears or overpayment calculated by CRASS.

Veteran received on pday#1,#2 & #3 — 42 days @ 19.2464  808.35

Spouse received on pday#1,#2, & #3 — 42 days @ 19.2464  808.35

Spouse receives next 4 pays — 4 x 306.501226.00

                                                        2842.70

BP = 4 x CMR – NR

=4 x 232.40                                929.60

Total paid for 7 fortnights 3772.30

Display on Processing Report

Scenario 4

Auto WW grant.  Veteran dies day 3 of pp#1.  Processed in pp#2.

Veterans AP is terminated from day after death and spouse is reassessed as WW and ISS from day 4.  Payments are passed to RECORD and CRASS with no arrears or overpayment calculated by CRASS.

Veteran received on pday#1 — 14 days @ 19.2464  269.45

Spouse received on pday#1 — 14 days @ 19.2464  269.45

Spouse receives next 6 pays — 6 x 124.90  749.40

BP = 6 x CMR – NR**

=6 x 414.00 — 2484.00

Total paid for 7 fortnights 3772.30

Display on Processing Report

C52/2002 AAT REVIEWS OF INCOME SUPPORT DECISIONS - POLICY INPUT AND NOTIFICATION OF PENDING APPEALS

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DATE OF ISSUE:  28 NOVEMBER 2002

AAT REVIEWS OF INCOME SUPPORT DECISIONS – POLICY INPUT AND NOTIFICATION OF PENDING APPEALS

INTRODUCTION

Purpose of Instruction

This instruction clarifies the role of the Income Support Policy Section in providing policy advice on matters that are to be reviewed by the AAT.  The procedures for monitoring, and reporting on, Income Support cases which are scheduled for AAT hearing have also been revised.

This instruction replaces the previous Departmental Instruction, C26/2001 [13], which is rescinded.

AAT Reviews

AAT reviews are an important component of the system of administrative law.  They provide an avenue for the independent external review of Departmental decisions, based on interpretations of the relevant law and policy and an assessment of the individual merits of the case.

Clearly, some AAT decisions will involve issues that will have implications for the administration of income support within the Department.  It is important that the issues considered, and the judgments arising out of the AAT consideration of income support cases, are reflected in the policy framework adopted by the Department.

Role of Income Support Policy Section

The role of the Income Support Policy Section primarily involves the overall monitoring of the progress and outcome of AAT cases.  It also includes the consideration of case issues and providing policy input in the preparation of cases, where this is sought by State Offices.

  1. Monitoring –

The monitoring of income support decisions, for which an application for AAT review has been made, will allow the policy implications of the cases to be identified and for policy revisions to be made where necessary.

To this end, the assistance of State Offices is sought in advising the Income Support Policy Section of all cases where an application for AAT review of a decision has been made, following the internal review of the case under section 57 of the VEA.  Brief case details only, including a description of the issue to be reviewed, the position of the State Office, the grounds for seeking review, and the AAT timeframe, are required so that the progress of the case can be monitored.

The details to be referred to the Income Support Policy Section are outlined below.

  1. Policy Input –

The Income Support Policy Section will provide a policy response on the issues raised by AAT cases being prepared by State Offices, where this is requested.

It is not expected that policy input will be required in all cases, but it may be appropriate in situations where the existing policy parameters are unclear or fail to address the income support issues in question.  Cases where a legal ruling or interpretation is sought should also be referred to the Income Support Policy Section, which will then arrange for referral to the Legal Services Group.

Where policy input is requested, this should be sought at the case preparation stage, to allow sufficient time for the issues to be properly considered and a response to be forwarded prior to the AAT hearing dates.  State Offices should advise the date by which a policy response is required, with particular reference to the AAT timeframe.

Qualifying service cases

Cases involving the issue of Qualifying Service are monitored by the Disability Compensation Branch, and should not be referred to Income Support Policy Section.

Private trusts and companies cases

As at present, all AAT cases involving issues arising out of the ownership or control of private trusts or companies are to be referred to the Income Support Branch in National Office.

Information to be provided

The following information on AAT casework should be referred, for monitoring purposes –

  1. Name of case (veteran)

  1. Brief outline of the case and the issue(s) raised, including legislative references to the VEA

3.State Office position

4.Veteran's position (grounds for seeking review)

5.Does the State Office assessment of the reviewable decision indicate that it is sound, if not why not?

6.Next critical action (eg 1st preliminary conference, Directions Hearing, Hearing) and date.

7.Advocate's comment

8.Advocate's name and contact number

The information should be forwarded by e-mail to NAT Policy Advisings Income Support.

List of current AAT cases

The listing of current AAT cases maintained by the Income Support Policy Section is attached.  It would be appreciated if State Offices could review and amend this listing, including providing details of any current AAT cases which do not appear on the list, and forward the updated listing to NAT Policy Advisings Income Support.

AAT Hearings on the papers

If the AAT or an Advocate wishes to have an Income Support matter determined by the AAT “on the papers”, specific approval to do so should be sought from either the Director Income Support Policy or the Branch Head, Income Support.  A minute requesting instructions to have the matter determined on the papers should provide:

  • a brief outline of the issue;
  • an assessment whether the case is unique or may have more general implications for Income Support; and
  • reasons for the request.

These requests can also be e-mailed to NAT Policy Advisings Income Support.

Contact

The contact person in this matter is Brian Butler, Income Support Policy Section, on (02) 6289 6110.

Jeanette Ricketts

Atg Branch Head

INCOME SUPPORT

27 November 2002


Attachment

Income Support Policy current IS AAT cases – Alphabetical – updated November 2002

NAMECourtAppLodgedDir Hrg1st conf2nd confHearingSTATETYPEADVOCATE/LEGAL CONTACT Counsel

CHEETHAMAATV       02/06/2002 WA SP — C PONNUTHURAI

Issues:

Awaiting details of case, informed on 9/10/02 that details were to come.

COTTRELLAATV       02/06/2002 NSW — SP — J MARSH

Issues:

Inclusion of director loans totalling $397,752 to Jewellyn Pty Ltd as assets in pension assessment decision made on 4 January 2002.  Veteran out of time to lodge appeal to Tribunal and sought extension of time on basis the matter was actively been contested because of ministerial correspondence.  The Commission originally opposed the application for an extension of time but reconsidered. Substantive issue is whether the loans are legally irrecoverable.  Matter has yet to be set down for the first preliminary conference. Further up date from advocate sought 12/8/02.

EISENHAUERAATV       06/08/2002 QLD — SP — JEFF KELLY

Issues:

Loan of $240,000 to daughter held in assessment.

GIBBS, ESTATE OFAATV        SA — GREG DOUBE

Issues:

Section 57 review done on 4/3/02.  Vet and spouse had lived at same address since 1991 but did not marry until February 2000 when the 5 years were up after she handed a farm worth about $700,000 to her son.  Before he died, the veteran & his widow on being interviewed said they were in a committed relationship from July 1995 and this was taken as an admission of a marriage like relationship since that date.  Pension from 1995 to the date of marriage was reassessed accordingly.  Because of her assets, she was ineligible to receive SP during that period.  $23,000 is still outstanding on the debt.  Likely children challenge existence of defacto relationship but grounds for appeal not specified.  First PC is 16/10/02.

GOLLANDAATV       02/06/2002 NSW — T&C — J WILSON (LEGAL)

Issues:

Trusts and companies -private company, Mayfields Cordials Pty Ltd has issued share capital of 100 A class shares, and 12046 B class shares. Only the A class shares had voting rights and the veteran held 52 of them, the veteran's son held a further 24 A class shares and a John Parkes held the remaining 24 shares.  John Parkes is unrelated to the veteran or his son. According to the ASIC search the company had 3 directors, the 3 men above who held the class A shares. The company had not traded since 1983.,  The financial statements for the company indicated a loan to the veteran of $99,228.92 and a loan from the veteran to the company of $1630.91.  Upon internal review, 100% of the assets and income of the company was attributed to the veteran.  Net assets of the company were at the time $149,438.07. Matter has been referred to Legal and their investigations have revealed that the company was original incorporated in 1958.  A copy of the articles under Table A of the relevant NSW Companies Act vindicates that Mr Kerr was then Governing director of the company with absolute veto over voting rights. Mr Kerr still is Governing Director of the company but this was not recorded on ASIC records because there was no obligation to notify that information at the time.  Furthermore, the veteran has sold all his shares in the company following the internal review decision and has no involvement.  Decision to be reviewed by Martin McGlashan in light of further evidence obtained by the Legal area and it si likely the case will be conceded by the Commission.


JOHNSONAATV       28/05/2002 VIC — PBS — R DOUGLASS

Issues:

Pension Bonus Scheme – partner registered with Centrelink for Scheme since 21/6/1999 and working full time.  Partner service pension was claimed along with service pension in claim lodged on 20/6/2001.  The claim form did not ask partner to indicate whether she was registered with the scheme, only the veteran.  The partner tried to claim the Pension Bonus from Centrelink but was directed to DVA as she was not claiming the Age pension. She ceased employment on 3/8/2001 and lodged a claim for the PBS with DVA on 15/8/01. By this time, the service pensions had been granted on 27/6/2001 with effect from 14/6/2001.  The claim for the Pension Bonus was refused because she had received a pension (section 45TC refers).  Case referred to policy on 18/9/02 – advised claim for bonus cannot be paid because section 45UK(3) cannot apply as it overridden by the general qualification for the PBS contained in section 45TC – case referred to Legal on 26/9/02 for advice re defective administration.  Celia de Winter handling.

LEE-WARNERAATV QLD — T&C

Issues:

Application of T&C rules but veteran's solicitor wants to prepare documentation, which would in effect allow the veteran to retrospectively resign from involvement in the entity in question. Details have been sought from QLD advocacy – John Stoner but he does not return from rec leave until August 26.  Instructions have been received by Policy on 8/10/02 to examine case in light of additional material provided by applicant.  Brian Butler made original decision and has examined the new information.  To be discussed with Advocacy QLD as matter listed for hearing in Cairns on 28/11/02.  Julie Wilson (Litigation) handling.

MAJORAATV — VIC — T&C — R Douglass

Issues:

Assets from the trust valued at $521,202.68 were held in the veterans and spouse's assessment for pension purposes.  As a consequence, service pension was cancelled under the assets test.  Decision to attribute 100% of these assets to the vet and spouse, as they were the only shareholders in the private company concerned.  Commission's statement of facts and contentions has been lodged, matter listed for hearing on 21/8/02 but veteran withdrew the application before it was heard.  Veteran then sought to reinstate the application but pulled out just before a directions hearing scheduled for 24/9/02 to determine the matter proceeded.  The veteran is now going to lodge a new application and will lose any backdating as he is out of time.  It is likely that the matter will be listed for hearing in early November.  Stuart Kennedy handling.

PAULAATV — SA — T&C — G Doube

Issues:

Trusts and companies – private company, veteran and spouse sole directors, reviewable decision attributed 60% of income and assets to vet and spouse.  The veteran's daughters jointly owned 40%.  Decision claimed to be wrong in fact but no other reasons cited for the appeal.  First PC 22/10/2002.

SEERYAATV    05/04/2002 — 01/08/2002 — SA — OVERPAYMENT — G Doube — TH

Issues:

Assessment of overpayment from 1996-2001 – debt of $19,925.24. Appeal from decision to raise overpayment.  Jurisdiction to review decision to be opposed.

SERNACKAATV

Spouse – complex financial structure – daughter's involvement.  TPC 13/12/02.

SHULTZAATV — QLD — OVERPAYMENT — J WILSON

Issues:

Veteran applied for a SP is eligible but because of income/assets in excess, he is not entitled. Family trust owns family home, veteran claims he pays rent to the trust, Centrelink had granted some benefit (to be clarified) possibly a Age Pension but have cancelled payments and raised a debt.  Applicant wants to merge the Centrelink and VEA proceedins but we oppose this.  Next TPC, Maroochydore, 7/11/2002.  He also has another court matter in WA on 30/10/02 but we do not know the nature of the proceedings.

WILLIAMSAATV      23/04/2002 — 13/06/2002 — VIC — SP-PBS — R DOUGLASS

Issues:

Pension Bonus Scheme – refusal of application to register for scheme.  Veteran now has QS – FESR extensions which commenced 1/1/2001.  Primary decision made on 2/5/2001 refused registration because of veteran's age and referred to requirement to register within 13 weeks.  Decision is demonstrably wrong because this veteran's special date of eligibility is 13 weeks from 1/1/2001.  We received notification from the veteran that he wanted to register for the scheme before the 13 weeks was up but formal application to register was not received until about 2 weeks out of time.  Delegate doing internal review declined to do so because of jurisdiction.  Application to Tribunal is clearly out of time but we are considering option of reconsidering the decision not to register under the discretion to accept a late application. I await a response fro0m Greg Heitch about this option. Followed up 8/8/02 re progress on revised decision, awaiting advice from Robert Douglass.  26/9/02 – Robert Douglass reported that veteran had withdrawn appeal but was following up to see whether the decision had been reconsidered at the primary level.  Robert to advise Policy re outcome.

WOODBRIDGEAATV        27/08/2002 — QLD — SP              T McCONNELL

Issues:

Valuations of rural property “Green Acres” near Binalong, NSW - vet and spouse with son operate the farm, which is 320 ha in area.  The son conducts his own piggery business on the farm as well as taking part in the grazing business of his parents.  Primary decision made 16/3/2001 – total assets assessed at $772,701 and because the vet had transferred the farm to the son on 15/12/2000 for no valuable consideration, a deprived asset of $569,000 was held in the assessment under sections52E and 52GA based on the AVO valuation.  On 19/6/2001, the decision was reviewed but the delegate accepted the AVO valuation without seeking a new valuation. The AVO has now done a further valuation of $877,000 but having regard to allowable deductions, the value of the deprived asset has been reassessed at $342,000.  The case was considered for the RAFS Scheme but it would appear the vet satisfies all the criteria except for the farmer's income test (s.49J).  The Certificate of Title for the property – first schedule describes the estate as a perpetual lease and the second schedule refers to a Closer Settlement Lease 1947/16 Boorowa subject to the Closer Settlement Acts & Closer Settlement Amendment (Conversion) Act 1943 and Crown Lands Consolidation Act, 1913. Now issue of an equitable interest in relation to the CLS lease has been raised.  This issue will be examined but Commission is to write to applicant pointing out that the son's contributions have already been recognised in the revised value held for the deprived asset.

C51/2002 RELEASE OF PERSONAL INFORMATION RELATING TO EULOGIES AND OTHER MATTERS

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DATE OF ISSUE:  12 NOVEMBER 2002

RELEASE OF PERSONAL INFORMATION RELATING TO EULOGIES AND OTHER MATTERS

Purpose

The purpose of this Departmental Instruction is to:

  • advise of the issues that have been identified in the current practice in State Offices for the processing of requests for the release of personal information, particularly in relation to eulogies; and

  • request States to ensure that such releases of personal information are being processed correctly.

Background

The Strategic Review Section (SRS) of the Strategic Support Branch in National Office recently concluded a review of FOI arrangements in DVA.  Recommendation 11 of the SRS report was that DVA promote consistent practices by providing guidance to State-based FOI personnel on what activities should, or should not, be treated as a request for access to information under the Freedom of Information Act 1982 (the FOI Act) and subsequently recorded in the FOI database.

The recommendation went on to say “...In particular, there is a need to clarify whether information requested for eulogies ought to be dealt with under the provisions of the FOI Act.”

The issues raised by the SRS review were discussed with some State FOI sections, and by all State FOI officers at the DVA National FOI Conference held in Canberra in September 2002.

Identification of Issues

It is clear from comments of State FOI officers and from discussions at the DVA National FOI Conference that there are two separate issues raised by SRS Recommendation 11:

  1. the practice by some State Offices under which requests for personal information, particularly requests for eulogies, are treated as FOI requests in circumstances whereas in other State Offices they are not treated as FOI requests; and

  1. the broader issue of ensuring that all DVA officers are aware of the department's obligations when releasing personal information, and that such obligations are consistently and uniformly met.

Consideration of Issues

(a)Treatment of Eulogies and other requests for personal information as FOI requests

Discussion at the Conference established that there are differences between State Offices as to the types of request which should be dealt with under the FOI Act.  Some State Offices treat many requests for eulogies and some other types of requests (for example, nursing home information requests) as FOI requests, even when the requests do not comply with the legal requirements set out in subsection 15(2) of the FOI Act.  For example, the request may not be in writing, the issue of payment or waiver of a fee is not always dealt with, and often the response does not involve the provision of documents.

It is appreciated that the intention is to balance the need for urgency with a desire to obtain the protection offered by the FOI Act, and that subsequent action is often taken to bring such requests within FOI (for example, by seeking the submission of FOI request forms after the matter has been resolved).  Nevertheless, the practice is a breach of the FOI Act and the correct procedure must be followed.

Correct Procedure
  • Requests for personal information relating to eulogies and similar urgent requests should be treated outside the FOI Act whenever possible.  Such release of personal information must be made in accordance with DI B54/91 [15] as amended by DI B04/92 [16] (Disclosure of Personal Information Relating to a Deceased Person and his or her Dependants, see attached).

Where there may be difficulties in releasing information in relation to eulogies and similar requests, the matter must be processed under, and comply with the requirements of sub-section 15(2) of the FOI Act as follows - it must:

  • be in writing;

  • provide enough information to identify the document;

  • specify an address in Australia at which notices under the FOI Act may be sent to the applicant;

  • be sent to the relevant DVA State or National office address; and

  • if applicable, be accompanied by the fee payable.

Examples of such difficulties are when there is a question of identity of the applicant, or of relationship with the person concerned, or where personal information of third parties are also on file.

  •                  Only requests made in compliance with section 15(2) of the FOI Act should be included in the FOI statistics.

  •             Personal information released outside FOI should comply with the requirement of the Privacy Act 1988 (Privacy Act).

Consideration of Issues

(b)Ensuring all DVA officers are aware of obligations regarding personal information and that such obligations are uniformly met.

The FOI Manual presently being finalised and to be circulated to all staff will note the obligations of staff.  A Privacy Manual is also under preparation – this manual will address the relationship between the disclosure of personal information under the FOI Act and the requirements under the Privacy Act that regulate the lawful disclosure of personal information.

Correct Procedure

Prior to the circulation of the FOI and Privacy Manuals and/or relevant training, officers should take particular care to comply with the requirements of both the FOI Act and Privacy Act.  Officers should familiarise themselves with the provisions of section 41 of the FOI Act and the Information Privacy Principles under section 14 of the Privacy Act.  For specific guidance for releasing personal information under the Privacy Act, officers should refer to DI B54/91 [15] as amended by DI B04/92 [16].

Contact

Contact officers for this Departmental Instruction are Derek Emerson-Elliott (telephone (02) 6289 6577) and Norman Kalagayan (telephone: (02) 6289 6208).

WR MAXWELL

Division Head

Compensation & Support Division

12 November 2002


DEPARTMENTAL INSTRUCTION NO.:   B54/91

DATE OF ISSUE:  25 November 1991

DISCLOSURE OF PERSONAL INFORMATION RELATING TO A DECEASED PERSON AND HIS OR HER DEPENDANT

Purpose

The purpose of this Instruction is to specify guidelines for disclosure of personal information relating to a deceased person and his or her dependant.

Background

2. In the past the Department has co-operated closely with ex-service organisations upon the death of a veteran in providing information concerning the deceased veteran and his or her dependants.  This practice has assisted the ex-service organisations and associations to offer their services to the widows and other dependants and has worked to the benefit of all concerned.

3. Of particular significance is the traditional practice of the Department to notify Legacy, the War Widows' Guild, the RSL and other organisations of the death of veteran.

Privacy Act 1988

4. However, with the commencement of the Privacy Act 1988 on 1 January 1989, any disclosure of personal information held by the Department is subject to the provisions of the Privacy Act which imposes certain limitations on the disclosure of personal information.  The Act allows the disclosure of personal information to private individuals or organisations where the individual concerned has consented to the disclosure or where the disclosure is made under any of the other exceptions specified in the Act.

5. Consequently, personal information concerning the widows or other dependants of a deceased veteran cannot be disclosed to an ex-service organisation without the consent of that dependant.  Such personal information extends to any information which might identify the dependant, e.g. name and address.

6. The Privacy Act, however, does not apply to a deceased person.  The Act applies to an "individual" who is defined as "a natural person".  The Privacy Commissioner has advised that a deceased person is not a natural person within the meaning of the Privacy Act.

7. This means that personal information which the Act protects from an unauthorised disclosure, is only concerned with a living person.

Disclosure of Personal Information

8. Accordingly, a disclosure of personal information relating to a deceased person is not a breach of the Privacy Act.  However, such a disclosure ought to be made with due care and sensitivity.  In this regard the Department may disclose personal information relating to a deceased person provided the information:

(a)does not identify the existence of and/or any other information about a dependant of the deceased person; and

(b)is not that which the Department has traditionally refused to disclose on the grounds of sensitivity for the veteran's personal reputation such as details of his or her psychiatric and other medical conditions.

9.  The effect of the above conditions is that the Department may provide to ex-service organisations the following details of a deceased person:

(a)  DVA File No.;

(b)  Full name;

(c)  Address;

(d)  Service details (as on the Client Data Base) where applicable; and

(e)  Date of Death.

10. Should an ex-service organisation require further information relating to a deceased person, the Departmental officer concerned shall seek an explanation from the organisation as to why the additional information is required.  The officer should disclose that information if it is reasonably required by the ex-service organisation to provide support and assistance to a dependant of the deceased and the information falls within the parameters of sub-paragraphs 8(a) and 8(b).  Such disclosures should only be made by Departmental officers authorised under the Freedom of Information Act.

11. Any request for release of documents held by the Department should only be considered under the provisions of the Freedom of Information Act.

Consent held by Ex-service Organisations

12. Where an organisation has the consent of a deceased veteran or of a dependant of a deceased veteran to obtain personal information relating to the veteran or the dependant respectively, the information may be disclosed to the organisation.  The consent must specify the information which can be disclosed.

13. In regard to a consent held by an ex-service organisation, the following is the Department's position:

(a)the death of a veteran does not negate any consent given by the veteran;

(b)where an ex-service organisation seeks personal information relating to a deceased veteran and has the written consent of the veteran, or where an ex-service organisation seeks personal information relating to a dependant of a deceased veteran and has the written consent of the dependant, the Departmental officer shall require from the ex-service organisation evidence of the consent before the officer may disclose the information to the organisation;

(c)The evidence of the relevant consent under (b) above may be obtained by requesting over the telephone such details as the date of the consent and the nature of the information specified in the consent.  Where an officer is given such details, the officer shall make a file note to that effect.  The consent may continue to be held by the ex-service organisation and therefore need not be provided to the Department.  In the event of a complaint to the Privacy Commissioner, the Department shall obtain the relevant consent from the organisation concerned; and

(d)where an ex-service organisation seeks personal information relating to a dependant of a deceased veteran and claims to have the oral consent of the dependant, the Departmental officer shall verify the oral consent by contacting the dependant by phone or in writing.  If the contact was by phone then as evidence of this contact, the Departmental officer shall make a file note.  When evidence of the oral consent is established the Department may disclose the information to the ex-service organisation.

Consent held by other Third Parties

14. Where a third party, other than an ex-service organisation, seeks personal information relating to a deceased veteran, or where a third party, other than an ex-service organisation, seeks personal information relating to a dependant of a deceased veteran, the Departmental officer shall sight the relevant consent before the information may be disclosed to the third party.  In this respect the third party may be requested to fax the consent.

Other Guidelines or Instructions

15. Where there is an inconsistency between this Instruction and any other existing guidelines or instructions issued by the Department (e.g. DVA General Disclosure Policy), this Instruction shall prevail over the other and the relevant guidelines or instructions shall become inoperative to the extent to which the inconsistency exists between the two documents.

16. The General Disclosure Policy document is in the process of being revised by the Corporate Services Program.

Review of this Instruction

17. This Instruction will be reviewed early next year in line with the implementation of the Death (Information) Processing System.  This system is currently being developed and is due for implementation in March 1992.

Enquiries

18. If there are any enquiries about this Instruction, please contact Warwick Moloney on (06) 2896355 or Mushtaq Butt on (06) 2896342.

Peter Hawker

National Program Director

Benefits Program


DEPARTMENTAL INSTRUCTION NO.:  B04/92

DATE OF ISSUE:  14 January 1992

DISCLOSURE OF PERSONAL INFORMATION RELATING

TO A DECEASED PERSON AND HIS OR HER DEPENDANT

Following representations from Legacy and the RSL late last month concerning the limitations imposed by D.I. B54/91 [15] on the disclosure of personal information relating to a deceased person and his or her dependant, the D.I. was reviewed and a further approach was made to the Privacy Commissioner about this matter.

2.In line with the Privacy Commissioner's advice paragraph 9 of the D.I. has been amended to read as follows:

"The effect of the above conditions is that the Department may provide to ex-service organisations the following details of a deceased person:

(a)DVA File No.;

(b)Full name;

(c)Address;

(d)Service details (as on the Client Data Base) where applicable;

(e)Date of Death; and

(f)The deceased has/has not a dependant (delete which is not applicable)."

3.It should be noted that in providing the information contained in sub-paragraph (f) above the objective is simply to indicate the existence or non-existence of a dependant of the deceased concerned.  Therefore, the identity of the dependant must not be apparent from the information provided to the ex-service organisations.

Peter Hawker

National Program Director

Benefits Program

   January 1992

C50/2002 PROPERTY VALUATION EXERCISE - 2002/2003 FINANCIAL YEAR

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DATE OF ISSUE:  6 NOVEMBER 2002

PROPERTY VALUATION EXERCISE – 2002/2003 FINANCIAL YEAR

Purpose

The purpose of this Departmental Instruction is to provide information on the various stages of the annual property valuation exercise.

Background

Every November, specific income support cases requiring a property valuation are automatically selected and forwarded to the Australian Valuation Office (AVO) for valuation by April in the following year.  Once the valuations have been completed, they are forwarded back to DVA with the new valuation amount.  The output is then forwarded to the State Offices for updating.

A listing of manual cases is also produced at the time of the bulk run.  State Offices are required to manually prepare and forward these cases to the AVO.

Due to the implementation of IPS schedules previously printed for State Office use are no longer available.  Automatic and Manual cases will be provided to the states in a Microsoft Excel format.

Stage 1

Production run

The data extraction was carried out on 4 November 2002.  The data containing information on the automatic review was forwarded to the AVO on 5 November 2002.  Excel spreadsheets for automatic and manual cases have been provided to the State Offices.

Number of cases extracted

The data has been extracted through the AD Hoc Inquires System (AIS).

The following is a breakdown of automatic and manual cases extracted from this years bulk run:

State

Auto

Manual

Manual (Business)

NSW

668

263

7

VIC

640

201

5

QLD

461

152

2

SA

127

48

7

WA

172

89

0

TAS

128

29

0

Total

2196

782

21

Criterion for extracting cases

The following criteria was used for extracting cases:

  • All income support and income support supplement recipients who are asset tested;

All income support and income support supplement recipients who are income tested but have assets within $10,000 of their prescribed assets limit and have property, business, farm or sublet portion of their home.

Cases excluded from exercise

The following pensioners have been excluded from this year's bulk run.

  • Pensioners who have had an AVO property valuation done since the last bulk run (3 November 2001);
  • All single pensioners who are assessed as blinded and are not paid rent assistance;
  • All couples where both are assessed as blinded and are not paid rent assistance.

Stage 2

State Office to action manual cases

Manual cases have been forwarded to the State Offices in an Excel format for further action.

State Office action is required to provide the AVO with a form containing detailed information on each of the manual cases where a property valuation is required.  Records are to be kept and a Claims Management Systems (CMS) case should be created to ensure that all such requests are returned by the AVO and action completed.

Stage 3

AVO conduct valuations

The AVO will conduct the necessary valuations in the period from December 2002 to April 2003.  The AVO will update the valuation information and forward the updated information to DVA by the end of April 2003.

Stage 4

Updated data forwarded to State Offices

Printouts and an Excel spreadsheet of the updated property valuations will be provided to the contact officer in each State Office.  These reports can be expected early May 2003.

Stage 5

State Office update valuations

Once the updated data is received manual action will be required to update the Central Data Base (CDB) to take effect in conjunction with the indexation of the free areas in July 2003 (Ordinary Income Free Area, Asset Value Limit & Adjusted Income Free Area).  Cases where the value of property has reduced may be actioned for increase of the service pension from the next convenient payday.

Date of valuation to be used

All States should use 4 November 2002 as the date of valuation when updating cases from this exercise.

It is essential that this date be used to enable all the appropriate cases to be selected for next year's exercise.  Using another date creates complications for the bulk extraction.

Processing Information

Screens and processing information for PIPS/PC can be found in Departmental Instruction C54/96 [18].

Contact Officer

The contact officer for this exercise is Nasreen Haque (02) 6289 1125, Business Operations and Support Section, Income Support Branch.

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

6 November 2002

C49/2002 REVISED PROCEDURES FOR CENTRELINK CLEARANCES

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DATE OF ISSUE:  4 NOVEMBER 2002

REVISED PROCEDURES FOR CENTRELINK CLEARANCES

Purpose

The purpose of this Departmental Instruction is to replace DI B12/95 [20] DVA/DSS Clearance, and to provide further direction on the revised procedures between Department of Veterans' Affairs and Centrelink for clearances processing and associated debt recovery.

Commencement

The changes commence on 1 November 2002.

Contact

The NO contact officers for this project are Elaine Tse on (02) 6289 6011 and Peter Feinler on (08) 8290 0441.

Authorised by

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

4 November 2002


Overview of Clearance Processing

Background

The clearance process is a long established arrangement between Centrelink and DVA to prevent excess payments to pensioners when they transfer between the agencies and excess payment that results from the grant/variation of a disability pension (DP) that affects the benefit currently being received.

The process ensures that:

  •     the losing (ie the first) agency's payments are cancelled or varied from the date on which the gaining (ie the second) agency commences payment, and
  • when a retrospective grant or increase of a DVA pension is made to a Centrelink income support recipient, the backdated amounts are adjusted to account for any overlapping payments.

Both DVA and Centrelink have acknowledged that the existing arrangements were inefficient, with associated risks such as processing delays, inadequate training/support and lost transmissions leading to adverse client impact.

Streamlined Clearance procedures

Centrelink and DVA have worked together to identify the priorities in the clearance process.  The jointly initiated project has a phased approach.  The objective of Phase 1 is to streamline the procedures and to resolve some of the concerns raised in State Office consultations that could be achieved independent of significant IT system changes.

Functions provided by the current clearance and printing systems used by some State Offices will not require any major amendments to accommodate the new procedures.

Electronic transmission options will continue to be investigated in Phase 2 of this project, and enhancements to IT systems for both agencies to facilitate fully automated clearance processing will be explored in Phase 3.

Key components of Phase 1

To streamline the clearance and debt recovery procedures, the following standards/changes are being introduced:

  • Centralised processing of DVA clearance requests by Centrelink
  • Agreed service levels/service delivery times
  • Enhancement of Centrelink clearance forms
  • Recovery of overpayment
  • Revised letters
  • Debt Reporting

Centrelink Centralised Processing Units

Centralised processing or 'cluster' office structure was already in place in some states. The direct liaison between a limited number of personnel in Centrelink and DVA has achieved excellent response time for clearance processing and debt transactions.

However, in other states where clearance requests were sent to the local area offices, the response times varied significantly, with lack of awareness or lack of priority for DVA work by some Centrelink staff leading to long delays.

From October 2002, designated processing units will be responsible for the processing of clearances from DVA.  There are 1 to 3 Centrelink Centralised Processing Units (CCPU) established per state, with the work allocated according to the postcode of the pensioner concerned.

This arrangement will allow staff in the CCPU to establish a good network with DVA teams and build up their knowledge of all aspects of clearance and debt processing.

Communication protocols for data exchange between DVA and Centrelink are being established.  These will detail service level agreements and recommend that biannual meetings take place within the states to consolidate local relationships and business arrangements.

The procedures, protocols and contact details are available in the CLIK Reference Library, under Centrelink Information.

Clearance Requests

Decision-makers should assess the need to send a clearance based on the information provided by the claimant.   Where claimants have declared themselves as non-recipients of Centrelink payments, the question of means of support must be adequately addressed. If there is any doubt, the relevant CCPU should be contacted to establish if a Centrelink payment record exists.  Clearances should also be sent for War Widow's Pension (WWP) granted through Death Processing System where there is no DVA income support payment.


Clearance Requests (continued)

For grants of income support payment where the DVA rate is less than the Centrelink rate, (ie. DVA arrears will not be sufficient to cover the Centrelink adjustment), contact the CCPU concerned to arrange a “cut-off” for the Centrelink payment to be cancelled, such that there is no overlapping entitlement period and no interruption to payment. *

Minor differences in pension rates could arise due to investment updates but significant differences may suggest that the previous entitlements were incorrect.  The CCPU should be furnished with the relevant details so that Centrelink can determine if any further investigation is required.

*An EATERS action should be undertaken to record the correct dates where additional treatment eligibility is gained from the grant of the income support payment.

Clearance Data

Pending development of clearance requests for electronic transfer, State Offices should ensure that the clearance forms currently used contain the key fields for each client that requires a clearance.

Part A (DVA's request):

  • Full Name (including any other name the client is known by)
  • Date of birth
  • Address
  • DVA and Centrelink reference numbers
  • Date of grant/variation
  • Payment type/s and rate/s (eg. Disability Pension 10%)
  • Fortnightly payment amount/s

Part B (Centrelink's response):

  • The additional phrase for Centrelink to specify that the adjustment amount is a recoverable debt under s.1223(1) of the Social Security Act 1991 (SSA),
  • Include a request for residential, income and asset details in the case of War Widows' Pension (WWP) grants, to facilitate assessment of Income Support Supplement (ISS) on the basis of details held by Centrelink.

Part C (DVA's acknowledgment):

  • Include the options of DVA recovery or referred back to Centrelink

A clearance request sample is shown in Attachment A

War Widow's Pension and ISS

Procedures for the combined WWP/ISS claim form are outlined in DI C18/2000 [21].  Once ISS eligibility is established, Centrelink should be requested via the clearance to provide an itemised income and assets statement.

Given the high income and asset limits for ISS, most war widow/ers who were in receipt of age pension from Centrelink will receive the maximum rate of ISS.  If necessary, contact the war widow/er by telephone to clarify any details about the income and asset assessment, or any other aspect of the case.  Where the income and/or asset levels are close to the limits, or, are sufficient to generate a reduced rate of ISS, an income and asset statement should be sent to the war widow/er after the grant of ISS to verify the details.

If the existing payment from Centrelink was paid at a higher rate than WWP (eg. maximum rate age pension and rent assistance), the case should be referred to Income Support without delay for ISS eligibility to be investigated.

Bereavement Payment

It should be noted that it is Centrelink policy that once the lump sum bereavement payment (LBP) is calculated and paid, it is NOT adjusted.  For partnered assessments, the survivor is paid an ongoing rate.  Variations can be made to the ongoing rate of pension, even during the bereavement period.

Where WWP is granted and a clearance is sent by DVA, Centrelink will cancel the social security payment with effect from date of grant of WWP.

Centrelink then requests recovery of the overpaid amount back to date of cancellation, but no re-calculation of the LBP is performed.  DVA will adjust the pension arrears and assess eligibility and payability of ISS based on information provided by Centrelink.

Agreed response times

DVA is to provide a clearance request within 2 days of processing a payment grant/variation.  The agreed turnaround time is 5 working days from either agency to undertake the required action.

If the standard interval is insufficient due to difficulties in retrieving data or pending action that will affect the arrears amount/recovery outcome, then the respective liaison officer should be advised about the potential delay.


Recovery of Overpayment

Centrelink overpayments

Overpayments of social security pension or benefit to DVA pensioners can arise in the following circumstances:-

  • Multiple entitlement exclusions exist in the SSA precluding payment of certain social security entitlements when a service pension (SP) or WWP becomes payable to the person.  That is, the Centrelink payment ceases to be payable from the date of grant of SP or WWP, and any amount of Centrelink payment paid since that date is an overpayment.

  • When a retrospective grant or increase of DP is made to a Centrelink pensioner, any amount of income support which would not have been payable during the period had the DP been in payment, is an overpayment.

If Centrelink makes a social security payment and a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit, the amount of the payment is a debt to the Commonwealth by the person who obtained the benefit of the payment.  Subsection 1223(1) of the SSA defines debts that are recoverable.

Recovery of these overpayments is authorised under s.205 and 205AA of the VEA.  These can be applied to recover the overpaid amounts from the person, either in a lump sum or by instalments from the new pension.

Recovery of excess payment to Partners

If the veteran has a partner who has been receiving a social security pension or benefit, the calculation of arrears as set out in s.27 (A) allows for the reduction of excess income support paid to the veteran's partner.

This section applies when:

  • Arrears of disability pension become payable;
  • The veteran has been a member of a couple during the arrears period;
  • The veteran's partner has been receiving an income support payment; and
  • The rate of that income support is retrospectively reduced because of the disability pension arrears.

The amount of arrears payable to a veteran may also be affected by section 205 or 205AA and should be adjusted first.  The balance is then compared against any excess recovery for the partner.

If the excess payment is less than the balance of arrears, the amount payable to the veteran in respect of the arrears period is reduced by the excess payment of income support to the veteran's partner.  If the partner's excess income support payment is equal to or greater than the balance of arrears, the pension payable to the veteran in respect of the arrears period is reduced to zero and no lump sum is payable.

Example

John and his partner Mary are both in receipt of Newstart Allowance.  John applies for an increase in disability pension, which is subsequently increased to 70% of the General Rate as from 10 June 2002.  A clearance request with this information is sent to Centrelink

Because disability pension is income for Centrelink payments, the Newstart Allowance payments that John and Mary receive will need to be adjusted from the date of grant of the increase.  Centrelink advises DVA the adjustment amount for each recipient.

The adjustment amount for John is recovered from his arrears first.

If John's arrears are sufficient to cover his adjustment amount, then Mary's overpayment can be considered.  The balance of John's arrears can be used to offset Mary's overpayment but this balance can only be reduced to zero (ie. no lump sum payable).  Any further excess for Mary will need to be referred back to Centrelink, as Mary has no ongoing payment at DVA.

If John's arrears are not sufficient to cover his adjustment amount, then the outstanding amount for John can be recovered from his ongoing payments as per s.250AA.  However, there is no authority for DVA to apply deductions in respect of Mary's adjustment amount, therefore, her overpayment must be referred back to Centrelink for any recovery action.


Adjustment of DVA arrears

DVA arrears

It is the responsibility of DVA to ensure that arrears are not released during the agreed response interval, prior to receipt of relevant clearances.

Upon receipt of Centrelink's clearance response, DVA will calculate and release the balance of arrears to the pensioner or to the Centrelink Overpayment Recovery destination through Integrated Payment System (IPS) as required.

As per Centrelink's waiver of small debts policy, debt accounts of less than $50 are waived and no action should be required by DVA.

In the majority of cases, if the existing payment is varied/cancelled within the agreed response time, then the adjustment amount should not exceed the arrears.  Queries about the adjustment amount should be referred to the Centrelink Liaison officer.

Where the arrears are insufficient to cover that person's adjustment amount, DVA will initiate recovery from ongoing pension payments on behalf of Centrelink.  Extra care should be taken if such a case relates to a grant of WWP and ISS eligibility should be investigated before starting the recovery plan.

Where there is an overpayment to the partner that cannot be recovered from the veteran's DP arrears, the outstanding amount must be referred back to Centrelink.

Recording Centrelink Debts on DMRS

Centrelink clearance debts being recovered by DVA should be recorded on the DMRS as overpayment, “Other Department DSS”.  This allows for an audit trail with the corresponding Centrelink Overpayment destination in the Outward Payments tab in VIEW.

Only the outstanding adjustment amount should be entered as a debt.  The DMRS business rules will initiate the appropriate recovery plan.

Add “clearance received dd MMM yy” or similar notation in the comment column for reference.  These debts should not be included in the DVA total of outstanding debts for Annual Reports or any other similar publication.

An extract from the DMRS guide is provided in Attachment B and the full guide is available via the following link:

http://sharepoint/programsandprojects/systemguides/view/dmrs/Documents/DMRSProceduralGuidePartsABCD.doc [22]


Notifying Centrelink

Adjustment Outcome

A response is not required for cases where Centrelink has no current payment record, or no adjustment was requested.  For all other cases, Centrelink must be notified about the outcome of the adjustment.

The final part of the clearance form should be completed with details of the amount recovered.  If there is an outstanding balance, it must be clearly indicated whether DVA has initiated debt recovery, or if the case is referred back to Centrelink for their action.

Debt Reporting

As DVA undertakes debt recovery on behalf of Centrelink, the agency should be advised of the status of each debt at monthly* intervals.  This includes debt initiated by DVA following clearance adjustments as well as requests for ongoing deductions from Centrelink.  All debts recovered in the reporting period need to be recorded in the report even if the debt is $0 at the end of the reporting period, so that they can be clearly identified as fully recovered.

The debt reports should be sent to the Area Recovery Teams at Centrelink.  A listing of contacts for these Teams is available from the Centrelink Information folder in CLIK.

*System changes are being investigated to produce the scheduled DMRS report, “Outstanding Debts – other Department” monthly to facilitate this exchange of information.


Standard letters

Pensioner Notification

DVA is responsible for advising the pensioner of the outcome of the arrears adjustment.  Two new standard letters have been developed for notifying the pensioner of overpayment recovery following clearance processing.

Available on:

IS Standard Letters, Pay Admn, Recovery post-clearance debt grant.dot

IS Standard Letters, Pay Admn, Recovery post-clearance debt increase.dot

(See Attachments C and D)

The name and telephone number of the Centrelink contact is maintained in DMRS if the debtor wishes to discuss the recovery or seeks a review of the calculations.

For portion recovery, an automatic letter will be generated when the debt has been repaid advising the client of the date pension will be restored to the level of full entitlement.  If the debt is repaid in a lump sum, a letter should be sent to the client to acknowledge the payment once it has been processed.

DVA will need to notify Centrelink immediately if ongoing payments cease before the debt is fully recovered.  It is then Centrelink's responsibility to renegotiate repayment arrangements with the debtor.


Attachment A - Clearance Example

DEPARTMENT OF VETERANS' AFFAIRS

REQUEST FOR CENTRELINK  CLEARANCE

To be retained by Centrelink

Centrelink Clearance Office

DVA Reference No

Centrelink Fax No

DVA Assessment No

Centrelink Reference No

DVA Fax No (  )

PART A: (Completed by DVA)

1. APPLICANT'S DETAILS

Surname — Given Name(s)Date of Birth

Name of Client

Name of Partner

Maiden Name/AKA

Address

2. The client and/or partner will be or has/ve been granted/increased

type of entitlement

with effect from

Client  :

? SP

? AP

? ISS

? WWP

? OP

? DP

? PA

? CSHC

/

/

Rate p/f

$

$

$

$

$

$

$

Partner:

? SP

? AP

? ISS

? WWP

? OP

? DP

? PA

? CSHC

/

/

Rate p/f

$

$

$

$

$

$

$

KEY: SP = service pension; AP = age pension; ISS = income support supplement; WWP = war widow's /war widower's pension; OP = orphan's pension; DP = disability pension; PA = Pharmaceutical Allowance; CSHC = Commonwealth Senior's Health Card;

3. Complete if granted benefit has varied in rate throughout the period

Type

Old % rate

New % rate

Old $

New $

Date of effect

DP

KEY: DP = disability pension; DP & LIM = disability pension with limitation ie. the DP amount  is limited due to payment of other compensation;

the actual (net) amount of DP received is shown

4. Complete if client or partner has been granted WWP

fromto

Date of death

Bereavement Period

Please Note: WWP is treated as income for Social Security pensions such as age, disability support, wife and carer until 20 March 1995. From 20 March 1995 the TOTAL amount of Social Security pension is cancelled. Other benefits such as sole parent pension, job search allowance, new start allowance, sickness allowance and or special benefit are not payable from date of grant of WWP.

for Deputy Commissioner

Date

DVA Contact Officer:

Phone Number:


DEPARTMENT OF VETERANS' AFFAIRS

CENTRELINK  CLEARANCE

Centrelink Clearance Office

DVA Reference No

Centrelink Fax No

DVA Assessment No

Centrelink Reference No

DVA Fax No

Warning: The attached information is strictly confidential.  If you receive this fax and you are not the intended recipient, please contact the sender by telephone.  This information is covered by Section 1312B of the Social Security Act 1991 and is protected information.  If you further disclose, record, or otherwise use this information, you will be committing a criminal offence and are liable to criminal prosecution, attracting a penalty of 2 years jail, a fine of $12,000, or both.  The authority to seek this information is contained in Section 128 of the Veterans' Entitlements Act 1986.

PART B: (Completed by Centrelink)

CENTRELINK ADJUSTMENT

Surname — Given Name(s)Centrelink Reference No

Name of Client

Name of Partner

  • Pension or benefit from Centrelink will be cancelled/varied on the date indicated
  • Please recover the amount shown below – a recoverable debt under s. 1223(1) of the SSA
  • No current Centrelink payment record
  • Centrelink's current residential, income & asset details attached for War Widow/ers' Pension clearance
  • Not attached – reason _______________________________________________

1.Client

Cancelled / Varied

Rate p/f

Payment Type/s

Adjustment period

Adjustment amount

from

/

/

$

to

2.Partner

Cancelled / Varied

Rate p/f

Payment Type/s

Adjustment period

Adjustment amount

from

/

/

$

to

Delegate of the Secretary

Date

Centrelink Contact Officer:

Phone Number:

Area Office:

Fax Number:

Please ensure all clearances are signed, as we are unable to release any arrears based on an unsigned clearance, necessitating the return of the form for completion.

PART C: (Completed by DVA)

Attn Centrelink Contact Officer:

Adjustment amount of

$

for

was recovered on

/

/

  •    

outstanding balance of

$

is being recovered by DVA on behalf of Centrelink

  •    

outstanding balance of

$

is referred back to Centrelink

Adjustment amount of

$

for

was recovered on

/

/

  •    

outstanding balance of

$

is being recovered by DVA on behalf of Centrelink

  •    

outstanding balance of

$

is referred back to Centrelink

for Deputy Commissioner

Date

DVA Contact Officer:

Phone Number:


Attachment B - System  -  DMRS

How to ADD an overpayment for another Department

REMEMBER:  MUST BE IN “UPDATE” MODE   [lock]? [open lock]

Step 1

Click on the “[file]ADD Debts” Folder.

The signs – and + will appear.

Step 2

Click on the “+” sign.

This will open folders for adding a debt.

Step 3

Click on the “Type of Debt” arrow.

This will produce a drop down list.  Scroll down.

Click on “Overpayment”.

Step 4

Click in the “Total Amount of Debt” field.

Enter the total amount of the Debt.

“$” symbol should be used.

Step 5

Optional

Click in the “Agreed Recovery Date” field.

Enter the date recovery will commence from.

If this field is left blank, the business rule start date will be applied.

Step 6

Do not complete

“Lump sum Advance Details”.

Go to the “Debt Details” heading.

Step 7

Click on the “Method of Detection” arrow.

Click on appropriate “Method of Detection”.

Step 8

Click on  “No” for field “VEA Legislative Breach”

Click on “No” for field “Potentially Liable for Admin Penalty”

Click on “Yes” or “No” for field “SIU Case”

VEA does not apply to other Department Debts

Step 9

Optional

Enter “DVA Pos Number”.

Step 10

Optional

Enter relevant “Comments”.

No longer than 350 characters.

Step 11

Click on the “+” under the heading “Overpayment Type and Reason for Debt”.

Step 12

Click on the arrow under the field “Overpayment Type”.

Click on appropriate “overpayment type”:

  • Other Department DSS
  • Other Department ATO
  • Other Department DEET
  • Other Department DoD

Step 13

Click in the “amount” field.

Enter amount of overpayment for the debt type.

Step 14

Optional

Click on the arrow under the field “Reason”.

Click on appropriate “Reason”.

Step 15

Optional

Click on the arrow under the field “Event Date”.

Enter date.

Step 16

Optional

Click on the arrow under the field “Notification Date”.

Enter the date.

Step 17

Optional

UIN if someone other than the client should be contacted.

Step 18

Click on Agency Client Rego UIN.

Enter UIN (Unique Identification Number).

All known DSS agencies have been registered in VIEW.

For Changes and new offices contact XXXXX.

Step 19

Click on “Reference Number” field.

Enter Reference number.

Step 20

Optional

Click in the “Contact Surname” field.

Enter surname of the other agency contact officer.

Step 21

Optional

Click in the “Contact Forename” field.

Enter the first name of the other agency contact officer.

Step 22

Optional

Click in the “Telephone Area Code” field.

Enter the telephone area code.

Step 23

Optional

Click in the “Telephone number” field.

Enter the “telephone number”.


Attachment C – Recovery post-clearance debt: grant

Dear {courtesy title} {pensioner surname},

I am writing to you about your recent grant of {Service OR Disability} Pension.

{Service OR Disability} Pension Arrears

Your {Service OR Disability} Pension was granted with effect from {date of grant}.  The arrears of pension from this date, up to and including {end date} and amounting to ${arrears amount}, were withheld pending advice from Centrelink of a possible adjustment.

Commencement of Regular Payment

The regular payment of {Service OR Disability} Pension commenced on payday {first payday}.  This payment was for the pension period {start of pension period} to {end of pension period}.

Centrelink Adjustment

Paragraph for new grant of Service Pension:

Centrelink has now advised that for the period {start of adjustment period} to {end of adjustment period} you were paid ${adjustment amount} from that Department.  Having offset your arrears against this amount, a balance of ${overpayment amount} remains outstanding.  This means that your {Centrelink payment type} has been overpaid.

Paragraph for new grant of Disability Pension:

Centrelink has now advised that for the period {start of adjustment period} to {end of adjustment period} you were overpaid ${adjustment amount} from that Department.  Your (Centrelink pension type) was overpaid because the rate of that pension is affected retrospectively by your rate of Disability Pension.  Having offset your arrears against the overpaid amount, a balance of ${overpayment amount} remains outstanding.


Recovery of Overpayment

To recover this amount, ${recovery portion} will be deducted from your pension each payday, commencing on {1st payday for deductions}.  The final deduction will occur on {last payday for deductions} and will be for the balance of the overpayment equalling ${final deduction amount}

If you wish to repay the debt in one lump sum or have any questions about the deductions, please contact me on {telephone number}.  If you are calling from outside the metropolitan area, dial our FREECALL number shown at the bottom of this letter.  You will need to quote reference number {DVA File No} when you call.

Right of Review

The recovery of this overpayment is undertaken by DVA on behalf of Centrelink.

If you are not satisfied that the amount used to adjust your {Service OR Disability} Pension arrears represents an accurate calculation of the amount of {Centrelink payment type} you received from Centrelink, you may apply for a review of that calculation.   Please contact me to discuss your concerns and I can arrange for the appropriate Centrelink office to be in touch with you.

Yours sincerely


Attachment D – Recovery post-clearance debt: increase

Dear {courtesy title} {pensioner surname},

I am writing to you about your recent increase of Disability Pension.

Disability Pension Arrears

Your Disability Pension was increased with effect from {date of increase}.  The arrears of pension from this date, up to and including {end date} and amounting to ${arrears amount}, were withheld pending advice from Centrelink of a possible adjustment.

Adjustment to Regular Payment

The adjustment to your regular payment of Disability Pension commenced on payday {first payday}.  This payment was for the pension period {start of pension period} to {end of pension period}.

Centrelink Adjustment

Centrelink has now advised that for the period {start of adjustment period} to {end of adjustment period} you were overpaid ${adjustment amount} from that Department.  Your (Centrelink pension type) was overpaid because the rate of that pension is affected retrospectively by the increase in your rate of Disability Pension.  Having offset your arrears against the overpaid amount, a balance of ${overpayment amount} remains outstanding.

Recovery of Overpayment

To recover this amount, ${recovery portion} will be deducted from your pension each payday, commencing on {1st payday for deductions}.  The final deduction will occur on {last payday for deductions} and will be for the balance of the overpayment equalling ${final deduction amount}

If you wish to repay the debt in one lump sum or have any questions about the deductions, please contact me on {telephone number}.  If you are calling from outside the metropolitan area, dial our FREECALL number shown at the bottom of this letter.  You will need to quote reference number {DVA File No} when you call.


Right of Review

The recovery of this overpayment is undertaken by DVA on behalf of Centrelink.

If you are not satisfied that the amount used to adjust your Disability Pension arrears represents an accurate calculation of the amount of {Centrelink payment type} you received from Centrelink, you may apply for a review of that calculation.   Please contact me to discuss your concerns and I can arrange for the appropriate Centrelink office to be in touch with you.

Yours sincerely

C48/2002 ELIGIBILITY CRITERIA FOR OFFICIAL COMMEMORATION

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DATE OF ISSUE:  4 NOVEMBER 2002

ELIGIBILITY CRITERIA FOR OFFICIAL COMMEMORATION

Purpose

The purpose of this Departmental Instruction is to provide information about the eligibility criteria for official commemoration that is carried out by the Office of the Australian War Graves (OAWG).

Background

The War Cabinet on 10 March 1922 extended official commemoration to war caused deaths following discharge. In 1942 official commemoration was extended for World War II veterans and in 1991 for post World War II veterans. In 1960 eligibility for official commemoration was extended to deceased Victoria Cross recipients.

Eligibility Criteria

For the purposes of commemoration 'war-caused' deaths covers deaths related to the following types of service: eligible war service, operational service, warlike service or non-warlike service (including peacekeeping service or hazardous service. The following are eligible for official commemoration:

  • Deceased 'Victoria Cross' recipients regardless of cause of death.
  • Deceased veterans whose deaths are accepted by a delegate of the Repatriation Commission as being war caused; or
  • Deceased veterans with eligible war service, operational service, warlike service or non-warlike service (including peacekeeping service):

?were ex-prisoners of war;

?who were in receipt of a special rate (T&PI or blinded) disability pension; or

?who were in receipt of an extreme disablement adjustment; or

?who were multiple amputees of a kind described in any of items 1 to 6 of the Table in s.27(1)..

Defence Service

Deceased members of the ADF whose only VEA service is defence service after 7 December 1972 do not qualify for official commemoration.

Claims for official commemoration

Claims for official commemoration have no lodgement time limit. Normally, no claim is required since once it is determined that a veteran meets the eligibility criteria for official commemoration, OAWG is advised.

A relative or interested citizen may make a claim for official commemoration of a deceased veteran. A delegate of the Repatriation Commission will decide whether the deceased veteran is eligible for official commemoration - ie whether the veteran's' death would have been accepted as war caused under the VEA.

Status of official commemoration decisions relative to the VEA

Official commemoration eligibility decisions follow-on from decisions made under the VEA. They are not in themselves decisions under the VEA. Appeal rights under the VEA do not apply.

Delegation to make official commemoration decisions

A determination that a deceased veteran is eligible for official commemoration is a determination under generic financial delegations.  There is no legislation that gives a specific delegation to make the decision but it is a proposal to spend public money as outlined in Chief Executive Instruction 5.1.

Consequently, a decision that a deceased veteran is eligible for official commemoration is to be made by a Commission delegate at the APS5 level or above. (See

http://sharepoint/money/rules/reg_10/Pages/GenericFinancialDelegations.aspx [24]

for generic financial delegations.) In exercising a delegation when making an Official commemoration eligibility decision staff should indicate their local title and/or classification.

Advice to OAWG

State Office Bereavement units and decision-makers:

  • advise OAWG within 2 weeks of determination of eligibility;
  • check SM prefixes to ensure veteran has operational service;
  • check for highest rank or military title held by the veteran since an incorrect rank or title causes embarrassment to next of kin;
  • avoid abbreviations when listing unit; and
  • include name and contact details.

Review rights

The Repatriation Commission has agreed that persons dissatisfied with an eligibility decision have access to internal review of that decision. External review may be available under the Judiciary Act 1903.

Contact

Contact officer for enquires relating to this topic is Anthony Staunton, Policy, Eligibility and Research on 02 6289 6640.

MARK JOHNSON

BRANCH HEAD

DISABILITY COMPENSATION

C47/2002 DETERMINATIONS OF SPECIAL MISSION - Employees of Cable and Wireless/Telcom

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DATE OF ISSUE:  25 OCTOBER 2002

DETERMINATIONS OF SPECIAL MISSION - Employees of Cable and Wireless/Telcom

Purpose

The purpose of this instruction is:

  1. to clarify that only the Repatriation Commission (the Commission) has the legal authority to make a decision on what constitutes a “special mission” as defined in section 5C of the Veterans' Entitlements Act 1986 (VEA);
  2. to advise on the Commission decision that employees of Cable and Wireless/Telcom during World War II were not undertaking a “special mission”; and
  3. to advise on the treatment of cases where benefits have already been granted to employees of Cable and Wireless/Telcom.

Special mission – definition

Section 5C of the VEA defines a special mission as:

“special mission means a mission that, in the opinion of the Commission, was of special assistance to the Commonwealth in the prosecution of a war to which this Act applies.”

Delegation

The power of the Commission to form an opinion on what constitutes a special mission is NOT delegated.  Each case or group must be individually submitted to the Commission for a decision.

All cases where a claim relating to a special mission is received MUST be referred in the first instance to the Policy Eligibility and Research Section, Disability Compensation Branch in National Office.

Background of Cable and wireless/
Telcom

Cable and Wireless is a civilian British organisation.  During World War II it had a contract to supply communications, through radio and cable networks, to the British forces.  The Telcom organisation was formed in 1944 to enable employees of Cable and Wireless to accompany members of the armed services to locations outside of Britain. These Telcom personnel remained civilians at all times and had no military status although they did wear a uniform and were given “officer rank” in case of capture by the enemy.

Commission decision – employees of Cable & Wireless/
Telcom

The Commission has considered the status of this group in relation to the requirements of the VEA.  The Commission has determined that employees of Cable and Wireless/Telcom were NOT undertaking a “special mission” as defined in the VEA.

Pre-existing cases

There are a number of cases where benefits have been granted under the “special mission” provisions, to employees of Cable & Wireless/Telcom.  The Commission has decided to grandfather these cases although they were initially granted without reference to the Commission.

Care must be taken that no further benefits be granted to these individuals on the basis of the previous (invalid) special mission decision.

Mark Johnson

Branch Head

Disability Compensation

25 October 2002

C46/2002 Assessment of Income Streams Paid from Self Managed Super Funds (SMSFs) or Small APRA Funds (SAFs)

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DATE OF ISSUE:  21 OCTOBER 2002

Assessment of Income Streams Paid from Self Managed Super Funds (SMSFs) or Small APRA Funds (SAFs)

Overview

Purpose

The purpose of this departmental instruction is to provide procedural information on how to assess income streams paid from Self Managed Super Funds (SMSFs) or Small Australian Prudential Regulatory Authority (APRA) Funds (SAFs).

Background

An increasing number of pensioners are setting up their own “do-it-yourself” self managed superannuation fund and paying themselves income streams.

DI C [27]30/2002 – Income Stream Changes, dealt briefly with the requirement to request Actuarial Certificates for asset-test exempt income streams paid from SMSFs and SAFs.

This instruction provides more detailed procedural information on assessing income streams paid from SMSFs and SAFs.

SMSFs and SMFs

“Do-it-yourself” or self managed superannuation funds fall into two categories:

  •   SMSFs (Self Managed Superannuation Funds), regulated by the Australian Taxation Office (ATO), and

  •   SAFs (Small Australian Prudential Regulatory Authority – APRA - Funds) or Small APRA Funds, regulated by APRA as they do not meet the ATO criteria.


What are Self Managed Superannuation Funds (SMSFs)

and Small APRA Funds (SAFs)

What is a SMSF ?

A Self Managed Superannuation Fund (SMSF) is a superannuation fund with less than 5 members, where:

  • all members are trustees (or directors of a corporate trustee) and no other persons are trustees (or directors of a corporate trustee); and
  • no member is an employee of another member (unless the members concerned are relatives); and
  • trustees do not receive remuneration for their services.

A single member fund may have one additional trustee (or director of a corporate trustee) provided the member is not an employee of the trustee (or employee of the director of the corporate trustee).

To be classified as a SMSF, the fund must meet all of these conditions as specified in the Superannuation Industry (Supervision) Act 1993.

A pensioner receiving the benefits from a SMSF will usually also be a trustee of the fund (however, reversionary beneficiaries of members need not be members of the fund).

To set up a SMSF, a person must:

  •       buy an off-the-shelf trust deed from a supplier, accountant or solicitor or have a trust deed drawn up by a legal firm;
  •       complete an 'Application to Register for the New Tax System Superannuation Entity' form to apply for a tax file number, Australian business number, GST registration, and elect for the trust to be regulated as a superannuation fund investment;
  •       open the fund's bank account and purchase investments in the name of the trustees on behalf of the fund; and
  •       keep the assets of the fund separate from any personal assets.

SMSFs are supervised by the Australian Taxation Office (ATO).

What is a
SAF ?

A SAF, is a superannuation fund with less than 5 members which:

  •       does not meet the definition of a SMSF; and
  •       has a corporate trustee that is approved by APRA.

SAFs are supervised by the APRA.


Documents Required to assess

Income Streams paid from SMSFs or SAFs

Documents required

Self Managed Superannuation Funds (SMSFs) and Small APRA Funds (SAFs) may offer income streams if the trust deed allows it.

If a SMSF or SAF offers an asset-test exempt income stream, the income stream must:

  • meet all requirements of sections 5JA or 5JB of the VEA; and
  • satisfy all relevant prudential requirements of the Superannuation Industry (Supervision) Act 1993.


If a pensioner claims they are receiving an income stream from their SMSF or SAF, they must supply the following documentation to enable DVA to be able to classify the income stream.  The checklist contained in Attachment B contains a list of the relevant characteristics which should be present for the income stream to be accepted as an asset-test exempt income stream and the documentation described below (and checklisted in Attachment A) should be examined to ensure that all these characteristics are present:

  • the trust deed under which the income stream is paid; and
  • any contract between the pensioner and the superannuation fund for the income stream; and
  • any other document (such as minutes of a trustees meeting) that sets out the conditions under which the income stream is paid; and
  • if the SMSF or SAF has purchased an annuity to directly fund the income stream, a copy of the contract for the fund providing the annuity; and
  • an income stream schedule for Veterans' Affairs purposes (form D0563), which provides the current income stream details, with a declaration from the trustee as to whether the income stream meets all the requirements of section 5JA or 5JB of the VEA; and
  • if the pensioner is claiming the income stream is asset-test exempt, a current Actuarial Certificate prepared in accordance with the Institute of Actuaries (Australia) Guidance Note 465 (GN 465), stating that the SMSF or SAF has a high probability of meeting the income stream payments specified in the contract, trust deed or governing rules.

The pensioner will not have to provide a current actuarial certificate if the income stream:

  •       is an allocated income stream; or
  •       has been purchased by the fund from an established life office to back its payment of an asset-test exempt income stream and the annuity payments are paid directly into the SMSF or SAF.


Reason why additional documents are required to assess

Income Streams paid from SMSFs and SAFs

Why are additional documents required ?

SMSFs and SAFs are financial arrangements where the pensioner (who is often the trustee) controls the investment decisions.

The pensioner decides where their money is invested and what type of income stream they want to receive from their fund.

As these financial decisions are not made at arm's length, the income streams paid from SMSFs and SAFs have a higher likelihood of:

  •       failing to make payments in accordance with the income stream contract, trust deed or governing rules;
  •       not returning the purchase price over the specified term;
  •       being used for estate planning to maximise income support payments (ie. deprivation may occur if the income stream payments do not provide adequate financial consideration for the purchase price paid to acquire the income stream).

Given these risks DVA must obtain additional documentation to assess income streams paid from SMSFs and SAFs.

This additional documentation will enable staff to:

  •       determine whether the income stream meets all of the requirements for asset-test exemption as specified in sections 5JA or 5JB of the VEA (in particular that a current actuarial certificate exists and that the purchase price has been wholly converted to income);

  •       check for deprivation (ie. that the income stream payments are appropriate for the purchase price paid to acquire the income stream).

The beneficial rules for assets test exemption were introduced as an incentive to encourage pensioners to purchase an income stream that could be expected to last over their retirement.

It would be unreasonable to expect taxpayers to support the use of some of the purchase price for purposes other than paying the retirement income stream (ie. intentionally leaving a lump sum to the pensioner's estate).


Reason why additional documents are not required to assess

Income Streams paid from Institutional Funds

Additional documents not required

Unlike SMSFs or SAFs, institutional funds involve financial arrangements where the investment decisions are not controlled by the pensioner.

Institutional funds (eg. life offices, public offer superannuation funds and public sector superannuation schemes) decide where funds are invested and the terms of the income streams they offer.

As these financial decisions are made at arm's length by institutions subject to prudential standards and commercial incentives, it is generally accepted that institutional funds attempt to provide the best possible returns to the investor in the market place.

APRA imposes strict reserving standards on institutional funds offering income streams, which serve to ensure that income stream payments specified in the contract, trust deed or governing rules, will be met.

Given that income streams paid from institutional funds are determined by market forces under strict regulations, they are not required to provide DVA with additional documentation to assess their income streams, other than:

  • an income stream schedule for Veterans' Affairs purposes (form D0563), which provides the current income stream details, with a declaration from the trustee as to whether the income stream meets all the requirements of section 5JA or 5JB of the VEA.


Deprivation and Asset-Test Exempt Income Streams

paid from SMSFs and SAFs

Deprivation provisions

All asset-test exempt income streams paid from a SMSF or SAF must be checked for deprivation because the purchase price is an amount nominated by the pensioner from a fund controlled by the pensioner.

The nominated purchase price can be either:

  •       part of the SMSF or SAF account balance (in which case that amount must be segregated by the trustee from any other remaining funds not used to purchase the income stream); or

  •       all of the SMSF or SAF account balance (in which case the total beneficial interest in the fund is used to purchase the income stream).

Deprivation can occur if the purchase price of an income stream is greater than the present value of the total payments specified in the income streams contract, trust deed or governing rules.

The calculation of present value is complex and must only be made by the Australian Government Actuary (AGA) following a referral by the Manager of the DVA Investment Database Unit in Sydney.

The following example demonstrates the application of the deprivation provisions in for a very simple case:

For example: A pensioner nominates and transfers $100,000 to purchase an income stream for a fixed term of 10 years.  Payments are fixed at $6,000 per year.  All payments to be returned over the term of the contract total $60,000.

The present value of these total payments (as calculated by an actuary) is $50,000.

As the purchase price of $100,000 is greater than the present value of  $50,000, the pensioner has deprived themselves of $50,000 because they did not receive adequate financial consideration in return for the purchase price.

The deprived amount of $50,000 must be recorded as a deprived asset.  The commencement date of the income stream is also the deprivation date.  Assuming the pensioner is entitled to the allowable $10,000 gifting limit, a deprived asset of $40,000 will be added to their financial assets and deemed for a period of 5 years from the deprivation date.

The purchase price of the income stream remains recorded as $100,000 on the PIPS PC income streams screen.


Action required to Identify, Classify and Check for Deprivation

for Income Streams paid from SMSFs and SAFs

Identification

Staff must identify any income streams paid from a SMSF or SAF, to ensure that the appropriate documentation is requested.

The most effective way to differentiate between income streams paid from institutional funds and those paid from SMSFs and SAFs is to ensure an income stream schedule for Veteran's Affairs purposes (form D0563) is requested.  Two tick boxes on form D0563 indicate whether the income stream is paid from a SMSF or SAF.

Another way to identify income streams paid from a SMSF or SAF is by the provider name, as it will often contain the surname of the pensioner (eg. The Robinson Family Superannuation Fund) or be linked to a private company or corporate trustee (eg. suffix is Pty Ltd).

If there is any doubt, staff must contact the pensioner or financial representative to clarify if the income stream is being paid from a SMSF or SAF.

Requesting  documents

After identifying that an income stream is being paid from a SMSF or SAF, processing staff must:

  •       obtain all of the appropriate documentation using the checklist at Attachment A; and
  •       classify the income stream as either asset-test exempt, asset-tested long term or asset-tested short term.

Where the pensioner claims that they receive an asset-test exempt income stream, staff must examine all of the appropriate documentation to:

  •       check if the income stream meets all of the requirements specified in section 5JA or 5JB of the VEA using the checklist at Attachment B; and
  •       check if the Actuarial Certificate prepared in accordance with the Institute of Actuaries (Australia) Guidance Note 465 (GN 465) is current.  See Attachment C for additional information.

Checking deprivation

Having classified the income stream, the staff member processing the case must contact Eddie Bolanac (Manager, Investment Database Unit, Sydney) on 02 9213 7875 to discuss the details of the case to see if investigation of the deprivation issue is warranted.

If appropriate, copies of the relevant documentation will need to be sent to the DVA Investment Database Unit in Sydney for vetting to examine if a referral to the Australian Government Actuary (AGA) is required to determine if deprivation has occurred.


Checking for deprivation of Asset-Test Exempt Income Streams

paid from SMSFs or SAFs

Checking for deprivation

Provided all the appropriate documentation is obtained, staff can classify the income stream and complete the initial data collection of the income stream details for the pension assessment.

However, as the present value of the income stream is unknown at the classification stage, staff will not be able to determine whether or not the pensioner has made a deprivation.

To check for deprivation, the staff member processing the case must:

  •       contact Eddie Bolanac (Manager, Investment Database Unit, Sydney) on 02 9213 7875 to discuss the details of the case;

and, if appropriate:

  •       refer copies of all of the relevant documentation to the DVA Investment Database Unit in Sydney for examination.

As there are significant costs involved in obtaining actuarial valuations (approximately $500 to $600 per case), the Investment Database Unit will act as a vetting and referral centre for these cases.

If it is likely that the deprivation provisions may apply, the Investment Database Unit will refer the case to the Australian Government Actuary (AGA) to obtain actuarial valuations to determine whether:

  •       deprivation has occurred (ie. if the purchase price is greater than the present value of the total payments to be made over the term of the income stream); and

  •       the purchase price has been wholly converted into income stream payments.

The outcome of any AGA valuation will be referred back to the relevant State Office to record details of the deprived amount in the pension assessment, if applicable.

It is important that staff obtain all of the appropriate documentation in these cases, as the information will be used by:

  •       processing staff to classify the income stream;
  •       the Investment Database Unit to determine if a referral for actuarial valuation is warranted; and
  •       the Australian Government Actuary to perform actuarial valuations for the present value and return of purchase price.


What to do if an Income Stream paid from a SMSF and SAF

ceases or reduces payments  or  is in financial difficulty

Financial difficulty

Where an income stream paid from a SMSF or SAF is in financial difficulty, it may either:

  •       cease making payments;
  •       reduce the level of payments; or
  •       continue payments, but may have trouble obtaining future actuarial certification because some assets are not performing.

These cases are complex and will require detailed examination of the circumstances of the financial difficulty.

Pending the outcome of the examination, the income stream may either:

  •       lose its asset-test exempt status and be re-classified as an assets tested long term or short term income stream; or

  •       no longer satisfy the definition of an income stream and be re-classified as a superannuation fund investment.

Detailed procedures are available for examining these cases and will be issued under a separate departmental instruction.

Enquiries on Income Streams paid from SMSFs and SAFs

Contact

If you have any enquires about how to assess income streams paid from SMSFs or SAFs please contact Eddie Bolanac (Manager, Investment Database Unit, Sydney) on 02 9213 7875 to discuss the details of your case.

Roger Winzenberg

Branch Head

Income Support

21 October 2002


Attachment A

Checklist for documents required

to assess Income Streams paid from SMSFs or SAFs

Additional Documents - Checklist

If a pensioner is receiving an income stream from a Self Managed Super Fund (SMSF) or Small APRA Fund (SAF), the following documents must be requested to classify the income stream and determine whether the income stream meets all of the requirements of section 5JA or 5JB of the VEA:

  • the trust deed under which the income stream is paid.

Yes      No

  • any contract between the pensioner and the superannuation fund for the income stream.

Yes      No

  • any other document (such as minutes of a trustees meeting) that sets out the conditions under which the income stream is paid.

Yes      No

  • an income stream schedule for Veterans' Affairs purposes (form D0563), which provides the current income stream details, with a declaration from the trustee as to whether the income stream meets all the requirements of section 5JA or 5JB of the VEA.

Yes      No

  • a current Actuarial Certificate prepared in accordance with the Institute of Actuaries (Australia) Guidance Note 465 (GN 465), stating that the SMSF or SAF has a high probability of meeting the income stream payments specified in the contract, trust deed or governing rules.

Yes      No

  • Exception:  the pensioner or trustee will not have to provide

          a current actuarial certificate, if the income

          stream:

  • is an allocated income stream; or

  • has been purchased by the fund from an established life office to back its payment of an asset-test exempt income stream and the annuity payments are paid directly into the SMSF or SAF.

  • If the SMSF or SAF has purchased an annuity to directly fund the income stream, then a copy of the contract for the fund providing the annuity must be provided.

Yes      No


Attachment B

Checklist for classifying

Income Streams paid from SMSFs or SAFs

Asset-Test Exempt Income Stream - Checklist

Asset-test exempt income streams must meet all of the requirements for asset-test exemption specified in VEA sections 5JA (for lifetime income streams) or 5JB (for life expectancy or 15 year minimum income streams):

Is the income stream:

  • paid for life ?   OR

Yes      No

  • a term equal to the person's life expectancy or life expectancy rounded up to the next whole number, provided the person has attained pension age ?              OR

Yes      No

  • a term of 15 years or more, provided the person has attained pension age, and the person's life expectancy is 15 years or more, and the period is not more than the person's life expectancy ?

Yes      No

Is the Actuarial Certificate:

  • a current Actuarial Certificate prepared in accordance with the Institute of Actuaries (Australia) (IAA) Guidance Note (GN) 465, stating that the SMSF or SAF has a high probability of meeting the income stream payments specified in the contract, trust deed or governing rules ?

Yes      No

Does the income stream contract, trust deed or governing rules specify  all of the requirements listed below:

  • the level of pension payments in the first year (allowing for indexation increases and commutations);

Yes      No

  • that pension payments are made at least annually and cannot be less than the previous year's payments;

Yes      No

  • that indexation is capped at 5% fixed or CPI + 1%;

Yes      No

  • the purchase price is wholly converted into income;

Yes      No

  • there is no residual capital value;

Yes      No

  • that commutations are limited to within the first 6 months of commencement of a non-commutation funded income stream, or to directly purchase another asset-test exempt income stream, or to pay a reversionary beneficiary or estate, or to pay a superannuation contribution surcharge, or to pay a hardship amount under VEA 5JA(7);

Yes      No

  • the income stream cannot be transferred to another person apart from the reversionary beneficiary or estate upon death;

Yes      No

  • the income stream cannot be borrowed against;

Yes      No

  • that reversionary benefits cannot be greater than the benefit that was payable immediately before the reversion;

Yes      No

  • that commuted benefits cannot be greater than the benefit that was payable immediately before the commutation;

Yes      No

If the income stream fails to meet any one on these requirements it is not section 5JA or 5JB compliant and is not an asset-test exempt income stream, and must then classified as either asset-tested long term or asset-tested short term.

Continued on next page


Attachment B

Checklist for classifying

Income Streams paid from SMSFs or SAFs

Asset-Tested Long Term Income Stream - Checklist

If an income streams fails to meet any one of the requirements for asset-test exemption specified in VEA section 5JA (for lifetime income streams) or section 5JB (for life expectancy or 15 year minimum income streams), it will be classified as an:

Asset-tested Long Term income stream, if it has a term:

  • greater than 5 years;

Yes      No

                 OR

  • 5 years or less which is equal to or greater than the person's life expectancy.

Yes      No

Asset-Tested Short Term Income Stream - Checklist

If an income streams fails to meet the requirements for an asset-test exempt income stream and an asset-tested long term income stream, then it will be classified as an:

Asset-tested Short Term income stream, if it has a term of:

  • 5 years which is less than or not equal to the person's life expectancy.

Yes      No


Attachment C

Actuarial Certification – Background Summary

Superannuation Industry (Supervision) Modification Declaration 23

On 12 January 1999, the Australian Prudential Regulation Authority (APRA) issued a modification to the Superannuation Industry (Supervision) Act 1993.  The modification is known as Modification Declaration 23, which introduced tighter prudential requirements for superannuation funds paying pensions.

All superannuation funds paying pensions (other than allocated pensions or those backed wholly by life company annuities) are now required to produce an annual actuarial certificate.

How did this modification affect DVAs assessment of income streams?

On 20 September 2001, sections 5JA and 5JB of the VEA were amended to require all

asset-test exempt income streams paid from SMSFs and SAFs to provide an annual actuarial certificate to verify that the fund has sufficient reserves to meet the income stream payments.

If a current actuarial certificate is not provided, DVA will not grant assets test exemption to the income stream.

What sort of actuarial certificate is required?

In January 2001, the Institute of Actuaries Australia (IAA) released an actuarial Guidance Note (GN) 465 to provide guidance to actuaries drawing up actuarial certificates under the provisions of the Superannuation Industry Supervision Modification Declaration 23.

From 2 April 2001, all actuarial certificates must be prepared in accordance with GN 465.

Under GN 465, SMSFs and SAFs which provide asset-test exempt income streams must have asset backing sufficient to ensure that there is a 'high probability' that the fund will be able make the income stream payments specified in the contract, trust deed or governing rules.

What action must DVA processing staff take in relation to actuarial certification ?

For asset-test exempt income streams paid from a SMSF or SAF, DVA staff must:

  •       obtain a current Actuarial Certificate prepared in accordance with the Institute of Actuaries (Australia) (IAA) Guidance Note (GN) 465 as a pre-requisite to granting assets test exemption status under sections 5JA or 5JB of the VEA; and

  •       request a new Actuarial Certificate every year on expiry of the old Actuarial Certificate.

A review must be set on VIEW using review type 'Super Fund Certification' to ensure a new Actuarial Certificate is requested every year.

Once an Actuarial certificate has expired, a 6 month period of grace can be applied from the expiry date to allow the pensioner to obtain a new Actuarial Certificate prepared under GN 465.

If upon expiry of a 6 month period of grace, the pensioner has not supplied a new Actuarial Certificate prepared under GN 465, the income stream will lose its asset-test exemption and be re-classified as an asset-tested long term income stream.

C45/2002 Budget 2002 Initiative to Index Ceiling Rate Income Support Supplement and Service Pension

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DATE OF ISSUE:  19 SEPTEMBER 2002

Budget 2002 Initiative to Index Ceiling Rate Income Support Supplement and Service Pension

Overview

Purpose

This instruction provides information relevant to the Budget 2002 initiative that will:

  • Allow backdating of Income Support Supplement (ISS) in certain circumstances;
  • Align rules for ISS recipients who have a partner who is not in receipt of an income support payment, with the rules applicable to other income support pension recipients.  That is, this group will be assessed under partner assessment rules; and
  • Index the ceiling rate ISS and service pension (SP).

Target Population

There are almost 81,000 who will benefit from the indexation of ISS/SP.  The following state by state breakdown gives approximate numbers of war widow(er)s affected:

New South Wales — 29,000

Victoria — 20,000

Queensland — 16,500

South Australia — 7,000

Western Australia — 5,500

Tasmania — 3,000

No existing pensioners have been identified that will be effected by changes:

  • to backdating of ISS claims rules; and
  • to family assessment rules.

The rules will however apply to cases arising on or after 20 September 2002.

Contact Officers

Kirrily Williams, Income Support Policy:  (02) 6289 6525

Oona O'Beirne, Income Support Policy:    (02) 9213 7771

Peter Feinler, New Systems Delivery:        (08) 8290 0441

Authorised by

Roger Winzenberg

Branch Head

Income Support


Legislative Amendments

The Act

The changes are contained in the Veterans' Affairs Legislation Amendment (2002 Budget Measures) Act 2002 No. 72 of 2002.  The Act received Royal Assent on 6 September 2002.

Legislative Amendments

There are 5 new VEA sections/subsections added to the VEA as a result of the Veterans' Affairs Legislation Amendment (2002 Budget Measures) Act 2002.

New VEA references

Explanation

1

ss45C(3)

Allows ISS claim to be backdated by reference to new subsection 45R(2)

2

ss45R(2)

Allows claim to take effect on the WWP pension receipt date if the person was in receipt of a social security payment immediately prior to WWP pension receipt date and the social security payment is no longer payable.

3

s59A

Provides the indexation of the ceiling rate of ISS, in line with the percentage increase in maximum single rate SP.

4

s59LA

Provides the formula for indexation adjustment to the ceiling rate.

5

Sch6-A4

Adds that the ceiling rate is indexed

6-monthly

Repealed sections

SCH6-B2 has been repealed.  SCH6-B2 permitted an ISS recipient who is partnered (partner receiving neither pension nor benefit) to be treated as not being a member of a couple under Table B of SCH6-B1.

Commencement Date

The Act will come into effect from 20 September 2002, with the first pension payday to include the indexation adjustment increase being 3 October 2002.


Backdating ISS

Change

These changes will enable a claim for ISS to be backdated for eligible war widow(er)s who were receiving a social security payment that is cancelled when the person starts to receive a WWP.

The claim will be backdated to the date of grant of WWP.  This will enable the eligible person to receive the maximum amount of income support available to them (new VEA subsections 45C(3) and 45R(2) refer).

20 March 1995

ISS commenced to be payable on 20 March 1995.  That means that backdating of grant of ISS to a date prior to that date is not possible.  Grants of WWP that are backdated to a date prior to 20 September 2002 should result in grant of ISS from the later of:

  • the date of grant of WWP; or
  • 20 March 1995.

If the person was receiving a social security pension during the period from date of grant of the WWP and 20 March 1995, the social security pension should be reduced to the ceiling rate up to 19 March 1995.

Background

Prior to 20 September 2002 a person who was receiving certain social security payments and who is subsequently granted a WWP could be disadvantaged in relation to the payment of income support.

The problem arose as a result of multiple exclusion clauses that prevent:

  • a war widow(er) from receiving a social security benefit or allowance; and
  • a war widow(er) who is eligible for ISS from receiving a social security pension.

Although a claim for WWP under the VEA is also a claim for ISS, the ISS could only be payable from the date of lodgement of the claim.  This differs from the 3 months backdating rule applicable to the WWP grant.

With the automatic cancellation of social security pension it was possible for a gap between the cancellation of that payment and the commencement date of ISS.

e

Multiple exclusion clauses

The multiple exclusion clauses that prevent war widow(er)s from receiving a certain payment referred to above apply to the following social security payments:

  • age pension;
  • disability support pension;
  • wife pension;
  • carer payment;
  • bereavement allowance;
  • widow allowance;
  • parenting payment;
  • newstart allowance;
  • mature age allowance;
  • mature age partner allowance;
  • sickness allowances;
  • special benefit;
  • partner allowance; and
  • special needs pension.


Changes to Family Situation Assessment Rules

Changes

A person who is a member of a couple and whose partner is not receiving a pension or benefit under the VEA or the SSA will have their pension rate assessed as a member of a couple, rather than a single person.

This change corrects the anomaly between ISS recipients and other income support payment recipients (Repeal of Sch6-B2 VEA refers).

Background

A person who is a member of a couple and whose partner is not receiving a service pension or a social security payment, is classified as a 'member of a couple' for pension rate assessment purposes.

Prior to 20 September 2002 the same rule did not apply to ISS paid to a person who has a partner who is not receiving a service pension or social security payment.


Indexation of Ceiling Rate ISS and SP

Ceiling Rate

The ceiling rate was set at $120.10 on 1 November 1986 to limit the amount of pension payable to people receiving WWP.  Since then one increase of 4% has been applied on 1 July 2000 to compensate for the introduction of the 'New Tax System', bringing the rate to $124.90 per fortnight.

Indexation

From 20 September 2002, the ceiling rate ISS/SP will be indexed every March and September in line with percentage increases in the maximum rate service pension.  The first indexation adjustment brings the ceiling to $127.20 per fortnight.

The indexation rate that will be applied to ceiling rate ISS and SP from September 2002 will be equal to the percentage increase to maximum basic rate of service pension following the application of the CPI and 25% male total average weekly earnings rule.

Exclusions

The following groups are not directly affected by the indexation of the ceiling rate:

  • ISS and SP recipients who are on a reduced rate of payment already benefit from indexation.  Therefore they are unaffected by the Budget initiative.

  • ISS and SP recipients who have been continuously in receipt of a higher ceiling rate income support pension since 1 November 1986 will remain on their individual ceiling rate until the general ceiling rate indexation increases are equal to the person's individual ceiling rate.

  • Recipients of a higher ceiling rate of ISS due to application of the compensation reduced Part II or Part IV pension rule.

  • Recipients of frozen rate social security pensions will not benefit from the indexation unless they transfer to the ISS.

How the indexation will work

The calculation for the new indexed ceiling rate is based on the single SP Maximum Basic Rate (ie excludes SP allowances and pension supplement but factors in MTAWE rule).

Steps

Action

Formula

1

Determine previous annual single MBR (less pension supplement)

$405.80 ?14 x 364 = $10,550.80 pa

2

Determine current annual single MBR (less pension supplement)

$413.10 ?14 X 364 = $10,740.60

3

Calculate Pension MBR factor (Step 2 ? Step 1)

$10,740.60 ? $10,550.80 = 1.0179891

(worked out to 3 decimal places: 1.018)

4

Determine previous annual rate of ISS/SP

$3,247.40 (pre 20 September 2002)

5

Apply the formula for indexation adjustment to ISS/SP (Step 4 x Step 3)

$3,247.40 x 1.018 = $3,305.85pa rounded to nearest multiple of $2.60 pa

= $3,305.90

6

Calculate daily & fortnightly amounts (s58A refers)

$3,305.90 ? 364 = 9.083 x 14 =$127.16

rounded = $127.20


Impact of Indexation on Rates of ISS/SP

Overview

From 20 September 2002 those war widow(er)s who receive $124.90 per fortnight ISS/SP will receive an increase in that pension to $127.20 per fortnight.  On 3 October 2002 the pension increase will relate to eleven days of the pay period.  The first full pension increase will occur on payday 17 October 2002.

Following that, the ceiling rate will be indexed twice yearly on 20 March and 20 September.

The impact of the indexation on groups who are not in receipt of a ceiling rate ISS/SP are set out below.

ISS/SP recipients receiving above the ceiling rate

Immediately prior to 20 September 2002, there were 340 war widow(er)s who were receiving a ceiling rate above $124.90.  Four of these war widow(er)s have a ceiling rate greater than $124.90 but less than $127.20 per fortnight.  This group will have their payments increased to the ceiling rate.

There are two groups within the remaining 340 war widow(er)s to whom indexation will impact differently.

Above ceiling rate – Group 1

Group 1 consists of war widow(er)s in continuous receipt of income support pension and a WWP prior to 1 November 1986 (Sch6-A5 to Sch6-A5A of the VEA refers).

The higher ceiling rate applicable to this group will continue to apply until their individual rate is equal to the indexed ceiling rate.  At that point this group will start to benefit from indexation unless they are on a lower rate of income support because of the level of their income or assets.

Above ceiling rate – Group 2

Group 2 are receiving a higher rate of ISS due to a compensation reduced WWP (Sch6-A6 to Sch6-A9 of the VEA refers).

War widow(er)s who receive a reduced rate of WWP due to compensation from another source in respect of their veteran partner's death, have an adjusted ceiling rate applied to their ISS.

The difference between the full WWP rate and the reduced rate actually received is added to the general ceiling rate ($124.90).

It should be noted that until 20 September 2002, the adjusted ceiling rate applicable to this group could vary any time the rate of WWP payable changes.  This may occur due to:

  • indexation of WWP; or
  • changes to the rate of the dual compensation received that in turn varies the rate of the Australian WWP.

Commencing 20 September 2002, the indexation of ISS adds another variable that will alter the ceiling rate applicable to this group.

It should be noted that if the reduction to Australian WWP is due to periodic payments of compensation/overseas WWP as opposed to lump sum compensation, the rate of ISS is often payable at a rate lower than the individual's ceiling rate.  This is because of the impact of the income test.

In the course of implementation of the ISS/SP indexation project a group of compensation reduced WWP recipients was identified who appear to have an incorrect ceiling rate.  Further detail relating to the corrective action necessary on these cases is set out at attachment A.

ISS/SP recipients receiving below the ceiling rate

Those war widow(er)s receiving less than ceiling rate are receiving their correctly assessed rate of income support and are not disadvantaged by the ceiling.  Those below the ceiling already benefit three times a year from indexation including from:

  • the twice yearly indexation of pension rates; and
  • the 1 July indexation of the income/adjusted income free areas and the assets value limits.

WWs receiving pension at Centrelink

A small group (171) of war widow(er)s remain in receipt of a 'saved' social security pension payable by Centrelink.  When ISS was introduced as a means of allowing war widow(er)s to receive all their income support from DVA, SSA multiple exclusion clauses were introduced to prevent payment of social security pension to a person receiving WWP payable under Part II or Part IV of the VEA.

Centrelink has written to remind this group of the requirement to notify of changes to circumstances that may effect social security pension entitlements.   Media articles relating to the increase of ceiling rate ISS/SP from DVA are contained in the September issues of VetAffairs and Age Pension News.  These articles will also alert this group about the availability of a higher rate of income support if they transfer to ISS.

Q&As have been distributed to Centrelink call centres so that all calls from war widow(er)s responding to the letter are handled by Centrelink staff appropriately and referred to the correct area/person within the relevant DVA State Office.

Telephone inquiries from war widow(er)s considering transferring to DVA should be entered onto a D501 preliminary details form and considered an informal claim and appropriate action taken.

Refer to Stateline (Trim Ref 0248639E) 9 September 2002:  'Centrelink Mail out to War Widow(er)s Re: ISS Indexation', for further detailed instructions on procedure for this “one off” exercise.

Rent deductions to State Housing Authority

A small number of Centrelink age pensioners who are recipients of a WWP are currently patrons of the Rent Deduction System (RDS) at Centrelink.  The cases identified are from Western Australia and New South Wales.

The RDS allows rent payments to be deducted automatically from their pension payments and paid directly to State Housing Authorities on a fortnightly basis.

DVA is currently developing a similar facility, the Direct Deduction System (DDS), but implementation is not anticipated until the new year.  A special interim arrangement has been negotiated with the WA and NSW State Housing Authorities that will allow DVA to deduct rent payments from pension payments until the DDS is implemented.

Very important  steps for RDS customers

All War Widow(er)s contacting State Offices regarding the transfer from Centrelink to ISS with DVA should be asked whether they utilise the RDS.

If

  • a claim for ISS is received from a war widow(er) who currently utilises the Centrelink RDS; and
  • they want to continue having rent payments deducted from their ISS on transfer,

then it is absolutely essential that David Owen, National Office, be notified (by phone (02) 6289 6685, or e-mail) prior to finalisation of the claim so that the interim rent deduction arrangements can be enacted.

A note indicating this requirement should be attached to the preliminary details form.

Discounting rules for aged care

The indexation of ISS ceiling rate has no effect on discounting rules for war widow(er)s' aged care fees.

Aged care ready reckoners held within State Offices should be updated to reflect the new indexed rates of ISS.


System Procedures

Overview system changes

All systems that calculate ISS and SP ceiling rates have been changed to cater for ISS indexation.  These systems include:

  • PIPS PC;
  • Quarterly and Fortnightly batch processes;
  • DPS; and
  • Age Care Matching.

PIPS PC changes – phased approach

The implementation of PIPS PC changes for ISS Indexation has been split into 2 phases:

  • Phase 1 changes will be implemented with the September SI run;
  • Phase 2 changes will be implemented together with FormBuilder Replacement changes for PIPS PC, probably in November this year.

PIPS PC – phase 1

The Phase 1 changes are the minimum necessary to ensure the 20 September 2002 indexation increase occurs. These changes are mostly background system changes with no visible changes apart from the updating of warning and edit messages.  The minimum nature of the Phase 1 changes mean that interim procedural arrangements are necessary.  These arrangements include:

  • 2 or 3 PIPS cases will be required for each grant of ISS with an effective date prior to 20 September 2002; and
  • any existing ISS or SP ceiling rate case that has a change made on the Adult Details screen and also has an effective date prior to 20 September 2002 will reset the pension recipient's current ceiling rate to a pre 20 September 2002 ceiling rate.

PIPS PC – phase 1 – ISS/SP grants between 1/7/00 and 20/9/02

All grants of ISS/SP with a grant date on or after 1 July 2000 and prior to 20 September 2002 will require 2 PIPS cases for the ceiling rate to be correctly recorded.

The steps for this are:

PIPS Case #1 (eg, ISS/SP New Claim)

  • Create worksheet with appropriate date of grant between 1 July 2000 and 19 September 2002;
  • Enter ceiling rate on Adult Details as $124.90;
  • Data collect personal and income and assets data, as required;
  • Proceed through Calculate Pension and Calculate History, etc;
  • Finalise case; and then:

PIPS Case #2 (eg, Dept Init Action)

  • Create worksheet, using SP-ISS-AP Notification Rules:  Do NOT Apply option and with effective date of 20 September 2002;
  • Change ceiling rate on Adult Details to $127.20;
  • Proceed through Calculate Pension, etc;
  • Suppress advice;
  • Finalise case.

Note: if an advice is produced from PIPS Case #1, it will have current payment rates as long as PIPS Case #2 is finalised immediately after Case #1.

PIPS PC – phase 1 – ISS/SP grants prior to 1/7/00

All grants of ISS/SP with a grant date prior to 1 July 2000 will require 3 PIPS cases for the ceiling rate to be correctly recorded.

The steps for this are:

PIPS Case #1 (eg, ISS/SP New Claim)

  • Create worksheet with appropriate date of grant prior to 1 July 2000;
  • Enter ceiling rate on Adult Details as $120.10;
  • Data collect personal and income and assets data, as required;
  • Proceed through Calculate Pension and Calculate History, etc;
  • Finalise case; and then:

PIPS Case #2 (eg, Dept Init Action)

  • Create worksheet, using SP-ISS-AP Notification Rules: Do NOT Apply option and with effective date of 1 July 2000;
  • Change ceiling rate on Adult Details to $124.90;
  • Proceed through Calculate Pension, etc;
  • Suppress advice;
  • Finalise case, and then:

PIPS Case #3 (eg, Dept Init Action)

  • Create worksheet, using SP-ISS-AP Notification Rules: Do NOT Apply option and with effective date of 20 September 2002;
  • Change ceiling rate on Adult Details to $127.20;
  • Proceed through Calculate Pension, etc;
  • Suppress advice;
  • Finalise case.

Note:  some of these cases may create more than 25 assessment histories – if this occurs, no advice will be produced for the case.

PIPS PC – phase 1 – variations prior to 20/9/02

The bulk of cases that are varied with an effective date prior to 20 September 2002 will retain and correctly assess the ceiling rate as $127.20 from 20 September 2002.

However, if:

  • any data on the Adult Details screen is updated, eg, if granting or cancelling RAA or changing status to Illness Separated or Blinded; and
  • the date of variation is on or after 1 July 2000 and prior to 20 September 2002 (or if the event date of the worksheet is prior to 20 September 2002 and Calculate Pension determines the date of effect as on or after 20 September 2002); then
  • Calculate History will reset (reduce) the ceiling rate to $124.90 from 20 September 2002 or the Calculate Pension date of effect if later (and also any subsequent dates of effect).

Similarly, if:

  • any data on the Adult Details screen is updated; and
  • the date of variation is prior to 1 July 2000; then
  • Calculate History will reset (reduce) the ceiling rate to $120.10 from 1 July 2000 and for all subsequent dates of effect.

If the ceiling rate is reduced as a consequence of an Adult Details change it must be corrected in much the same way as for grants of ISS/SP:

  • if reduced to $124.90 from 20 September 2002 (or any later date), an additional PIPS case must be actioned to restore it to $127.20 from that date;
  • if reduced to $120.10 from 1 July 2000, 2 PIPS cases must be actioned to restore the ceiling rates from 1 July 2000 and 20 September 2002.

PIPS PC – phase 2

Phase 2 of PIPS PC changes will enable all grants and variations of ISS/SP to be done as a single action regardless of whether the effective date for the case is prior to or after 20 September 2002.

The system changes for phase 2 will largely be background changes with no visible change to screen designs.  The key aspects of these changes will be:

  • Adult Details screen will default the correct ceiling rate when ISS/SP is granted so that it won't need to be manually entered in the screen;
  • Calculate History will also default the correct ceiling rate for each history date of effect.

Phase 2 will also fix a problem identified in Crossview Service Request #5125.  This is a problem with partnered ISS/SP recipients who have their partnered status removed.  In these cases, the PIPS case that removes the partnered status continues to assess the ISS/SP recipient as if partnered, and an additional PIPS case must be done to correctly assess the ISS/SP as non-partnered.

Further information about phase 2 changes will be provided when FormBuilder Replacement for PIPS is implemented.

Death Processing System

Changes have been made to DPS to ensure that it uses the correct ceiling rate for automatic grants of ISS.  For example, if a TPI veteran dies on 10 September 2002 and his war widow(er) will be granted ISS, DPS will record the ceiling rate as $124.90 from 11 September 2002 and $127.20 from 20 September 2002.

Of course, if DPS reports an ISS grant for manual action through PIPS, the ISS grant will require 2 PIPS cases if the grant date is prior to 20 September 2002 until phase 1 PIPS changes are superseded by phase 2 changes.


Communication

IAS

Minor changes to IAS have been made to reflect the new ISS/SP ceiling rates effective 20 September 2002.  Other minor changes to IAS advices that have occurred include:

  • A change to bereavement advices to emphasise the need to claim ISS asap in circumstances where grant of that payment is not automatic.
  • A change to bereavement advices to emphasise the fact that Centrelink payments cannot continue if war widow(er)'s pension is granted. 
  • A change to GIS relevant to ceiling rate ISS to emphasis that the ceiling rate cannot be exceeded even though rent assistance may be payable.

Mail out

All ISS/SP recipients, who will automatically receive the maximum benefit from this initiative, will receive a letter from the Minister advising them of the increase, the amount and the effective date.  The following dates are relevant to this mail out exercise:

Date

Action

20 September 2002

Delivery of Excel spreadsheet and electronic word version of the text to the mailing house

23 September 2002

Printing Job to commence

27 September 2002

Lodgement with Australia Post by COB

Processing Runs and Mailout timeframes

The download of client data occurred on 19 September 2002.

A check for ISS/SP recipients who have died since the initial data download will be conducted prior to the letters being enveloped by the mailing house.  Any deceased cases identified will be manually extracted from the mail out exercise.

Mail out – 'special register' cases

All 'special register' ISS/SP recipients, ie, those pensioners who have their payment made to a group payment destination, will have their ISS/SP indexation letter sent directly from the mailing house to the address recorded for them on the system.

Therefore, letters for these pensioners will not be streamed out and sent to State Offices for mailing.

Mail out – overseas residents

Letters for overseas residents will be sent to State Contact Officers for them to address correctly and post.  Most of the overseas residents are paid by the Tasmanian State Office.  Where an overseas resident is paid by another State Office, the letters will be sent to the relevant State Office for addressing and dispatch.

Manual Advices

Letters will be sent by National Office to war widow(er)s who will receive a partial benefit from the indexation of ISS/SP.  This group will receive a letter advising of the increase to their individual payment that will be sent from National Office.

Interaction with other exercises

Reduced rate ISS/SP recipients who meet the selection parameters for the global refresh of MI and SH will receive an advice letter as part of that exercise.  Refer Departmental Instruction C42/2002 [29] dated 10 September 2002 for further information on this exercise.

ESOs

A letter has been issued to Ex-Service Organisations informing them of the changes to the VEA that have occurred.  A copy of the letter is provided at attachment B.


Policy/Procedural Information Updates

Statelines

The following Statelines have been issued in relation to this initiative in the course of project implementation:

  • 'Media Release re:  Indexation of Ceiling Rate Income Support', 24/06/02 (Trim Ref 0234749E);
  • 'Income Support Related Publicity', 04/09/02 (Trim Ref 0247674E);
  • 'Centrelink Mailout to War Widow(er)s re:  ISS Indexation', 09/09/02 (Trim Ref 0248639E).

Q&As

An updated version of the Q&As sheet previously supplied is at Attachment C.

Updates to reference material

The relevant chapters and sections of CLIK, You and Your Pension, Intent Paper and the Rate Charts have been updated.

Fact Sheets will be in production by Thursday 26 September 2002.  Future increases to the ceiling rate ISS will be made automatically.

If you are providing a hard copy of 'You and Your Pension', 2001 edition please insert Fact Sheet IS03 'Income Support Supplement Overview'.  The 2003 edition of 'You and Your Pension' will reflect the 20 September 2002 changes.

C44/2002 Veterans' Affairs Legislation Amendment Act (No.2) 2002

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DATE OF ISSUE:  19 SEPTEMBER 2002

Veterans' Affairs Legislation Amendment Act (No.2) 2002

Purpose

This departmental instruction provides information relevant to the minor and technical amendments contained in the Veterans' Affairs Legislation Amendment Act (No. 2) 2002 (VALA No. 2 2002).

VALA No. 2 2002 contains the following measures:

  1. Double counting of periodic compensation payments
  2. Lump sum compensation payments received before and after 20 March 1997
  3. Definition of “rent” for the purpose of entry contributions to retirement villages
  4. Criteria for telephone allowance to allow payment of telephone allowance to persons with a mobile service
  5. Access to rent assistance for persons receiving Family Tax Benefit (FTB) payments without a rent component
  6. Extensions to eligibility for the Pension Loan Scheme (PLS)
  7. Eligibility for Commonwealth Seniors Health Card (CSHC)
  8. Definition of “non-illness separated spouse”

The link to VALA No 2 2002 should be shortly added to the Scaleplus web site situated at http://scaleplus.law.gov.au/ [9]

Commencement Date

All proposals with the exception of measure number 2 commence upon Royal Assent. VALA No.2 2002 received Royal Assent on 6 September 2002.

Measure number 2 (lump sum compensation payments received before and after 20 March 1997) commenced on 20 September 2001.

Details of changes

Details of the changes are attached.

Contact

For further information in relation to the above mentioned changes please contact Ian Williams on (02) 6289 6382.

Authorised by

Roger Winzenberg

Branch Head

INCOME SUPPORT

19 September 2002

1.       Double counting of periodic compensation payments

Background

Prior to the VALA No.2 2002 changes, double counting of periodic compensation payments occurred with a small group of disability pensioners who:

  • are not affected by the Part IIIC compensation recovery provisions who are of “pension age” or older; and
  • have their Disability Pension (DP) reduced under Parts II or IV of the Veterans' Entitlements Act 1986 VEA) because they are in receipt of periodic compensation in respect of the same injury or disease for which they receive DP.

Issue

The double counting occurred because the periodic compensation payments receive were assessed as ordinary income due to the broad definition of “income” in subsection 5H(1) of the VEA.

The same problem does not arise with persons who are under the pension age to whom Part IIIC of the VEA applies.  This is because under Part IIIC, the “double counting” of compensation payments which have already been counted for the purpose of reducing a Part II or IV pension is prevented by the operation of subsections 5NB(5) and (6).

Legislative changes

The amendment prevents the “double counting” of compensation that has already been counted to limit the person's disability pension.  The amendment involves the addition of a further exclusion to the list of excluded income types in subsection 5H(8).  New paragraph 5H(8)(ea) applies to:

“any payment of compensation (other than a payment referred to in paragraph (e)) to the extent that the payment is taken into account:

  1. under Division 5A of Part II; or
  2. under section 74;

to reduce a disability pension payable to the person under Part 2 or Part 4, as the case requires”

This means that any amount of compensation to the extent that it has already been counted to limit the person's DP will not be regarded as income.

Any additional amount of compensation over and above the amount that has been used to limit the person's disability pension will continue to be assessed as ordinary income.

Systems Changes

There are no systems changes involved as it is estimated that there are less than a dozen cases, which fall in this category.

Procedural Changes

In order to assist in the identification of potentially affected cases, National Office will refer the data acquired from the Ad Hoc Inquiry System (AIS) which includes the file numbers of cases that potentially fall into this category separately to State Managers, Income Support.

The cases that are affected should be recorded in PIPS in the following manner:

  1. Disability Pension screen - record the full fortnightly amount of the compensation in the 'PTIV N/I Amt' field with an 'Adj. Type' of 'PTIV'.
  2. Other Direct Income screen (in the Direct Income folder) - record the balance of compensation over and above the DP amount.

The amount recorded as Other Direct Income should be recalculated when DP is increased at each March and September SI.  Therefore, these cases should be reviewed at each SI and marked for review accordingly.

Fact Sheets

The following Fact Sheets have been updated to reflect the changes:

  • IS101 Income and Assets – Compensation
  • IS102 Income and Assets – Compensation and your Social Security Age Pension

CLIK

CLIK has been updated to reflect the changes.


2.       Lump sum compensation payments

Background

Amendments were made by the Veterans' Affairs Legislation Amendment (1996-97 Budget Measures) Act 1997 to the compensation recovery provisions of Part IIIC.  This measure provided for lump sum compensation payments received on or after 20 March 1997.  Under these 1997 changes, from 20 March 1997, the pension payments of the partner of the person receiving the lump sum compensation were not subject to the compensation recovery provisions.

The 1997 amendments to Part IIIC included consequential amendments to the provisions that determine the debts arising from the overpayment of an affected pension during the lump sum preclusion period.  The amendments distinguish between lump sums received before 20 March 1997 and those received on or after that date.

Issue

A need to make consequential amendments to the provisions relating to the direct recovery of debts from compensation payers and insurers to distinguish between lump sums received before 20 March 1997 and those received on or after that date was necessary.

Legislative changes

The amendments make amendments to sections 59ZA and 59ZG to reflect the 20 March 1997 changes to the lump sum compensation payment rules as they applied to partners of compensation recipients.  These provisions now differentiate between payments made before and after 20 March 1997.

Start date

For legal reasons, due to recent amendments of the relevant provisions, the commencement of this proposal is effective immediately after the commencement of items 25 – 33 of Schedule 1 to the Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Act 2002).  These amendments commenced on 20 September 2001.

System Changes

No systems changes were necessary.

Procedural Changes

The only procedural change relates to the issuing of notices under section 59ZA and 59ZG.  Delegates should note the amendments where issuing a notice under either of these sections particularly in cases involving a lump sum payment made before 20 March 1997.

Standard letters

Relevant standard letters will be reviewed in light of these changes.

CLIK

CLIK has been updated to reflect the changes.

3. Entry contributions to retirement villages

Background

A “special resident” entering a retirement village is required to pay an entry contribution to the village owner for the right to occupy a unit within the village.  An entry contribution is the “total amount paid, or agreed to be paid, for the resident's current right to live in the village”

[1] [31] . If the amount of a person's entry contribution exceeds the extra allowable amount, the special resident will not be eligible for rent assistance.  The extra allowable amount is the difference between the assets limit for a property owner and the assets limit for a non-property owner [2] [32] .

In the mid 1990s, a case arose in the Social Security context that indicated that entry contribution amounts were being manipulated so as to bring them under the threshold necessary to gain access to rent assistance.  In the case in question; Department of Social Security v. Knight, the Federal Court held that an amount of $15,000 which was part of the person's entry contribution and to be paid on a monthly basis over 10 years was rent.

In 1997, the definition of “rent” contained in section 13 of the Social Security Act 1991 (the SSA) was amended by the addition of subsections 13(3AA) and 13(3AB)

[3] [33] .  Subsection 13(3AA) was added because of the Knight decision and clarified that “an amount that is paid, or becomes payable by a person is not rent in relation to the person if the amount is or forms part of a special resident's entry contribution.”

Subsection 13(3AB) was added to the SSA to clarify that if the whole or part of an entry contribution is or will or may become repayable to the person, any amount by which the amount so repayable is reduced is not rent in relation to the person. This provision reflected the decision of the Federal Court in Secretary, Department of Social Security v. Montgomery which had held that notional annual deductions from the refundable portion of an entry contribution were not rent.

Issue

The amount of entry contribution may be manipulated by calling components of it as rent.  In these circumstances, the overall entry contribution paid by the resident is thereby minimised and the person becomes eligible for rent assistance.

Legislative changes

The legislative amendments involve the addition of new subsections 5N(3AA) and 5N(3AB) to the definition of “rent” contained in section 5N of the VEA.  The amendments mirror the 1997 amendments to the SSA definition of rent and are made for the same reasons. The new subsections provide as follows:

“(3AA) To avoid doubt, an amount that is paid or becomes payable by a person is not rent in relation to the person (either at the time when it is paid or becomes payable or at any later time) if the amount is or forms part of, a special resident's entry contribution in relation to the person in respect of a retirement village under section 52M, whether the amount is paid or payable (whether wholly or partly) in a lump sum, by instalments or otherwise.

(3AB) If the whole or any part of an amount that is not rent in relation to a person as mentioned in subsection (3AA) is, or will or may become, repayable to the person, any amount by which the amount so repayable is reduced is not rent in relation to the person (either at the time when the reduction occurs or at any later time).”

System changes

There are no system changes associated with this initiative.

Procedural changes

There are no changes to current procedures in relation to this measure.

CLIK

CLIK has been amended to include discussion about the relevant changes.

4.  Telephone allowance

Background

One of the requirements for eligibility for telephone allowance (TA) is that a person has to be a “telephone subscriber” as defined in subsection 118Q(4).

Prior to the changes, the definition of “telephone subscriber” required the person to have “a telephone service connected to a home of the person in Australia”.

Issue

The purpose of these amendments is to avoid any doubt with respect to the payment of TA to persons who operate a mobile telephone instead of a fixed telephone.

Legislative changes

This amendment will make it clearer that TA is available to persons with a mobile service (as opposed to a fixed line telephone service).

System changes

There are no system changes associated with this change.

Procedural changes

There are no procedural changes as TA is currently paid to people with a mobile service.  Given that the present system only allows a phone number to be recorded as a 2 digit STD code and then 8 digit phone number, a mobile telephone number should be adapted to conform to this format, for example: 04 44123456.

Fact Sheets

The Fact Sheet IS13 Income Support Allowances – Telephone Allowances has been updated to reflect the changes.

CLIK

CLIK has been updated to reflect the changes.

5.       Rent assistance for persons receiving family tax benefit

Background

This measure is intended to ensure that access to rent assistance is not restricted under the VEA to those persons receiving Family Tax Benefit (FTB) payments without a rent component.

Currently, under Schedule 6-C3(f)(i) of the VEA, a person cannot be paid rent assistance under the VEA if either the person or their partner has a FTB child.

Issue

The problem is that a person may be receiving FTB in respect of their children without a rental component.  This is known as a FTB payment at the “base rate”(Part A).  This will occur under the A New Tax System (Family Assistance) Act 1999 in the following circumstances:

  • The person or their partner is entitled to claim child maintenance in circumstances where it is considered reasonable for the person to take action to obtain the maintenance and the person, or their partner does not take the action that is considered reasonable.
  • Because of the application of the maintenance income test (Schedule 1, Clause 20-24 of ANTS).
  • The child is over the age of 16, undertaking full time education and receiving a Youth Allowance.

The same issue does not arise under the Social Security Act 1991 because the relevant Schedule permits the payment of rent assistance in circumstances where the person's “maximum Part A rate of family tax benefit does not include rent assistance”.

Legislative changes

The amendment is a technical amendment that will align the VEA with the SSA and is intended to ensure that persons who receive FTB without a rent component can access rent assistance under the VEA.

System changes

There was no requirement for system changes regarding this initiative.

Procedural changes

There are no procedural changes associated with this change.

Unfortunately specific cases cannot be identified given the available data on the Ad Hoc Inquiry System.

CLIK

CLIK has been updated to reflect the changes.

6.       Eligibility for Pension Loans Scheme

Background

The Pension Loans Scheme (PLS) allows a person to receive additional payments of pension.  The Scheme allows a person whose rate of pension has been reduced under the means test to receive additional payments of pension, by agreeing to a statutory charge over their assets for the extra amounts of advanced pension.  Payments under the PLS do not give rise to fringe benefits such as Pensioner Concession Cards.

In 1995, the VEA was amended with the addition of a new means tested pension called Income Support Supplement (ISS).  ISS was available only to those in receipt of a war widow's or war widower's pension.  At the time of these amendments, the eligibility criteria for the PLS was amended to take account of this new pension.

Issue

However, the 1995 amendments had the unintended consequence of limiting eligibility for the PLS as follows:

  1. The majority of income support supplement recipients who are not veterans in their own right, nor the partner of a veteran, were precluded from applying. 
  2. Partner service pensioners who are not veterans in their own right or the partner of a veteran were also unable to apply.

Furthermore, the consequential amendments failed to provide that persons, eligible for, or in receipt of, income support supplement, would be eligible for the PLS from “qualifying age”, rather than “pension age”, subject to the person meeting the other eligibility criteria.

The intention was to enable any person eligible for, or in receipt of ISS, who has reached qualifying age, and who meet the other criteria, to be eligible for the Scheme.

Legislative changes

The legislative changes extend eligibility to participate in the Scheme (subject to satisfying all other eligibility criteria).  The following people can now apply to participate in the Scheme:

Where the applicant is not a member of a couple:

  • Persons receiving or eligible for Income Support Supplement (ISS) from “qualifying age” (previously eligibility to participate in the Scheme was limited to people on ISS who were veterans in their own right who have reached pension age).

Legislative changes, continued
  • Persons receiving or eligible for Partner Service Pension (PSP) from “pension age” (previously people who were eligible for, or in receipt of PSP who were not veterans in their own right or the partner of a veteran could not apply).

Where the applicant is a member of a couple:

  • If the person is a veteran – the person must have reached pension age.

  • If the person is a partner of a veteran – the veteran must have reached pension age.

If the person is eligible for or receiving ISS, the person must have reached qualifying age.

System changes

There was no requirement for system changes regarding this initiative.

Procedural changes

All PLS cases are currently recorded using a “manual rates” method of assessment.  The manual rates method of assessment caters for all client and income support pension types.  Therefore there are no changes to procedures.

Fact Sheets

The IS116 Additional Financial Assistance – Pension Loan Scheme Fact Sheet has been updated to reflect the changes.

CLIK

CLIK has been amended to reflect the changes.

Forms

The D2662 Pension Loans Application form has been amended to reflect the changes.

7.       Eligibility for Commonwealth Seniors Health Cards (CSHC)

Background

The CSHC was introduced to extend a limited range of concessions to low income non-pensioners who have reached pension age but who are not in receipt of an income support pension because their income or assets are too high.

The Federal Government provides CSHC holders with pharmaceuticals at a concessional rate and telephone allowance.  In November 2001, concessional fares were extended to CSHC holders for travel aboard Great Southern Rail lines.  Also, in the 2001 Budget, the Government committed to negotiating with the State Governments for the extension of full Pension Concession Card (PCC) concessions to CSHC holders.

Issue

Prior to these extensions, war widows or war widowers gained no additional benefit from obtaining a CSHC as they are already entitled to concessional pharmaceuticals and telephone allowance under the VEA.

The new concessions have created an incentive for war widows and war widowers to claim the CSHC.  This new demand for the CSHC has highlighted an anomaly in the eligibility criteria for the CSHC in relation to war widows and war widowers whereby they could only apply for it once they had reached the pension age.

These amendments to the VEA will enable war widows and war widowers to be eligible for CSHC from “qualifying age”.

Legislative changes

The eligibility criteria for a CSHC in section 118V of the VEA has been amended so that war widows or war widowers aged between 57 and 62 years of age can apply for the CSHC and obtain a CSHC subject to satisfying all other eligibility criteria.

System changes

There was no requirement for system changes regarding this initiative.

Procedural changes

The only change to procedures is that two new standard letters have been generated.  See under heading “Standard Letters”.

Fact Sheets

The following Fact Sheets have been updated to reflect the changes:

  • IS126 Concessions and Benefits – Commonwealth Seniors Health Card
  • IS160 Concessions and Benefits – Overview of Cards Available to Veterans and their Dependents
  • IS152 Concessions and Benefits – Great Southern Railway Travel Concession

Standard Letters

Two new standard letters have been prepared to cover the situation where:

  • A CSHC claim is rejected because the war widow or war widower has not reached qualifying age;
  • Accepting a CSHC claim by a war widow or war widower.

CLIK

CLIK has been updated to reflect the changes.

8.       Non-illness separated spouses

Background

These amendments to the VEA amend the definition of a “non-illness separated spouse” so that it may apply to a person who is a veteran or non-veteran.

Prior to these amendments, the definition of “non-illness separated spouse” in the VEA, read as follows:

Subsection 5E(1) non-illness separated spouse means a person:

  1. who is legally married to a veteran but is living separately and apart from the veteran on a permanent basis; and
  2. whose separation has not resulted in a direction under subsection 5R(5); and
  3. who is not receiving age or invalidity service pension.

Issue

Under this definition, the veteran cannot be the “non-illness-separated spouse”. The definition is applied in a number of areas of the VEA such as subsection 5G(4), subsection 5L(7) and subsection 118Q(4). The amendment will ensure that unintended outcomes do not arise under the VEA in cases where the veteran is the non-illness-separated spouse.

Legislative changes

This initiative involves two technical amendments to the definition of “non-illness separated spouse” which ensures that all non-illness separated spouses are taken into account under the VEA.  The technical amendments are:

  1. Removing the requirement for the person to be married to a veteran.  This is because the definition assumes that the veteran is not the “non-illness separated spouse” when the non-illness separated spouse could be either party to the marriage.
  2. Removing the requirement for “a person not to receive age or invalidity service pension”.  The problem is that non-illness separated spouses may receive such a pension and this limitation again causes problems with the application of the definition elsewhere in the VEA (refer to Example 2).

The definition will now read as follows:

Subsection 5E(1) non-illness separated spouse means a person:

  1. who is legally married to another person but living separately and apart from that other person on a permanent basis; and
  2. whose separation has not resulted in a direction under subsection 5R(5).

Examples

Example 1

An example of where the application of the definition of “non-illness separated spouse” causes a problem with regard to the requirement for the person to be married to the veteran, is where a person must be a “telephone subscriber” to receive telephone allowance (paragraph 118Q(1)(c) of the VEA).

In subsection 118Q(4), telephone subscriber means a person:

  1. who is an Australian resident; and
  2. who has a telephone service connected to a home of the person in Australia; and
  3. whose telephone service is connected:
  1.                                         in that person's name; or
  2.                                        if subparagraph (i) does not apply to the person and the person is a non-illness separated spouse – in the name of the person to whom the person is legally married; or
  3.                                      if neither (i) or (ii) applies to the person and the person is a member of a couple – in the name of the person's partner.

The difficulty arises if the veteran is the non-illness separated spouse and the following circumstances apply:

  • Veteran and spouse are married but separated and living separately and apart on a permanent basis; and
  • The telephone service is in the name of the estranged spouse not the veteran.

In these circumstances the veteran will not satisfy the definition of a 'telephone subscriber' and hence be ineligible to receive telephone allowance for the following reasons:

  • Subparagraph 118Q(4)(c)(i) does not apply because the telephone service is not connected in the veteran's name.
  • Subparagraph 118Q(4)(c)(ii) cannot apply because the veteran by virtue of the definition of non-illness separated spouse cannot be the non-illness separated spouse.
  • Subparagraph 118Q(4)(c)(iii) does not apply because the veteran is not a “member of a couple” as defined in subsection 5E(2) because the veteran is living separately and apart from the other person on a permanent basis.

The technical amendment will ensure that in this case the veteran as a non-illness separated spouse will satisfy the criteria as a telephone subscriber and hence, will be eligible to receive telephone allowance.

Examples, continued

Example 2

Where the application of the definition of “non-illness separated spouse” causes a problem with regard to the requirement “of a person not to receive age or invalidity service pension”, for example:

Fred and Wilma are married and both receiving age service pension.

Upon separation (not divorce) eligible partners, Fred and Wilma will continue to receive the single rate of age service pension.  As Wilma receives age service pension this will exclude Wilma to be considered as a “non-illness separated spouse” and therefore Wilma could miss out on other benefits/allowances under the VEA where the definition is relevant such as telephone allowance.

This technical amendment prevents unintended outcomes from the application of the definition of “non-illness separated spouse” under the VEA.

System Changes

There was no requirement for system changes regarding this initiative.

Procedural change

There are no changes to current procedures in relation to this measure.

CLIK

CLIK has been updated to reflect the changes.

Section 52M.

[1] (go back) [34]

See section 52N.

[2] (go back) [35]

See the Social Security & Veterans' Affairs Legislation Amendment (family & Other Measures) Act 1997.

[3] (go back) [36]

C43/2002 EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

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DATE OF ISSUE:  10 SEPTEMBER 2002

EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

Purpose of Instruction

The purpose of this Departmental Instruction is to provide information about the Pounds Sterling exchange rate variation exercise.

Introduction

Following the recent variation in foreign exchange rates, it is appropriate for DVA to apply a new exchange rate for income support pension assessment purposes.

New exchange rate A$2.7624

The exchange rate used to convert Pounds Sterling to Australian Dollars for income support assessment purposes has changed from one Pound = A$2.8547 to one Pound Sterling equals A$2.7624 (ie A$1 = ?0.3620).

This rate reflects the average of the “on demand airmail buying rate” for the two weeks to 30 August 2002.

Date of effect
3 September 2002

Effective from 3 September 2002 the current exchange rate will change.

On pension payday 19 September 2002 (pay period 32) pensioners will receive a full instalment at the new assessed rate.

Date of processing run

Processing to implement the new exchange rate is scheduled for the evening of Monday 9 September 2002.

Automatic superannuation processing

The amount recorded as BRI non-indexed super type 08 or BRI indexed super type 09 will be varied by applying the exchange rate to the amount recorded, to find the new rate of superannuation.  The pension amount will then be reassessed automatically.

Manual cases and MS cases

Cases with actions in frozen status will not be processed automatically.  These cases will be listed on the manual listing for follow up action, and CMS/PIPS cases will be created automatically for State Office action.  Any cases processed through PIPS/PC should be reassessed from the beginning of the pension period for pension payday 19 September 2002 – ie 3 September 2002.

Advice letters

The advice letters for this exercise will be joint advices where both members of a couple are in receipt of BRI and their pension payment varies.  Age Pensioners will receive separate advices.

The letter will advise the new exchange rate, the amount of income and a payment box.  An advice will only be produced for cases where a variation in payment results.

IBM GSA implications

IBM GSA will produce the cartridge and forward it to Security Mailing in Sydney.

Overseas, Special Register and Enclosure Advices

Overseas, Special Register, Enclosure Advice letters (ie cases where a change to treatment entitlement occurs) and reduction to nil cases will be separated by IBM GSA and despatched to the State Office for manual distribution.  This arrangement is the same for daily advice letters.

Mail out of bulk advices

Security Mailing will print and prepare the advices for lodgement with Australia Post by 13 September 2002.

British DP case paid Rent Assistance

Income Support pensioners who are in receipt of Rent Assistance (RA) and who also receive British Disability Pension direct from Britain (not EATS and Composite cases) should have that Disability Pension converted to $A using the BRI exchange rate.  RA should be manually recalculated.  These cases can be extracted through AIS by each state.  If you have any problem please contact Andrew Purcell on the number below.

Note: If DP has already been assessed as income in determining Hardship cases it should not also be assessed as income for RA.

Contact officer

The Income Support Branch contact officer is:

Andrew Purcell           Telephone:   (02) 6289 4832

Roger Winzenberg
Branch Head
INCOME SUPPORT

10 September 2002


POUND STERLING EXCHANGE RATE

Foreign exchange periodExchange rate

3 Dec 98

to

27 January 99

0.3834

2.6082

28 January 99

to

10 Feb 99

0.3719

2.6889

11 Feb 99

to

19 May 99

0.3905

2.5608

20 May 99

to

28 July 99

0.4079

2.4516

New Date of Effect Rules

13 July 99

to

9 August 99

0.4271

2.3414

10 August 99

to

1 Nov 99

0.4105

2.4361

2 Nov 99

to

10 Jan 00

0.3952

2.5304

11 Jan 00

to

6 March 00

0.4069

2.4576

7 March 00

to

1 May 00

0.3927

2.5465

2 May 00

to

29 May 00

0.3807

2.6267

30 May 00

to

10 July 00

0.3907

2.5595

11 July 00

to

16 Oct 00

0.4022

2.4863

17 Oct 00

to

2 April 01

0.3737

2.6759

3 April 01

to

14 May 01

0.3550

2.8169

15 May 01

to

23 July 01

0.3674

2.7218

24 July 01

to

6 August 01

0.3803

2.6295

7 August 01

to

1 October 01

0.3701

2.7020

2 October 01

to

29 October 01

0.3430

2.9155

30 October 01

to

10 December 01

0.3588

2.7871

11 December 01

to

7 January 02

0.3709

2.6961

8 January 02

to

18 March 02

0.3612

2.7685

19 March 02

to

27 May 02

0.3723

2.6860

28 May 02

to

10 June 02

0.3830

2.6110

11 June 02

to

08 July 02

0.3928

2.5258

09 July 02

to

22 July 02

0.3758

2.6610

23 July 02

to

05 August 02

0.3643

2.7450

06 August 02

to

02 September 02

0.3503

2.8547

03 September 02

to

0.3620

2.7624

C42/2002 SEPTEMBER 2002 GLOBAL REFRESH OF MANAGED INVESTMENTS (MI) AND SHARES (SH) MAILOUT

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DATE OF ISSUE:  10 SEPTEMBER 2002

SEPTEMBER 2002 GLOBAL REFRESH OF MANAGED INVESTMENTS (MI) AND SHARES (SH) MAILOUT

Purpose of Instruction

This Departmental Instruction is to provide information about processing arrangements for the September 2002 global refresh of Managed Investments and Shares advice letter mailout.

ROGER WINZENBERG

BRANCH HEAD

INCOME SUPPORT

10 — th September 2002


Overview

Introduction

In March and September of each year the Department varies certain pension and allowance rates and thresholds in line with movements in the Consumer Price Index (CPI) and/or Male Total Average Weekly Earnings (MTAWE).  We do not send advice letters to all pensioners whose pensions are adjusted because of the CPI or MTAWE - information on these increases is contained in the latest edition of VetAffairs.  Letters are only sent to those pensioners on less than maximum rate of income support pension who have managed investments (MIs) and/or shares (SHs) in their assessment.

This Departmental Instruction provides information about the mailout and advises of the significant issues relating to the exercise.  Letters will be sent to pensioners affected by the events as set out in the following paragraph.

Significant Issues- of Managed Investment and Share Global Refresh Mailout

The September 2002 Quarterly mailout will incorporate the following events for payday 3 October 2002 (WEF 20 September 2002).  Issues of significance with regard to this mailout are as follows:

  • Letters will be sent to all less than maximum rate income support recipients;
  • The asset value of managed investment (MI) and share (SH) data will be reassessed;
  • A Managed Investment and/or Share Information Attachment will be provided for all less than maximum rate income support recipients who have MIs and/or SHs in their assessment.  This Attachment will provide a full listing of the client's MIs and/or SHs regardless of what has been reassessed;
  • If a treatment change occurs as a result of the reassessment a letter will be produced;
  • The implementation of the Budget 2002 initiative to index the ceiling rates of Income Support Supplement and Service Pension paid to war widows and war widowers;
  • The implementation of the Australia Post Delivery Point Identifier (DPID) - Barcoding - will see the introduction of barcodes included as part of the client postal address block; and
  • Changes to the format of Advices as part of the DOCGEN2 project.


Letter Content

Advice Letter Target Audience

A letter will be produced for the following clients:

  • All less than maximum rate service pensioners (SP), income support supplement recipients (ISS) and age pensioners (AP)
  • Max rate SP/ISS/AP recipients who move to less than max rate as a result of the reassessment
  • Less than max rate SP/ISS/AP recipients who move to max rate as a result of the reassessment
  • SP/ISS/AP recipients who are reduced to nil as a result of the reassessment
  • Treatment changes as a result of the Statutory Increase (SI) or global refresh of MIs and/or SHs reassessment.

DOCGEN2 Project - New Advice Format

The new advice format has been designed to standardize and simplify the look of advices by introducing a succinct and more readily understandable letter.

As part of the new format, the advices are to be separated into two parts, a letter and a series of attachments.  The main formatting change to be featured in the September advice letters will be the introduction of the Payment Information Attachment (PIA).

The PIA will contain single or multiple payment boxes as well as all other payment related information ie., all information relating to payment diversions (bank account details), arrears etc will be taken out of the body of the advice.  Reference will be made in the letter directing pensioners to the Payment Information Attachment for details about their payments - this is a new paragraph.

For further information on the new advice format for September - Please refer to the advice 'mockups' provided at Attachment A.

Additional information detailing the new advice formatting changes as they impact upon daily advices will be provided as part of that process - should you have any questions regarding the daily advice changes, the contact officer is Renee Arkinstall (02 6289 6428).

Australia Post - DPID (Delivery Point Identifier) - Barcoding

Australia Post has introduced a new program of equipment to increase the efficiency of mail sorting and delivery.  Part of this project calls for the installation of new Barcode Sorters at its mail centres to increase sort rates and to allow the introduction of deep sorting - down to individual Postie level.  These sorting machines are capable of sorting incoming mail via a barcode read from letters.

To implement barcoding for letters, Australia Post has allocated a unique 8 digit DPID to each of the delivery addresses within Australia.  The DPID is encoded to form the main part of the customer barcode.  It is printed in barcode format on letters as part of an address.

The DPID - Barcode will print on the line above the name and address block on all letters automatically produced.  While the barcode will be included when printing daily advices, the Barcode will only be used for mail sorting of batch or bulk mailouts.  It is with the bulk mailouts that the Department is able to take advantage of reduced rates of postage, and providing a barcode is an Australia Post requirement for postage discounts.  So while the barcode will print in daily advice address blocks it will not be used for letter sorting purposes and is not required to be displayed in an envelope address window box when posting a letter from the Branch Office.

Implementation of Indexation of Income Support Supplement & Service Pension to War Widow/ers

Commencing 20 — th September 2002, and effective for payday 3 — rd October 2002, ISS and SP paid to war widows and widowers will be indexed by the same percentage applicable to the maximum basic rate of service pension.  From that date ISS and SP will be increased twice yearly in March and September to reflect the increases to the CPI and  MTAWE.

Amendments to advices wording are minimal to accommodate the indexation of ISS and changes are reflected in the advice 'mockups' attached.

The General Information Sheet (GIS) will be updated to reflect any adjustments to the maximum rate of ISS when indexation occurs.

A new paragraph note will appear in the GIS under the Rent Assistance information advising that '...although rent assistance may be payable, the maximum combined rate of income support supplement and rent assistance cannot exceed the maximum rate of income support supplement listed above'.

Please note: A further mailout is being undertaken to advise approximately 81,000 war widows and war widowers about the commencement of the Budget 2002 initiative to index the ceiling rate of income support supplement (ISS) and service pensions (SP) payable.  A separate Stateline will be issued providing details of this mailout which is scheduled to occur shortly after the September global refresh mailout.

Financial Assets Reassess-ment

The asset value of managed investment and/or share data will be reassessed as part of this process.  Clients with MI and/or SH data in their assessment will receive a paragraph advising them of the ...Change to Value of Managed Investments and/or Shares...

CPI

There will be a brief reference made in the advice letters about the CPI increase after the 'Change to Value of Managed Investments and/or Shares' paragraph.

Male Total Average Weekly Earnings (MTAWE)

There will be a brief reference to MTAWE made in the advice letters after the 'Change to Value of Managed Investments and/or Shares' paragraph.

Advice on CPI and MTAWE variations will be included in the September edition of VetAffairs - VetAffairs distribution is to commence on Wednesday, 11 — th September 2002 to be completed by Wednesday, 18 — th September 2002.

Obligations suppressed

Obligations are to be suppressed for all letters produced.  Reference will be made to previous obligations issued to clients and in the case of Service Pension and Income Support Supplement recipients, reference will also be made to obligations provided in the 'You and Your Pension' Booklet.

The Financial Obligations paragraph (including the Prescribed Rates) will be present in the advice for all clients (excluding Blinded pensioners and clients reduced to nil.)

$1 Minimum Variation Rules

The $1min rules will be applied to all less than max rate SP and ISS variation cases ie., an increase or reduction must be equal to or greater than a $1 amount to receive an advice.

$1min rules do not apply to Age Pensioners.

Continuation Cases

Cases where the 'old rate' resulting from the Statutory Increase (SI) processing and the 'new rate' resulting from MI/SH refresh end up being the same amount after the reassessment will not have an advice produced.

Treatment Advices to be Checked

As is the procedure for quarterly processing all Overseas and Enclosure (treatment changes) advice letters will be printed at the IBM printhub and sent via courier to each State Office.  We always request that these be checked for accuracy, and reconciled against the reports received by each State Office.

Change to procedures for Special Register  Advices

Previously, all State's Special Register advice letters were printed at the IBM Printhub and forwarded to each state office for checking and posting.  Following consultation with each State, we will now return only the South Australian Special Register advices produced from each batch processing run to South Australia State Office.  All other State's Special Register advices will form part of the bulk advices and be printed and sent from the mailing house.

General Information Sheet

Each letter will contain a General Information Sheet (GIS).  This will act as the consistent last page for gatemarking purposes at the mailing house.  The GIS provides details of new rates and threshold information.

Single & Joint Letters

All Service Pensioners and Income Support Supplement recipient couples will receive a joint letter, provided the pensioner addresses are identical.

Age Pensioner couples will receive separate letters.

Pensioner couples where one member of the couple is 'blind' will also receive separate advices.

Production of Advice Letters

Processing

Processing is scheduled to run from Friday evening 13 — th September until Monday 16 — th September 2002.

Critical Dates

Processing Weekend within DVA (includes 'advices' processing)

Friday (pm), 13 — th September 2002 - Monday (pm), 16 — th September 2002

Dispatch Production Data to SMS

Monday, 16 — th September 2002

Commence printing Advice Letters

Tuesday, 17 — th September 2002

End Printing Advice Letters

Friday, 20 — th September 2002

Lodgement of Advice Letters with Australia Post

On Friday, 20 — th September 2002

Client Numbers

The following is a summary of client numbers in each State.  The numbers are approximates only:

STATE

NO. OF LETTERS

(Approx Only and includes Special Register, Overseas and Enclosures)

New South Wales (incl ACT)

10,004

Victoria

7,261

Queensland

5,932

Western Australia

2,742

South Australia

2,834

Tasmania

1,113

TOTAL

29,886

Printing of Letters

Security Mailing Services (SMS) Sydney, will print, fold and insert advice letters in the week from Tuesday 17 — th September through until Friday 20 — th September 2002.

Lodgement of Letters

All State's letters will be lodged with Australia Post on Friday 20th September 2002.  A representative from National Office will notify details of lodgement for each State as they occur.

The State Office Contacts for this exercise will be given progress reports and advised of any changes to this timetable.

Issues Requiring State Office Action

Special Register, Overseas & Enclosures

Special Register (SA State Office only), Overseas and Enclosure (treatment changes) advice letters will be printed at the IBM Printhub and sent via courier to each State Office.  These should be checked for accuracy, and reconciled against the reports received by each State Office.

Each State Office will receive a report detailing the advice letters produced in each of these categories.  We will advise SSOs in each State when to expect delivery of these letters, and it is essential that Systems Delivery is notified if they do not arrive.  It is also necessary to advise Carol Walsh, Systems Delivery on (02) 6289 6729 if the delivered letters do not exactly match the reports.

Reprints of selected letters

Reprints of individual Quarterly Advice letters can be requested via VIEW - Advices Tab reprint facility.

'HELD' Advices to be Forced

As part of the Batch processing run any advices in 'Held' status will be forced to print.  Forced held advices will print at each respective State Office's nominated printer as part of the production processing.  Please ensure your designated printer is fully operational during the processing period.  These advices will need to be checked to ensure the information in them is correct prior to posting.

Holding of daily advice letters

Daily payment advice letters produced after the processing run of 13 — th  - 16 — th September 2002, should be held pending notification that the quarterly letters have been dispatched.  This will ensure that pensioner's receive their advice letters in chronological order.

State Office Contacts

State Office Point of Contact

A contact person from each State has previously been identified to act as a liaison point for the National Office Advice's Team and will be the responsible person for distributing any information regarding the global refresh and mailout to staff.

State Office Contacts for the September quarterly processing are:

NSW: Genia Sacharczuk - 02 9213 7106

VIC: David Price - 03 9284 6379

QLD: Steve Jensen - 07 3223 8835

SA: Craig Bettess - 08 8290 0425

WA: Kim Gooding - 08 9366 8549/John Gliddon - 08  9366 8417

TAS: Chris Craven - 03 6221 6698

ACT: Kristie Chynoweth - 02 6289 6019

National Office Contacts

Feedback from State Offices

Any concerns regarding letters produced as part of this run should be directed to the National Office Contact Officer, Pat Webb.  At the end of this process we will be collecting and collating all State feedback to analyse issues raised and develop solutions to address any concerns raised.  Any problems noted should be reported to the National Office Contact Officer with the nature of the query and any relevant information pertaining to the query.  Please ensure that problems are reported as early as possible.

Contacts

There will be one National Office contact for this mailout.  Any queries regarding advice wording, data cartridges, mail house printing and  lodgement of letters with Australia Post should be referred to:

Pat Webb

(02) 6289 6444 (Phone)

(02) 6289 6553 (Fax)

pat.webb@dva.gov.au [39] (email)

Systems issues should be directed to:

Carol Walsh on (02) 6289 6729

Letter Mockups

Letters

Prior to the issue of this Departmental Instruction, the State Office Contact Officers for this exercise and Manager's Income Support were provided with copies of the proposed paragraph sequencing and mock-ups of advice letters for this run.

All recommendations received have been taken into consideration for the final version of paragraphs and sequencing.  An email will be forwarded to the State Contact Officers advising of the changes in respect of all comments received.

Copies of the amended advice letters for this run are at Attachment A of this DI.

Attachment A – Paragraph sequencing and Advice Letter Examples

Example 1: Overall Decrease - either from Maximum  Rate to less than Maximum Rate or decrease in Less than Max Rate Amount,  Payment Information Attachment, MI/SH Information Attachment, General Information Sheet (GIS)

Example 2: Increase from Less than Maximum Rate to Maximum Rate  - WITH Managed Investments and/or Shares in Assessment.  Service Pension - Single advice

Example 3: Overall Increase - remaining on Less than Maximum Rate Income Support Supplement, WITH MIs/SHs in assessment.  Payment Information Attachment, MI/SH Information Attachment, and GIS

Example 4: Age Pension increase remaining on Less than Maximum Rate, Disability Pension in payment, WITH MIs/SHs in assessment.

Example 5: Reduction to Nil, with MIs/SHs in assessment, Single advice

Letter Variables

Please note, in the following samples:

  • Letterhead, DC name and signature block will change according to State;
  • The words “service pension”, “age pension”, “income support supplement” each represent variables which will appear for those clients in receipt of the applicable pension.
  • State specific 'closing' paragraphs with the preferred contact telephone number for Income Support related issues will be used for this mailout.


ATTACHMENT A

PARAGRAPH SEQUENCING AND TARGET AUDIENCE

Note: Advices will be produced for all clients receiving a less than maximum rate income support payment for clients WITH Managed Investments and/or Shares in their assessment.  These clients will receive the following paragraphs:

Paragraph

To Whom

State specific letterhead

All

Opening (Introduction) - RTRAIN

All

Change to value of shares and managed investments - Decrease - QTDECR

Increase - MCHPEN-

Red to Nils - QTLNIL

Only for those clients with Managed Investments and/or Shares in their assessment.

Effective Date - MSEFDT

All

Payment Information - PAYADV

All

Reduction to Nil para

Reduction to Nil cases

“You have been increased to the maximum rate of pension” - INCMAX

All increase to max rate cases

Fringe Benefits -Destroy PCC - FGNELS, FGNELJ

Reduction to Nil cases

Your Right to Re-Apply - RRARTN (Other Info)

Reduction to Nil cases

Treatment On/Off

Any cases where a change in treatment eligibility is detected (with or without MI/SHs in assessment)

Financial Obligations (incl Prescribed Rates) - IALMMJ, IALMMS, IALAPM, IALPAJ, IALMTW, IALMTJ, IALMAP, IALJAP, IAAILS, IAAILJ, IAAIAP

All (not Reduction to Nil cases or Blinded clients)

Other Obligations (Partial Obs) (reference to previous) - OBQTLY, OBQTAP

All (not Reduction to Nil cases)

Changes You Have Already Told Us About - THECAN (Other Info)

All

Your Right of Review - APPLAP, APPLSP

All

State specific closing paragraph and State Deputy Commissioner Signature

All

Payment Information Attachment including Payment Diversion Table - PAYINT/PADEST

All

Managed Investment and/or Shares Information Attachment

Only clients with MIs/SHs in their assessment.

General Information Sheet

All


EXAMPLE 1:

  • Overall Decrease - either from Maximum Rate to Less than Max Rate or Decrease in Less than Max Rate amount with MIs/SHs in assessment.
  • Service Pension - Joint advice

T-ADVICE-RETURN-ADDRESS __Commonwealth Department of

Veterans' Affairs_

Contact:STATE OFFICE

Telephone:

AMP Place

10 Eagle Street

Brisbane Qld 4000

1!!11 IIIll l 111 1I!! (Barcode?)Postal Address:

JOHN SMITH — GPO Box 651 Brisbane Qld 4001

MARY SMITH — Telephone:

29 MARGARGET STREET — General inquiries: 133 254

IPSWICH   QLD   4010 — Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1800 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs

Change to Value of Shares and/or Managed Investments

The asset value of your shares which are listed on the Australian Stock Exchange and/or unit based managed investments has been reassessed.  The adjusted value of these investments has been used to work out your T-PENSION-SP-ISS-AP payment and has resulted in an overall decrease to the amount of T-PENSION-SP-ISS-AP paid to you.  Please note that the value of other income and assets you may have has not been affected by this reassessment.

Please refer to the 'Managed Investments and Shares Information' Attachment included in this letter.  This Attachment details all your managed investments and/or shares regardless of whether there has been a change to that managed investment or share.  We have not provided you with a complete listing of any other income or assets you may have in your assessment, as they remain unchanged.  However, they continue to be used in assessing the amount of T-PENSION-SP-ISS-AP you are paid.

Your pension has also been adjusted in line with movements in the Consumer Price Index (CPI) and Male Total Average Weekly Earnings (MTAWE).

This change will take effect from T-CLNT-EFFECTIVE DATE.

Payment Information

Details of your payments are provided in the Payment Information Attachment.

Financial Obligations

You need to tell us within 14 days (28 days if you are living overseas or receive Remote Area Allowance) if your income is more than $XXXX.XX per fortnight or the value of your assets, apart from your home, is more than $XXXXXX.XX.  Income includes deemed income from your financial assets and income from other sources.

Other Obligations

We have explained your obligations to you in previous letters and the booklet 'You and Your Pension'.  These obligations still apply.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner


PAYMENT INFORMATION ATTACHMENT

The Department calculates T-PENSION-SP-ISS-AP payments on a daily basis.  This means that your fortnightly pension payment is made up of 14 days of entitlement of pension.  Therefore, when there is a change to your circumstances on any particular day in the fortnight - your pension will be adjusted from that day.  For that reason your pension payment may be different for one or two paydays after a reassessment.

03 OCTOBER 2002 VeteranPartner

TOTAL FORTNIGHTLY PAYMENTxxx.xxxxx.xx

This is made up of:

- xxxxxxxxx xxxxxxxxxxxxxxx.xxxxx.xx

- xxxxxxxxxxx xxxxxxxxxxxx    x.xx    x.xx

17 OCTOBER 2002VeteranPartner

TOTAL FORTNIGHTLY PAYMENTxxx.xxxxx.xx

This is made up of:

- xxxxxxxxx xxxxxxxxxxxxxxx.xxxxx.xx

- xxxxxxxxxxx xxxxxxxxxxxx    x.xx    x.xx

Payment Destination

The following table shows where your pension payments are going.

Date

Name

Payment Destination

Amount Deposited

T-PAYDIVER-DATE

T-PAYDIV-PAYEE

T-PAYDIV-PAYDEST

T-PAYDIV-AMOUNT


MANAGED INVESTMENTS AND SHARES INFORMATION

(Information current as at T-ADVICE-PRINT-DATE)

You are receiving T-PENSION-SP-ISS-AP at less than the maximum rate payable.

You are currently paid under the T-INCOME-ASSET-TEST test.  The total of your fortnightly income is T-TOTAL-FORT-INCOME.  The total of all your assets (excluding any deductible assets) is T-TOTAL-ASSETS.

Information about your T-SHARES-AND-OR-MIS is provided below.

Your T-SHARES-AND-OR-MIS have been automatically updated.  The information below sets out the new values for these products.

Managed Investments

Description

Units

Asset Amount

VVVVVVVVVV

XX

$XX.XX

CCCCCCCCCCCCC

XXX

$XX.XX

Listed Securities and Unlisted Public Securities

Description

No. of Shares

Asset Amount

XXXXXX

X,XXX

$XX,XXX.XX

QQQQQQQQQQQQQ

XXX

$    X,XXX.XX

Note: Income from financial assets is deemed.

Please note:  We have not provided you with a complete listing of any other income or assets you may have in your assessment, as they remain unchanged.  However, they continue to be used in assessing the amount of T-PENSION-SP-ISS-AP you are paid.

You need to notify the Department if the list of your Managed Investments and/or Shares is incomplete or incorrect; or the number of shares or units you hold has changed.


This is an example of the General Information Sheet (GIS) for Service Pensioners that will be used in the September mailout.  There is a separate GIS for both income support supplement and age pensioner recipients. PLEASE NOTE:  Rates and thresholds have been updated to reflect changes.  The GIS will only be one page (2 images) in production.

GENERAL INFORMATION ON SERVICE PENSION RATES AND LIMITS

(Information current as at T-ADVICE-PRINT-DATE)

MAXIMUM RATES OF SERVICE PENSION (excludes pharmaceutical allowance)

Singles Rate$429.40 (per fortnight)

Couples Rate (each)$358.40 (per fortnight)

PENSION INCOME LIMIT (per fortnight)

Before Service Pension ReducesCut Off*

Singles Rate$116.00$1,204.00

Couples Rate (combined)$204.00$2,010.50

These limits may increase for each dependent child or student up to the age of T-CHILD-AGE, or if rent assistance is payable.

PENSION ASSETS LIMIT

Before Service Pension ReducesCut Off*

Home Owner

Singles Rate$145,250$290,500

Couples Rate (combined)$206,500$447,500

Non Home Owner

Singles Rate$249,750$395,000

Couples Rate (combined)$311,000$552,000

These limits may increase for each dependent child or student up to the age of T-CHILD-AGE, or if rent assistance is payable.

NOTE: *Income and assets cut off limits apply to all service pensioners except blinded service pensioners.

GOLD CARD INFORMATION

NOTE 1: These income and asset limits apply to the Gold Card only.  Different income and asset limits apply to the pension.  These limits can be found at the top of the page.

NOTE 2: If your disability pension is from 50% - 95% of the general rate and you also receive any amount of service pension, the Gold Card income and asset cut off limits do not apply to you.  Should your service pension payments cease due to excess income or assets you will no longer be eligible for the Gold Card.

NOTE 3: If you are aged 70 years or over, and you are a veteran who served in Australia's Defence Force, and you have qualifying service from any conflict (or you are an Australian Mariner with qualifying service from World War II), the Gold Card income and assets cut off limits shown below DO NOT APPLY TO YOU as your Gold Card is NOT affected by your income and/or assets.

GOLD CARD INCOME CUT OFF LIMIT

Singles Rate$331.50 (per fortnight)

Couples Rate (combined)$576.00 (per fortnight)

Add $71.10 per fortnight for each dependent child or student to the age of T-CHILD-AGE.

GOLD CARD ASSETS CUT OFF LIMIT

Home Owner

Singles Rate$174,000

Couples Rate (combined)$256,250

Non Home Owner

Singles Rate$278,500

Couples Rate (combined)$360,750

Add approximately $6,250 for each dependent child or student up to the age of T-CHILD-AGE.

DEEMING

Deeming assumes that any money you have invested in financial assets is earning a particular amount of income regardless of the actual amount earned.  The deeming rates are:

Singles

Low Rate:- 2.5% interest up to the threshold of $34,400

High Rate:- 4% interest for the remaining balance

Couples

Low Rate:- 2.5% interest up to the threshold of $57,400

High Rate:- 4% interest for the remaining balance

ILLNESS SEPARATED COUPLES

Couples separated due to ill health are paid at the single rate of service pension, but have their income and assets assessed as a couple.

RENT ASSISTANCE

You may be eligible for rent assistance if you pay rent to a non-government body or landlord.  The amount of rent assistance you receive depends on the amount of rent you pay and your family circumstances.  Rent assistance is paid at the rate of 75 cents in the dollar for every dollar you pay over the set rent limits.

When calculating the amount of rent assistance payable to a service pension recipient, any disability pension received by that person or their partner, is counted as income and may reduce the rate of rent assistance payable.

Maximum Amount of Rent Assistance Payable (per fortnight)

No children1-2 children3 or more

children

Singles Rate$92.00$107.60$122.20

Couples Rate

(combined)$86.80$107.60$122.20

Rent Limits (per fortnight)

No children1-2 children3 or more

children

Singles Rate$81.60$107.40$107.40

Couples Rate

(combined)$133.00$159.00$159.00


EXAMPLE 2:

  • Increase from Less than Max Rate to Maximum Rate amount with MIs/SHs in assessment.
  • Service Pension - single advice

T-ADVICE-RETURN-ADDRESS __Commonwealth Department of

Veterans' Affairs_

Contact:STATE OFFICE

Telephone:

AMP Place

10 Eagle Street

Brisbane Qld 4000

1!!11 IIIll l 111 1I!! (Barcode?)Postal Address:

JOHN SMITH — GPO Box 651 Brisbane Qld 4001

30 MARGARET STREET — Telephone:

IPSWICH   QLD   4010 — General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1800 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs.

Change to Value of Shares and/or Managed Investments

The asset value of your shares which are listed on the Australian Stock Exchange and/or unit based managed investments has been reassessed.  The adjusted value of these investments has been used to work out your T-PENSION-SP-ISS-AP payment and has resulted in an increase to the amount of T-PENSION-SP-ISS-AP paid to you.  Please note that the value of other income and assets you may have has not been affected by this reassessment.

Please refer to the Managed Investments and Shares Information Attachment included in this letter.  This Attachment details all your managed investments and/or shares regardless of whether there has been a change to that managed investment or share.  We have not provided you with a complete listing of any other income or assets you may have in your assessment, as they remain unchanged.  However, they continue to be used in assessing the amount of T-PENSION-SP-ISS-AP you are paid.

Your pension has also been adjusted in line with movements in the Consumer Price Index (CPI) and Male Total Average Weekly Earnings (MTAWE).

You have been increased to the maximum rate of T-PENSION-SP-ISS-AP.

This change will take effect from T-CLNT-EFFECTIVE DATE.

Payment Information

Details of your payments are provided in the Payment Information Attachment.

Financial Obligations

You need to tell us within 14 days (28 days if you are living overseas or receive Remote Area Allowance) if your income is more than $XXXX.XX per fortnight or the value of your assets, apart from your home, is more than $XXXXXX.XX.  Income includes deemed income from your financial assets and income from other sources.

Other Obligations

We have explained your obligations to you in previous letters and the booklet 'You and Your Pension'.  These obligations still apply.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner

ATTACHMENTS

  • Payment Information Attachment - YES
  • Managed Investments and/or Shares Information Attachment - YES
  • General Information Sheet - YES


EXAMPLE 3:

  • Overall Increase - remaining on Less than maximum Rate Income Support Supplement with MIs/SHs in assessment.
  • Income Support Supplement- single advice
  • War Widows Pension payable

T-ADVICE-RETURN-ADDRESS __Commonwealth Department of

Veterans' Affairs_

Contact:STATE OFFICE

Telephone:

AMP Place

10 Eagle Street

Brisbane Qld 4000

1!!11 IIIll l 111 1I!! (Barcode?)Postal Address:

MARY SMITH — GPO Box 651 Brisbane Qld 4001

33 MARGARET STREET — Telephone:

IPSWICH   QLD   4010 — General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1800 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs.

Change to Value of Shares and/or Managed Investments

The asset value of your shares which are listed on the Australian Stock Exchange and/or unit based managed investments has been reassessed.  The adjusted value of these investments has been used to work out your T-PENSION-SP-ISS-AP payment and has resulted in an increase to the amount of T-PENSION-SP-ISS-AP paid to you.  Please note that the value of other income and assets you may have has not been affected by this reassessment.

Please refer to the Managed Investments and Shares Information Attachment included in this letter.  This Attachment details all your managed investments and/or shares regardless of whether there has been a change to that managed investment or share.  We have not provided you with a complete listing of any other income or assets you may have in your assessment, as they remain unchanged.  However, they continue to be used in assessing the amount of T-PENSION-SP-ISS-AP you are paid.

Your pension has also been adjusted in line with movements in the Consumer Price Index (CPI) and Male Total Average Weekly Earnings (MTAWE).

This change will take effect from T-CLNT-EFFECTIVE DATE.

Payment Information

Details of your payments are provided in the Payment Information Attachment.

Financial Obligations

You need to tell us within 14 days (28 days if you are living overseas or receive Remote Area Allowance) if your income is more than $XXXX.XX per fortnight or the value of your assets, apart from your home, is more than $XXXXXX.XX.  Income includes deemed income from your financial assets and income from other sources.

Other Obligations

We have explained your obligations to you in previous letters and the booklet 'You and Your Pension'.  These obligations still apply.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner

ATTACHMENT

  • Payment Information Attachment - YES
  • Managed Investments and/or Shares Information Attachment - YES
  • General Information Sheet - YES - GIS for ISS is presented as follows - please note: bolded wording highlights changes to GIS for ISS.


This is an example of the General Information Sheet (GIS) for Income Support Supplement recipients that will be used in the September mailout.  There is a separate GIS for both service pensioner and age pensioner recipients. PLEASE NOTE:  Rates and thresholds have been updated to reflect changes.  The GIS will print on one page (2 images) in production.

GENERAL INFORMATION SHEET ON INCOME SUPPORT SUPPLEMENT RATES AND LIMITS

(Information current as at T-ADVICE-PRINT-DATE )

MAXIMUM RATES OF INCOME SUPPORT SUPPLEMENT

War Widows and Widowers$127.20

If you have continuously received income support supplement (ISS) since before 31 October 1986, the ceiling rate is the amount payable immediately prior to 1 November 1986.

INCOME LIMIT (per fortnight)

Before ISS ReducesCut Off*

Singles Rate$871.50$1,189.50

Couples Rate (combined)$1,360.00$1,996.00

These rates may increase for each dependent child or student up to the age of T-CHILD-AGE, or if rent assistance is payable.

War Widow(er)'s pension is income for the purposes of income support supplement.

ASSETS LIMIT

Before ISS reducesCut Off*

Home Owner

Singles Rate$246,000$288,500

Couples Rate (combined)$360,500$445,500

Non Home Owner

Singles Rate$350,500$393,000

Couples Rate (combined)$465,000$550,000

These rates may increase for each dependent child or student up to the age of T-CHILD-AGE or if rent assistance is payable.

NOTE: *Income and assets cut off limits apply to all income support supplement recipients, except blinded recipients.

DEEMING

Deeming assumes that any money you have invested in financial assets is earning a particular amount of income regardless of the actual amount earned.  The deeming rates are:

Singles

Low Rate:- 2.5% interest up to the threshold of $34,400

High Rate:- 4% interest for the remaining balance

Couples

Low Rate:- 2.5% interest up to the threshold of $57,400

High Rate:- 4% interest for the remaining balance

RENT ASSISTANCE

You may be eligible for rent assistance if you pay rent to a non-government body or landlord.  The amount of rent assistance you receive depends on the amount of rent you pay and your family circumstances.  Rent assistance is paid at the rate of 75 cents in the dollar for every dollar you pay the set limits.

Maximum Amount of Rent Assistance Payable (per fortnight)

No children1-2 children3 or more children

Singles Rate$92.00$107.60$122.20

Couples Rate (combined)$86.80$107.60$122.20

Rent Limits (per fortnight)

No children1-2 children3 or more children

Singles Rate$  81.60$107.40$107.40

Couples Rate (combined)$133.00$159.00$159.00

IMPORTANT: Please note although rent assistance may be payable, the maximum combined rate of income support supplement and rent assistance cannot exceed the maximum rate of income support supplement listed above.


EXAMPLE 4:

  • Age pension increase, remaining on Less than maximum Rate with MIs/SHs in assessment.
  • DP in payment
  • Single Advice

T-ADVICE-RETURN-ADDRESS __Commonwealth Department of

Veterans' Affairs_

Contact:STATE OFFICE

Telephone:

AMP Place

10 Eagle Street

Brisbane Qld 4000

1!!11 IIIll l 111 1I!! (Barcode?)Postal Address:

DAVID SMITH — GPO Box 651 Brisbane Qld 4001

17 MARGARET STREET — Telephone:

IPSWICH   QLD   4010 — General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1800 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs.

Change to Value of Shares and/or Managed Investments

The asset value of your shares which are listed on the Australian Stock Exchange and/or unit based managed investments has been reassessed.  The adjusted value of these investments has been used to work out your T-PENSION-SP-ISS-AP payment and has resulted in an increase to the amount of T-PENSION-SP-ISS-AP paid to you.  Please note that the value of other income and assets you may have has not been affected by this reassessment.

Please refer to the Managed Investments and Shares Information Attachment included in this letter.  This Attachment details all your managed investments and/or shares regardless of whether there has been a change to that managed investment or share.  We have not provided you with a complete listing of any other income or assets you may have in your assessment, as they remain unchanged.  However, they continue to be used in assessing the amount of T-PENSION-SP-ISS-AP you are paid.

Your pension has also been adjusted in line with movements in the Consumer Price Index (CPI) and Male Total Average Weekly Earnings (MTAWE).

This change will take effect from T-CLNT-EFFECTIVE DATE.

Payment Information

Details of your payments are provided in the Payment Information Attachment.

Financial Obligations

You need to tell us within 14 days (28 days if you are living overseas) if your income is more than $XXXX.XX per fortnight or the value of your assets, apart from your home, is more than $XXXXXX.XX.  Income includes deemed income from your financial assets and income from other sources.

Other Obligations

We have explained your obligations to you in previous letters. These obligations still apply.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with a decision, you may apply to have it reviewed by a Review Officer at this office.  If you decide to apply it may be to your advantage to do so quickly.  If you apply for a review of the decision more than 13 weeks from the day this notice is given to you, arrears can only be paid from the date we receive your application.  A request for a review must be in writing and set out your reasons for seeking a review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner as Delegate of the Secretary

ATTACHMENTS

  • Payment Information Attachment - YES
  • Managed Investments and/or Shares Information Attachment - YES
  • GIS - YES


EXAMPLE 5:

  • Reduction to Nil with MIs/SHs in assessment.
  • Single Advice

C41/2002 Notification and Handling of Overpayment Cases - Suspected Fraud

  • Log in [40] to post comments

DATE OF ISSUE:  4 SEPTEMBER 2002

Notification and Handling of Overpayment Cases - Suspected Fraud

Purpose

The purpose of this Departmental Instruction is:

  • to remind State Office staff of the approved Office procedures where the examination of overpayment cases reveals the possibility of fraud; and
  • to provide advice regarding the identification, and notification to National Office, of cases which are likely to attract adverse media attention (“media-sensitive” cases).

Fraud control

- a key corporate activity

A key result area in the Department's Corporate Plan for 2002 – 2003 is that of prudent financial and risk management.  An important measure of performance in this area is the strategic management of fraud control.

The Department's Fraud Control Plan (2001 – 2003) establishes the framework for identifying and dealing with cases of suspected fraud.  This Plan, together with CEI 8.1 (Fraud Control and Reporting), provides guidance for staff on the measures to combat potential fraud within the Department, and the procedures for handling actual or suspected fraud cases.

Fraud control

- a key corporate activity, continued

Staff involved in the assessment, payment and review of client entitlements are the first line of defence against potential or actual fraud.  Efforts to strategically manage, control and prosecute fraud against the Department will not succeed unless staff remain aware of the risk of fraud, and bring suspected instances of fraud to the attention of their supervisor when they become aware of it.

What is fraud?

Fraud is defined for the purposes of the Commonwealth Fraud Control Guidelines as “dishonestly obtaining a benefit by deception or other means”.

The key questions to be answered in deciding if a case is a suspected fraud are:

  • was the person in a position to have sufficient knowledge to know that the statements and actions being made were unlawful, misleading or deceitful?;

  • were things done by the person to try to get DVA to believe the claim, eg false statements?;

  • did the person deliberately withhold information which should have been presented to DVA?; and

  • did DVA make a payment or provide a benefit to the person, or would it have done so if the suspected fraud had not been detected?

If any of the above circumstances apply then fraud should be suspected and dealt with appropriately.

Reporting of suspected fraud cases

The importance of the role played by line area staff in identifying cases of fraud is recognised by paragraph 4.5 of CEI 8.1 (Fraud Control and Reporting).  This paragraph affirms that all employees have an obligation to be constantly aware of the risk of fraud, and to bring suspected cases to the attention of management.

CEI 8.1 provides that staff can report fraud either (i) directly to their supervisor, (ii) to the Director of the National Fraud Control Unit, or (iii) by use of the whistleblower policy.  Individual line managers are also required to report fraud investigations to their local State Case Management Committee as soon as possible.

Overpayments to veteran clients

Where a veteran has been overpaid a pension or benefit, and there is evidence (or some likelihood) that the overpayment arose through fraud, it is important to note that staff do not have the discretion to continue to process the case as a standard overpayment recovery.  Where fraud is suspected, the procedures in the Overpayment Management Manual should be followed.  These procedures are set out in Chapter 11.1 (Overview) and provide that:

  • before undertaking any client interview in relation to an overpayment, staff should ensure that there is no possibility of prosecution action;

  • responsibility for determining whether there is no possibility of prosecution lies solely with the Commonwealth Director of Public Prosecutions (Prosecution Policy of the Commonwealth refers);

  • if the suspicion of fraud or a prosecutable offence arises during the interview, the interview should be stopped and the client cautioned that an offence may have occurred.  The client should be advised that they are not required to say anything further, and anything they do say could be used in evidence.  The client should be asked to wait while guidance is sought from the State Case Management Committee.  The interview should not continue without further advice being sought, as this may jeopardise future prosecution activity; and

  • if guidance cannot be obtained at the time, or if the client is unwilling to wait, they should be advised that the overpayment interview will not be continued but that they may be required to attend a further interview at a later date.

Instances of fraud in pension/benefit overpayment cases can include the falsification or intentional withholding of information, a failure to advise of a change in circumstances which may affect a pension or benefit, or the claiming of benefits from both DVA and Centrelink at the same time (double-dipping).

Referral of media-sensitive cases to National Office

Income support cases which are likely to attract adverse media attention (“media-sensitive” cases) should be notified to the Branch Head, Income Support.

Cases likely to attract media scrutiny would include those involving sizeable overpayment recovery action, or where a veteran's eligibility to receive payment of a pension or benefit has not been found to be sustainable, eg. 'false veterans'.

Referral of these cases to National Office will allow the circumstances of the case to be examined in anticipation of public or media interest, and for the Minister's Office to be informed about the case.

The information to be provided to National Office should include a brief summary of the circumstances of the case.  This would include –

  • the cause or origin of any overpayment, or the reason for the veteran's lack of eligibility for a pension or benefit;

  • any evidence which is suggestive of fraud;

  • any written advice from the Commonwealth Director of Public Prosecutions as to the likelihood of prosecution;

  • a copy of any related correspondence to the veteran, and any responses provided by the veteran;

  • whether the veteran has, or intends seeking, legal advice or the support of an ex-service organisation; and

  • contact officer details.

Criteria for assessment of media-sensitive cases

The assessment of whether an income support overpayment case, or a

non-eligibility case, are sufficiently sensitive to warrant referral to National Office should include, but not be limited to, the following factors:

  • the age and the health of the veteran;

  • the monetary amount of the overpayment and the length of time over which it accrued.  Overpayments which exceed $10,000 or which have accrued over a period of several years should be very carefully assessed.  It is expected that overpayments in this category would be referred, unless there are other known factors that diminish the sensitivity of the case.  These might include any existing communication, or agreement, with the veteran regarding the cause of, and repayment, of the overpaid amount;

  • the cause of the overpayment, and the strength of any evidence which suggests that the overpayment arose through fraudulent behaviour;

  • where the reason(s) for determining that a veteran is not eligible for a pension or benefit have been disputed by the veteran, or where the evidence for the decision is unclear or is open to different interpretation; and

  • whether the veteran has contacted any external party in relation to his/her case.  External parties would include any media group, an ex-service organisation, a legal representative, or a Member of Parliament.

The assessment of whether cases are of sufficient sensitivity to be referred to National Office will require a considered judgment of all the relevant factors of the case.  In this regard, staff should have regard to the Department's Risk Management Policy, which acknowledges that all judgments involve some degree of risk.  A balance should be sought, between the risks associated with not taking action against possible fraudulent behaviour, against the costs of investigating and referring non-sensitive or marginal cases where the evidence of fraud is not persuasive.

Offer of counselling to veterans

Staff involved in overpayment recovery or fraud investigation should consider whether the apparent health status of the veteran warrants suggesting counselling to the veteran.

The Vietnam Veterans Counselling Service (VVCS) is a departmental resource available to veterans experiencing trauma, stress, alcohol abuse, relationship difficulty or mental health disorder.

The VVCS does not provide medico-legal reports, but the service offers assessment, counselling, referrals, group work and a variety of educational and lifestyle management programs.

Staff considering suggesting counselling to a veteran in a fraud or overpayment situation should be mindful, however, that there should be no connection between the suggestion of counselling and the continuation, or otherwise, of fraud action or overpayment recovery.  The role of the VVCS does not encompass the provision of advice or written reports to explain or to mitigate possible fraudulent activity.

Contact Officers

The contact officers in the Income Support Branch in respect of any enquiries in these matters are:

Jeanette Ricketts           Director                    02 6289 6085

Brian Butler                  Assistant Director    02 6289 6564

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

4 September 2002

C40/2002 2003 ISSUE OF PENSIONER CONCESSION CARDS (PCCs)

  • Log in [41] to post comments

DATE OF ISSUE:  4 SEPTEMBER 2002

2003 ISSUE OF PENSIONER CONCESSION CARDS (PCCs)

Purpose of Instruction

This Departmental Instruction provides information on

The format and issuing of the 2003 PCCs;

Procedures for applying for replacement travel vouchers; and

Arrangements for the ongoing daily issuing of PCCs.

ROGER WINZENBERG

BRANCH HEAD

INCOME SUPPORT

         SEPTEMBER 2002

Overview of this year's exercise

Background

The PCC is issued by the Commonwealth Government to all income support recipients to prove eligibility for a range of Commonwealth and State/Territory benefits and concessions.  DVA is responsible for issuing the PCC to DVA clients (including Centrelink Age Pensioners being paid by DVA).

The PCC is issued annually either through a bulk issue or through individual daily issue for clients who become eligible.

The following table provides a summary timetable of key dates in this year's PCC process.

This Event

Is scheduled to occur

Data Extract and Download

7-8  September

Bulk Printing of PCCs

16 September – 12 October

Lodgement with Australia Post

From 7 October

What has changed
  • Cardholders' names will appear in upper case on the cards.  In married cases, the primary cardholder will appear in upper case and the spouse/defacto will appear in upper and lower case.
  • Dependent children's full file numbers will appear adjacent to their names on the card.
  • The expiry date printed on the bottom right hand corner of the card will be deleted. The expiry date on the back of the card will be extended to read “Valid from 1 Oct 2002 to 31 Dec 2003 (opposed to “Valid from Oct 2002 to Dec 2003”). 
  • Rail vouchers are no longer issued in QLD.  The travel entitlement will continue, however, paper travel vouchers are no longer required.
  • The pension payday fridge magnet will now be placed in each December edition of Vet Affairs Magazine.

What remains the same
  • The pensioner's name will be constructed as follows: forename, 2 — nd initial, 3 — rd initial (where applicable) and surname (all in upper case).
  • Victoria will issue replacement vouchers on behalf of their State Transport Authority throughout the year.
  • South Australia will issue replacement vouchers on behalf of their State Transport Authority throughout the year.
  • Blind clients will have a hole punched in the top right hand corner of the card and the word “BLIND” printed at the top of the card.
  • PCC Summary Report will be produced on CD-ROM.

Concession Information Sheet

A State specific “Concessions Information” sheet will be inserted during the bulk printing for VIC and TAS married carriers.  This is in order to provide information that is unable to fit onto the carrier due to the number of vouchers these States require.

Cross Reference Cases

Where there is a cross reference for a person, the 2003 PCC bulk issue will be issued in the payment (ie cross referenced) number.

Partners on PCCs

The PCC program will include the following in order to follow current DFACs policy regarding the issue of Centrelink PCCs:

Where both members of a couple are in receipt of an income support payment, they will be cross-listed as dependants on one another's cards.

If spouse/defacto of a veteran is not eligible or payable, but is present in the assessment, the spouse/defacto is added as a dependant to the veterans' card (blind veterans included).

Veterans who are not in payment (and therefore will not receive a PCC), will appear as a dependant on the PCC of their blinded service pension partner.

The maximum number of children that will be listed on a PCC is six.  If there are more than six dependent children in the assessment, an additional card will be issued listing the veteran and remaining children.

Production of PCCs

Card Production

The printing of approximately 360,000 2003 PCCs will commence on Thursday 20 September, following the extract of client data on the weekend of 7 - 8 September.

The 2003 PCC will be personalised, enveloped and despatched by the mailing house – Security Mailing Services in Sydney.  Lodgement with Australia Post will commence on 7 October and expected to be completed by Friday 11 October.

Card Numbers

The approximate numbers for each State/Territory are as follows:

State/Territory

No. of PCCs

New South Wales

120,025

Victoria

80,560

Queensland

74,111

South Australia

33,965

Western Australia

33,514

Tasmania

12,764

NT

567

ACT

3,257

TOTAL

358,763

2003 PCC Stock

For the 2003 bulk PCC issue, there will be 2 different carriers – one for couples (to be used in the bulk issue only) and one for singles.  The pre-printed format of the rear of the card for both singles and couples cards will be the same as the 2002 card.

The DVA National contact numbers, State Office street locations and postal addresses will be included on the carrier.

Carrier Layout

The 2003 carrier layout for single pensioners remains the same as the layout for the 2002 carrier, with the vouchers printed at the bottom of the carrier.

The 2003 carrier layout for couples will incorporate 2 cards positioned at the bottom edge of an A4 carrier and the appropriate number of vouchers positioned where they best fit on the carrier and depending on which State the PCC is issued.

For couples' PCC units, the left card and left column of vouchers will be personalised with the client's details (the right side card and vouchers being used for the partner details).

Blind Pensioners – Special PCCs

The word 'BLIND' will be printed in 14 point lettering on the top centre of the 2003 PCC for blind pensioners.  The PCC for blind pensioners issued during the bulk exercise will have a hole punched in the top right hand corner of the card.

Special Register PCCs

Special Register and Special Register Blind clients' PCCs will be enveloped and forwarded directly to each State Office for checking prior to dispatch to the Special Register addresses.

Fridge Magnet Calendar

The State specific magnetic refrigerator calendar will be no longer included with the bulk issue of PCCs.  They will be placed in the December edition of Vet Affairs Magazine.  States will be issued with a small supply of calenders to cater for new clients.

Vouchers

The number of vouchers attached to the carriers will vary with each State/Territory and will be separated from the carrier with perforations.  The vouchers will include the pensioner's name and entitlement number, and in the case of Tasmania will also contain the pensioner's address and Date of Grant.

The vouchers provide fields for personal details to be lasered.  The information required to be lasered onto vouchers are as follows:

For this State

And this Card/Carrier

This information will be inserted onto the Voucher

NSW

NIL

NIL

ACT

NIL

NIL

NT

NIL

NIL

VIC

Single (2 vouchers)

Name

Entitlement Number

VIC

Couple (4 vouchers)

Names

Entitlement Numbers

QLD

NIL

NIL

QLD

NIL

NIL

SA

Single (2 vouchers)

Name

Entitlement Number

SA

Couples (4 vouchers)

Names

Entitlement Numbers

WA

Single (1 voucher)

Name

Entitlement Number

WA

Couples (2 vouchers)

Names

Entitlement Numbers

TAS

Single (4 vouchers)

Name

Address

Date of Grant

Entitlement Number

No. of Dependants

TAS

Couple (8 vouchers)

Names

Addresses

Date of Grant

Entitlement Numbers

No. of Dependants

Bulk Issue Reports

Reports

State offices will be provided with the following listings of cases following the bulk extract:

  • Rejection Report of clients who did not receive a PCC and the reason, eg clients with an overseas address;
  • Special Register clients;
  • Blind Cases – listing cases of blind pensioners who receive a PCC; and
  • Blind and Special Register Cases – listing cases where the pensioner is blind and a Special Register Case.

The reports will be addressed to the State Office PCC contact officers on Monday 9 September, following the data extraction processing on the weekend of 7 – 8 September.

CD-ROM

At the completion of the exercise the mailing house will provide each State office with a summary report on CD-ROM that lists the PCC recipients from the bulk issue.  The CD-ROM is expected to be dispatched to the nominated State contact officers by the end of October.

The CD-ROM files (*.pdf format) can be accessed via Acrobat Reader 3.0 which can be found on the DVA LAN.  From the Start up menu select Departmental/Applications/Internet Tools/Acrobat Reader 3.0.

Daily Issuing of PCC Cards and Vouchers

New and replacement PCC's

The procedures for the ongoing issuing of new and replacement PCCs remain the same as in other years i.e., new and replacement issues of PCCs are to be extracted by batch processing each night for printing daily on the local printers located in each State Office.

The last automatic daily extract for any issue/reissue of the 2002 PCCs will be on Friday, 6 September.

Formatting and any re-alignment of local printers to accommodate the 2003 PCC will be addressed by IMU.  Please advise Robert Krajina on 02 6289 6044 as soon as possible if you experience any difficulties in printing replacement or new grant PCCs.

Manual Voucher Issue

From Monday, 9 September 2002, 2003 PCC stock is to be used for daily issues.  However, any new grant or transfer-in between 9 September and 31 December 2002 still requires manually issued 2002-travel voucher/s and 2002 stock is to be used.

Replacement PCC's – voided Vouchers

Voucher personalisation should be suppressed for all replacement or re-issued cards for clients.  The card will be personalised and issued on the carrier, however, the vouchers will remain attached to the carrier but will be voided with XXXX's.  This includes clients who:

  • Have had a 2003 DVA PCC processed with vouchers, then lost and regained eligibility during the course of the year; or
  • Centrelink Transfer In cases, as they would have already received their PCC and vouchers from Centrelink.

Voucher Replacement

For most States, neither Centrelink nor DVA will have the facility to issue replacement vouchers.  The PCC carriers display a warning stating that DVA cannot issue replacement vouchers.  Where State rail authorities have provided them, contacts and procedures for applying for replacement vouchers are listed at attachment A of this instruction.

All cardholders are entitled to only one issue of vouchers for their residential State each calendar year except where a cardholder transfers to another State.  New grants of income support pension must not be provided with concession vouchers if they have received a PCC with vouchers in the same calendar year.

Replacement vouchers in
S A & VIC

As in previous years SA Rail have given the South Australian State Office authority to issue replacement vouchers on their behalf.

The South Australian carrier includes contact numbers for pensioners to contact for replacements.

The Victorian Rail Authority have given the Victorian State Office authority to issue replacement vouchers on their behalf.

The Victorian carrier includes contact numbers for pensioners to contact for replacements.

Blind Pensioners

When issuing a blind pensioner a PCC in the daily issue, the PCC stock provided and current issuing procedures should apply.  The reprint program will enable the word 'BLIND' to be printed on the PCC.

Normal PCC stock should be used for blind pensioners.

New PCC Stock

All State Offices should have received stock of 2003 PCCs by 31 August. The fridge magnet calendar stocks will be supplied to the State Offices during the first week in December.

Report Problems to National Office

Staff are reminded that it is important that they keep a log of problems identified following the bulk issue of PCCs.  Every endeavour will be made to rectify any identified problems.

Contact Officer

The contact officer for this exercise is Robert Krajina on 02 6289 6044 or fax 02 6289 6553.

ATTACHMENT A

Arrangements for providing replacement Travel Vouchers for Pensioner Concession Cardholders in 2003

VIC — The Victorian Rail Authority continue to give the DVA Victorian State Office authority to issue replacement vouchers on their behalf for an indefinite period.

SA — SA Rail continue to give the DVA South Australian State Office authority to issue replacement vouchers on their behalf indefinitely

WA(08) 9326 2222 – WAGR

For a period up until the 31 — st January 2003, WAGR have given authority to our WA State Office to issue replacement vouchers on their behalf.

After this date people can phone WAGR to apply for replacement vouchers.

Note: WAGR may charge for replacement vouchers.

C39/2002 DETERMINATIONS UNDER SUB-SECTION 5R(3) - NOT A MEMBER OF A COUPLE

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DATE OF ISSUE:  26 AUGUST 2002

DETERMINATIONS UNDER SUB-SECTION 5R(3) – “NOT A MEMBER OF A COUPLE”

Introduction

The purpose of this Departmental Instruction is to provide advice on the use and application of sub-section 5R(3) of the Veterans' Entitlements Act 1986 (VEA).  This sub-section allows a delegate to decide, for any special reason, that a person who is a member of a couple may be treated under the VEA as not being a member of a couple.

This Departmental Instruction replaces the earlier instructions given in DI C16/99 [43], Determination of member of a couple, particularly regarding the method of calculation of the rate of pension when a determination under sub-section 5R(3) has been made.

Sub-section 5R(3)

Sub-section 5R (3) states:

“Person may be treated as not being a member of a couple”

(3) The Commission may determine, for any special reason, that a person who is a member of a couple is not to be treated as a member of a couple for the purposes of this Act.

Background

Prior to October 1995, if a veteran was a member of a couple and the veteran's partner was not receiving a service pension or social security pension or benefit, the veteran could receive the single rate of service pension (calculated on the couple's combined income and assets).  Under changes announced in the 1995/96 Budget, the rate of service pension for a member of a couple was limited to the partnered (married) rate.  This applied even where only one member of the couple is eligible for, or chooses to receive the pension.

The rate of pension was calculated using the couple's combined income/assets and the partnered income free areas (IFA) and asset free areas (AFA). There was a proviso that the determined rate could not exceed twice the partnered rate at which the service pension would be paid to the veteran if the partner were receiving a service pension or social security pension or benefit.  The exceptions to using a couple's combined income/assets, and payment at the partnered rate, were limited to illness and non-illness separated couples, or in exceptional circumstances.  This would include any special reasons envisaged under sub-section 5R(3).

Previous Departmental Instruction

Departmental Instruction C16/99 [43], issued in July 1999, advised that the calculation of the rate of pension in 5R(3) cases should be based on the partnered assessment, using the partnered rates of IFA/AFA, but with any excess income or assets to be deducted from the single rate of pension.

This method of calculation continued the previous practice of recognising the couple's combined income and assets.  It was also intended in part to prevent the inappropriate payment of higher levels of pension, in circumstances where a couple transfer all income and assets to the name of the partner not claiming a pension or benefit, while the other partner claimed single rate of pension.

While this previous instruction was intended as a response to the possibility that a couple may contrive to transfer all income/assets to one partner, it is not supported by the source legislation.  A decision under 5R(3) applies for all the purposes of the Act, and cannot be partially applied.  Section 5E(5) (Standard family situation categories) reinforces this position, by stating that a person is regarded as being partnered for the purposes of the Act where they are a member of a couple.  This is not the case where a 5R(3) determination has been made.

Revised method of pension calculation in  5R(3) cases

In view of the legislative requirements, the method of calculating pension in 5R(3) cases has been amended.

Where a person has been determined under 5R(3) to be not a member of a couple, their partner's income and assets are excluded from the assessment.  The non-partnered IFA and AFA are used, with any excess income or asset values to be deducted from the non-partnered rate of pension.

Existing 5R(3) cases

Existing 5R(3) cases should be reviewed, based on the revised method of calculation outlined above, effective from the date of this Departmental Instruction.

Application of sub-section 5R(3)

Sub-section 5R(3) is intended to be used in situations where either member of the couple does not, or cannot reasonably expect to, enjoy the benefits from the pooling of resources that usually occurs in a marital relationship.

The discretion to treat a person as not being a member of a couple should be exercised only where a full consideration of all the circumstances relevant to the individual's case would make it unjust or unreasonable not to do so.

It is not possible to predict all of the situations in which it would be appropriate to exercise the discretion. However, the following considerations should be borne in mind:

  • The reasons for exercising the discretion would be expected to be those that relate to the nature of the marital relationship;

  • Financial hardship is not, of itself, a sufficient reason for exercising the discretion; and

  • The discretion will usually only be exercised if the marital situation is unusual, uncommon or abnormal – all the circumstances of the case should be examined before considering whether it is reasonable to exercise the discretion.

There may be other circumstances requiring close examination, such as where the affairs of a married couple may have been arranged so that the access of one partner to the other's income is limited.  In examining such cases, great care should be taken to ensure that the situation has not been contrived to circumvent the purposes of the Act.

Income/Asset transfer

Delegates should carefully examine cases, before making a 5R(3) determination, if there is reason to believe that income and assets have been transferred to the partner not in payment.  Cases of genuine transfer, to meet a proven financial need of the partner, may be allowed, but unnecessary transfer for the purposes of affecting the rate of pension should not be allowed.

Cases of suspected income/asset transfer should be carefully reviewed (see below).

Examples of appropriate circumstances

Situations where it may be appropriate to exercise the 5R(3) discretion, based on the “special reasons” of the couple, include the following.  (These examples are not intended to be exhaustive).

  • Where a partner travels overseas, with the result that the partner remaining in Australia is deprived of access to the travelling partner's income.  In this situation, delegates should weigh all relevant factors, including any legal restrictions on the transfer of funds from overseas, whether the overseas partner has sufficient funds to remit to Australia, whether either party has the power to alter the situation and is taking reasonable steps to do so, and whether the situation arose as an unintended consequence of the partner's actions;

  • Where there are legal restrictions which limit access to a partner's income.  This might include the circumstance where the use of a partner's income is subject to the approval of a person with power of attorney, or otherwise limited by law.  Cases where a partner is unable to access overseas sources of income due to exchange controls (overseas 'blocked' income) could also be considered ;

  • Where there are visa problems or delays which prevent the payment of a social security pension or benefit to the partner;

  • Where partners are subject to the Centrelink rules which require a two year waiting period before benefits are payable (the Newly Arrived Resident Waiting Period rule);

  • Where a partner may be prevented from working and has no other source of income; and

  • Where the veteran is not TPI and the partner is under the partner service pension age limit, with no dependent children, resulting in the partner being ineligible for partner service pension and where there is no eligibility for a Centrelink pension or benefit.

Reviews

It is important to regularly review 5R(3) determinations, to ascertain whether it is appropriate that they continue, or whether the person's (and their partner's) circumstances have changed so that it is no longer appropriate to apply the discretion.

Reviews might include periodically obtaining information on the partner's income and assets, by obtaining a copy of the partner's tax return or by completion of an income/asset statement.

Where the information necessary to conduct a review is not provided, without reasonable explanation, this should be regarded as sufficient cause to cancel the 5R(3) determination.

Death of a veteran – where a 5R(3) determination exists

While for the purposes of the Act a veteran subject to a 5R(3) determination is deemed as, and treated as, a non-partnered person, their marriage or relationship remains a fact.  On a veteran's death, the 5R(3) determination is automatically cancelled.  Provided the normal qualifying tests are satisfied, payment of war widow/er's pension can be made to the surviving partner.

Social Security age pensions

This Departmental Instruction applies to service pension payments, and the discretion available under 5R(3) should not be considered when assessing age pension payments under the Social Security Act 1991.  For these cases the Centrelink guidelines (at paragraph 2.2.5.50 of the Guide to Social Security Law) should be followed.

Inquiries

Any question regarding this DI should be directed to the Policy Section in National Office:

  • Jeanette Ricketts, Director              (02) 6289 6085
  • Brian Butler, Assistant Director              (02) 6289 6564

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

23 August 2002

C38/2002 ISSUE OF 2002/03 COMMONWEALTH SENIORS HEALTH CARD (CSHC)

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DATE OF ISSUE:  13 AUGUST 2002

ISSUE OF 2002/03 COMMONWEALTH SENIORS HEALTH CARD (CSHC)

PURPOSE

To provide information about the bulk issue of the 2002/03 Commonwealth Seniors Health Card (CSHC).

HISTORY & CONCESSIONS PROVIDED

The CSHC was introduced on 1 July 1994 and currently provides entitlement to Commonwealth Concessions for pharmaceuticals listed on the Pharmaceutical Benefits Scheme (PBS).  Access to the Commonwealth Dental Program by the CSHC holders ceased on 1 January 1997 and eligibility for hearing services became unavailable from 1 July 1997. However, certain States (WA & SA) are now offering additional state specific concessions to CSHC holders.

From 1 September 2001, CSHC holders, who are eligible telephone subscribers, became eligible for Telephone Allowance (TA) payable quarterly.  CSHC holders can also access discounted rail travel (50% of the economy fare) on Great Southern Railway services: The Ghan, The Overland and The Indian Pacific.

ELIGIBILITY

The CSHC is intended to assist eligible veterans, and their partners, widows and widowers, of pension age who fail to qualify for pension due to assets or income in excess of the current limit.

To be eligible for the CSHC, a person must:

  • be a veteran who has rendered qualifying service or the partner, non-illness separated spouse or widow(er) of such a veteran; and
  • have reached pension age; and
  • be an Australian resident living in Australia; and
  • not be in receipt of service pension, income support supplement or a social security pension or benefit; and
  • satisfy the CSHC income test.

Eligibility is determined manually by State Office staff.

PENSION AGE

Pension age for male veterans with QS and war widowers is 60 years of age (or greater), and for non-veterans and veterans without QS is 65 years of age (or greater).

Pension age for female veterans and war widows is:

  • 56.5 years of age for those born from 1 July 1943 and 31 December 1944
  • 57 years for those born from 1 January 1945 to 30 June 1946.

Pension age for female non-veterans is:

  • 61.5 years for those born from 1 July 1938 to 31 December 1939 and
  • 62 years for those born from 1 January 1940 to 30 June 1941.

A detailed table of Pension Age can be found at sections 5QA and 5QB of the VEA.

THE CSHC INCOME TEST

The CSHC income test is based on adjusted taxable income.  The current CSHC income limits are as follows:

  • single - $50,000
  • partnered - $80,000
  • illness separated - $100,000
  • plus an additional amount per year for each dependent child - $639.60.

PRODUCTION, TIMING AND CARD NUMBERS

The bulk printing of the 2002-03 cards will commence on 22 August 2002.

As at 9 August there are 7,427 cards to be printed (5,504 in 2001-02). Following is the State by State breakdown of the expected numbers of CSHCs to be issued in the bulk run and the quantity of the blank stock to be supplied to the State Offices for daily card issue.

State

No. - Bulk issue

Blank supply

for daily issue

NSW

2671

1000

VIC

1715

1000

QLD

1152

500

WA

1179

500

SA

586

500

TAS

124

500

TOTAL

7427

4000

FORMAT OF CARDS/ CARRIER

The card has not changed from last year.   The carrier will continue to be a single A4 cut sheet format stationery, printed on the front and back. The card and carrier are identical for each State.  However, during the personalising process, slightly different information will be printed on the carrier for each State.

EXPIRY DATE

The expiry date for all CSHCs will be 30 September 2003.

POST PRODUCTION REPORTS

IMU will forward all reports to the respective State Office contacts.

DAILY ISSUES & STATE OFFICE CONTACTS

The new templates for the daily issue are to be used from Monday 19 August.  The new templates have the expiry date of 30 September 2003. This means States will only need to issue one card for any new grants after 19 August 2002.  ie the card will show: “Valid from: 19 August 2002 to 30 September 2003.

STATE

CONTACT

PHONE

FAX

NSW

William Berridge

(02) 9213 7874

(02) 9212 7885

VIC

David Price

(03) 9284 6379

(03) 9284 6797

QLD

Geraldine Howard

(07) 3223 8842

(07) 3223 8533

WA

John Gliddon

(08) 9366 8417

(08) 9366 8239

SA

Maria Lewandowski

(08) 8290 0439

(08) 8290 0412

TAS

Bryon Kelly

(03) 6221 6684

(03) 6221 6601

FACT SHEETS WITH NEW GRANTS

States are required to insert a CSHC Fact Sheet with all new grants.  This info is necessary to fully explain the nature of the income that is taken into account to determine whether a person meets the seniors health card income test.

REPORT DAILY ISSUE DIFFICULTIES

Any difficulties in relation to daily issues should be reported to the contact officers in National Office.

Robert Krajina

Tel:  (02) 6289 6044

Fax:  (02) 6289 6553

ROGER WINZENBERG

BRANCH HEAD

INCOME SUPPORT

12 August 2002

C37/2002 Override Facility for Recording Lump Sum Advance in DMRS.

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DATE OF ISSUE:  5 AUGUST 2002

Override Facility for Recording Lump Sum Advance in DMRS.

Purpose

The purpose of this Departmental Instruction is to provide procedural information with regards to processing Lump Sum Advance requests for clients who have recently transferred from Centrelink.

Background

To be eligible for a Lump Sum Advance (LSA) a client must have been receiving a pension from DVA or Centrelink continuously during the three months prior to the advance being paid.

The Debt Management System (DMRS) has system controls in place to reject an LSA request if the client has a continuous payment history of less than three months recorded in IPS.

Although clients transferring from Centrelink may actually meet the three-month eligibility criteria, IPS will not have the appropriate history until they have been with DVA for 3 months.  Therefore, DMRS does not allow users to record a LSA request for these clients.

System Changes

To allow for the recording of requests for LSA for Centrelink transferees, an extra field 'LSA Override check' has been added to the 'Lump Sum Advance Details' under the Add Debts folder.

If a new LSA request is created with this override field selected, the details are also recorded as a comment within the transaction folder indicating that this override facility has been used.

The override facility only operates to bypass the requirement for three month's continuous payment, and has not changed or overridden any of the other system edits currently in place.

When to Use this Facility

The override facility should only be used for clients transferring from Centrelink who meet all of the other LSA eligibility requirements.  It should not be used as a way to bypass system edits so that clients who are not eligible can be granted LSA.

NO Contact Details

Any queries should be directed to Danielle Cunningham, who can be contacted on 02 6289 6715.

Roger Winzenberg

Branch Head

Income Support

5 August 2002

C36/2002 AUTOMATION OF DEATH PROCESSING CASES

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DATE OF ISSUE:  2 AUGUST 2002

AUTOMATION OF DEATH PROCESSING CASES

Purpose

The purpose of this Departmental Instruction is to provide information about two changes to the Death Processing System (DPS) which took place on 27 July 2002:

  1. the first change will automate processing of Single DSS Age Pensioners;
  2. the second change will correct the way DPS processes home entry contributions.

Automation of DSS Age Pensioners

Background

The Department is required to process Age Pensioners under FACS rules as defined in the Social Security Act rather than in accordance with the Veterans' Entitlements Act 1986 (VEA).  These rules have proven too complex to easily program and consequently all Age Pension deaths have been processed as “manuals” since the introduction of DOE in April 2000.

A recent reinterpretation of how these rules are put into practical operation by Centrelink has simplified the programming and it is now possible for DPS to process these cases automatically.

Two phases

The changes relating to DSS Aged Pensioners will occur over two phases.

Phase 1 - will automate the processing of Single Age Pensioners who have a Method of Assessment of:

32 – Single DSS Age Pensioner and

33 – Single DSS Age Pens Sps, Widow/Sep.

Phase 2 -will automate the processing of Married Age Pensioners and Illness Separated couples.

Impact

Information gathered indicates that half of the manual cases produced and reported by DPS are related to DSS Age Pensioner cases.  There are some 5000 DSS Age Pension assessments of which approximately 1/3 are MOA 32 and MOA 33's. This equates to 17% of manual cases being addressed in Phase 1 and approximately 50% of manual cases being eliminated on the introduction of phase 2, with consequent reduction of work for staff in those areas.

Phase 1 – Single Aged pensioners

There are an estimated 1750 Single DSS Age Pensioners currently paid by DVA.  It is expected that all deaths for these clients will be automatically processed by DPS, outside of existing requirements that cause a case to be reported for manual action (e.g. death notified greater than 99 days after death).  DPS will continue to turn off the deceased's eligibility for treatment.

Phase 2 – Married Age Pensioners and Illness Separated couples

The implementation of this phase will mean 95% of Age Pension Assessments will be automated.  There is no delivery date as yet for the second part of Age Pension automation.  However, the business rules have been specified and as soon as programmer resources are available the work will be undertaken in the first quarter of this financial year.

Summary of Old System

DPS prior to the change.

Prior to this enhancement, DPS identified if the deceased was a single DSS Age Pensioner and if so turned off their eligibility for treatment and reported the case for manual termination and manual calculation.  State Office staff were then required to process the case through PIPS.  Payment action may also involve using IPS for lump sum payment.

Summary of Changes

SSA Rule

The SSA Rule 91(1) states:

When a single age pensioner dies, then the installment for the entitlement period in which the person died is payable (i.e. one further pension installment is paid to the estate for all the days in the entitlement period for which they die).

Centrelink Interpretat-ion

Centrelink has advised that it interprets the above rule as following for the payment of pension:

The pensioner is entitled to only those days from the day after death until the end of the entitlement period (death period).

That is:

  •     If the pensioner dies on day 4 of a period then his estate is entitled to 10 days.
  •     If he dies on day 9 then the estate is paid on 5 days. 
  •     If he dies on day 14 then no estate payment is made.

DVA Manual Action Required to process

Should a death relating to a single DSS Age Pensioner require manual action the following rules should be followed:

  • Cancel the deceased's assessment and payments from day after death
  • Cancel deceased's entitlements to fringe benefits from day after death
  • Identify if date of processing is during period of death

If processing is during period of death:

  • Calculate the number of days remaining from the day after death to last day of entitlement period (period in which the person dies)
  • Calculate that number of days x daily rate of Age Pension as the SEP (Single Estate Payment)
  • Pay the SEP as lump sum amount to default bank account using the payability type of Bereavement Payment (450)

If processing is after the period in which death occurred:

  • Calculate number of days released since date of death (A)
  • If only one payment has been made, and that is for the period in which death occurred, then no SEP is payable.
  • If more than one payment (the one for the death period) has been released then calculate how many days in total have been released (B).  Subtract the number of days released from day after death until the end of pension period that death occurred in (B-A).  The amount derived is now the amount overpaid and is recoverable.

Note:  If a single DSS Age Pensioner dies on day 14 of a pension period there is no SEP payable.

Disability Pension

There are no changes to the calculations for bereavement in relation to Disability Pension.  That is - There is no Disability Pension payable for the period in which the death occurred.

Commencement Date for Single Age Pension Changes

Commence-ment date

The changes for Phase 1 above were implemented on 25 July 2002.

The changes for Phase 2 have commenced but implementation has not yet been scheduled.  This change will be the subject of a separate DI.

DPS and Home Entry Contributions

DPS and Home Entry Contributions

Background

The Death Processing System has been incorrectly handling any Entry Contribution recorded in a Service Pension assessment when:

  1. a member of a couple dies; and
  2. a member of an illness separated couple dies. 

This problem can result in the wrong rate of Service Pension being paid to the survivor.  It can also cause problems when cases are later processed through PIPS/PC, again resulting in the wrong rate of pension being paid to a client.

What has changed?

Several changes were incorporated in the current release of DPS that have corrected the problems associated with a) above, including:

  • when a member of a couple dies the total of the Entry Contributions recorded as paid by the couple will be recorded against the survivor.

Further changes will be made in the next release of DPS which will cater for scenario b) above.  Appropriate notification to State Offices will be given when these changes take effect.

Entry Contribution in an assessment policy

For service pension purposes if an entry contribution is in the assessment for either a veteran, spouse or defacto and

  • Homeowner - Basic Assessment rules apply (low asset test):

any Entry Contribution recorded is an exempt (non-assessable) asset.

  • Non-Homeowner – Basic Assessment Rules apply (high asset test):

any Entry Contribution recorded is an assessable asset.

AP and ISS assessments

For income support supplement (ISS) and age pension (AP) assessment purposes, EC are treated the same as for Service Pension as above.

How the Entry Contribution is affected when a Member of a couple dies

When a member of a couple dies the policy states:

  • The total of the Entry Contributions recorded as paid by the couple should be recorded against the survivor. 
  • The asset limit that applied to the married assessment will also apply to the survivor's assessment.

If the asset limit of the survivor's assessment is:

  • Low (Homeowner's Basic Assessment rules applies) - the entry contribution remains a non-assessable asset
  • High (Non-homeowner's Basic Assessment rules apply) – the entry contribution remains an assessable asset

Old DPS Rules for Entry Contribution

The entry contribution of the deceased was deleted by DPS, and the survivor's Entry Contribution continued to be held.

If the asset limit of the survivor's assessment was:

  • Homeowner's - Basis Assessment rules applied (low asset test), the Entry Contribution was held incorrectly as an assessable asset
  • Non-homeowner – Basic Assessment Rules applied (high asset test), the survivor's Entry Contribution remained an assessable asset

Any home contents recorded were being incorrectly deleted if the veteran that dies is the member of a couple.

New DPS Rules for Entry Contribution

The entry contribution of the deceased will be deleted by DPS, and the survivor's Entry Contribution will be updated to the total of the Entry Contribution.

If the asset limit of the survivor's assessment is:

  • Homeowner's - Basis Assessment rules apply (low asset test), the Entry Contribution will remain as an non- assessable asset;
  • Non-homeowner – Basic Assessment Rules apply (high asset test), the Entry Contribution will remain as an assessable asset.

Any home contents recorded will continue to be maintained for the survivor.

Example 1 – married couple when low asset test applies

Married assessment with low asset limit - if a couple had paid $180,000 as an Entry Contribution to enter a retirement village and no home contents are recorded.  An Entry Contribution of $90,000 each will be recorded in their married SP assessment.

When DPS processes this case, it will delete the $90,000 Entry Contribution for the deceased and update the survivor's Entry Contribution from $90,000 to $180,000.  The 'new' entry contribution remains a non-assessable asset.

Note: the asset limit that applies to the assessment will not be changed by DPS processing.

Example 2 – married couple when high asset test applies

Married assessment with high asset limit – if a couple paid $80,000 to enter a retirement village as an Entry Contribution.  Home contents of $2000 recorded.  An Entry Contribution of $40,000 each will be recorded in their married SP assessment.  The home contents will be recorded against the veteran.

When DPS processes this case, it will delete the $40,000 Entry Contribution for the deceased and update the survivor's Entry Contribution from $40,000 to $80,000.  The home contents will continue to be recorded against the veteran if he is the survivor.  If the veteran is deceased, the home contents will now be recorded against the survivor.

Note: the asset limit that applies to the assessment will not be changed by DPS processing.

Commencement Date

Commence-ment date

The changes relating to home entry contributions were implemented on 26 July 2002.

Contact

Contact officer for enquiries relating to this topic is Steve Claypole on 02 6289 6792.

Roger Winzenberg

Branch Head

INCOME SUPPORT

2 August 2002

C35/2002 EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

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DATE OF ISSUE:  2 August 2002

EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

Purpose of Instruction

The purpose of this Departmental Instruction is to provide information about the Pounds Sterling exchange rate variation exercise.

Introduction

Following the recent variation in foreign exchange rates, it is appropriate for DVA to apply a new exchange rate for income support pension assessment purposes.

New exchange rate A$2.8547

The exchange rate used to convert Pounds Sterling to Australian Dollars for income support assessment purposes has changed from one Pound = A$2.7450 to one Pound Sterling equals A$2.8547 (ie A$1 = ?0.3503).

This rate reflects the average of the “on demand airmail buying rate” for the two weeks to 2 August 2002.

Date of effect
6 August 2002

Effective from 6 August 2002 the current exchange rate will change.

On pension payday 22 August 2002 (pay period 30) pensioners will receive a full instalment at the new assessed rate.

Date of processing run

Processing to implement the new exchange rate is scheduled for the evening of Monday 5 August 2002.

Automatic superannuation processing

The amount recorded as BRI non-indexed super type 08 or BRI indexed super type 09 will be varied by applying the exchange rate to the amount recorded, to find the new rate of superannuation.  The pension amount will then be reassessed automatically.

Manual cases and MS cases

Cases with actions in frozen status will not be processed automatically.  These cases will be listed on the manual listing for follow up action, and CMS/PIPS cases will be created automatically for State Office action.  Any cases processed through PIPS/PC should be reassessed from the beginning of the pension period for pension payday 22 August 2002 – ie 6 August 2002.

Advice letters

The advice letters for this exercise will be joint advices where both members of a couple are in receipt of BRI and their pension payment varies.  Age Pensioners will receive separate advices.

The letter will advise the new exchange rate, the amount of income and a payment box.  An advice will only be produced for cases where a variation in payment results.

IBM GSA implications

IBM GSA will produce the cartridge and forward it to Security Mailing in Sydney.

Overseas, Special Register and Enclosure Advices

Overseas, Special Register, Enclosure Advice letters (ie cases where a change to treatment entitlement occurs) and reduction to nil cases will be separated by IBM GSA and despatched to the State Office for manual distribution.  This arrangement is the same for daily advice letters.

Mail out of bulk advices

Security Mailing will print and prepare the advices for lodgement with Australia Post by 13 August 2002.

British DP case paid Rent Assistance

Income Support pensioners who are in receipt of Rent Assistance (RA) and who also receive British Disability Pension direct from Britain (not EATS and Composite cases) should have that Disability Pension converted to $A using the BRI exchange rate.  RA should be manually recalculated.  These cases can be extracted through AIS by each state.  If you have any problem please contact Andrew Purcell on the number below.

Note: If DP has already been assessed as income in determining Hardship cases it should not also be assessed as income for RA.

Contact officer

The Income Support Branch contact officer is:

Andrew Purcell           Telephone:   (02) 6289 4832

Roger Winzenberg
Branch Head
INCOME SUPPORT

2 August 2002


POUND STERLING EXCHANGE RATE

Foreign exchange periodExchange rate

3 Dec 98

to

27 January 99

0.3834

2.6082

28 January 99

to

10 Feb 99

0.3719

2.6889

11 Feb 99

to

19 May 99

0.3905

2.5608

20 May 99

to

28 July 99

0.4079

2.4516

New Date of Effect Rules

13 July 99

to

9 August 99

0.4271

2.3414

10 August 99

to

1 Nov 99

0.4105

2.4361

2 Nov 99

to

10 Jan 00

0.3952

2.5304

11 Jan 00

to

6 March 00

0.4069

2.4576

7 March 00

to

1 May 00

0.3927

2.5465

2 May 00

to

29 May 00

0.3807

2.6267

30 May 00

to

10 July 00

0.3907

2.5595

11 July 00

to

16 Oct 00

0.4022

2.4863

17 Oct 00

to

2 April 01

0.3737

2.6759

3 April 01

to

14 May 01

0.3550

2.8169

15 May 01

to

23 July 01

0.3674

2.7218

24 July 01

to

6 August 01

0.3803

2.6295

7 August 01

to

1 October 01

0.3701

2.7020

2 October 01

to

29 October 01

0.3430

2.9155

30 October 01

to

10 December 01

0.3588

2.7871

11 December 01

to

7 January 02

0.3709

2.6961

8 January 02

to

18 March 02

0.3612

2.7685

19 March 02

to

27 May 02

0.3723

2.6860

28 May 02

to

10 June 02

0.3830

2.6110

11 June 02

to

08 July 02

0.3928

2.5258

09 July 02

to

22 July 02

0.3758

2.6610

23 July 02

to

05 August 02

0.3643

2.7450

06 August 02

to

0.3503

2.8547

C34/2002 CHANGES TO IPS - PREVENTING DECEASED PEOPLE FROM GOING BACK INTO PAYMENT

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DATE OF ISSUE:  2 AUGUST 2002

CHANGES TO IPS – PREVENTING DECEASED PEOPLE FROM GOING BACK INTO PAYMENT

Purpose

This Departmental Instruction provides information concerning recent changes made to the IPS fortnightly payrun process (IPS FORT) to prevent deceased people from being returned to payment.  The changes may result in some additional processing work where problem cases are identified.

Background

For some time there have been problems with system processes returning deceased people to payment.  System Delivery, in conjunction with IMU, has been examining the cause of these problems and has identified several system processes that may erroneously cause a deceased client to return to payment.

Every effort has been made to identify and correct all of the potential causes of this problem, however, there remains the possibility that some system errors will remain undetected.  It is also possible that system changes made in the future may introduce new scenarios in which deceased clients may otherwise incorrectly be returned to payment.

To ensure that payments to deceased clients are not continued, a check to prevent this happening has been built into the IPS FORT process.

No Fortnightly Payments Made  Where Date of Death Recorded

If a client has a date of death recorded then any recurring and associated adjustment (recon) payments will not be made to the client on the normal fortnightly payday.  Adjustment (recon) payments will only be paid if the client has recurring payabilities of zero rate recorded.

The change works in the same way as for normal IPS FORT errors.  Processing for the client is bypassed completely and no payments are created for the fortnightly payday – this includes any adjustment payments (recons).

The cases are listed as errors on the normal IPS FORT errors report - System Errors (Payment Creation) – (State) Pension Payments – Fortnightly report.   This report is provided to SSOs after each IPS FORT run.

No other action (such as cancelling the recurring payabilities) is performed by the IPS FORT process in respect of the client.

Impact for Death Cases

In normal circumstances, the Death Processing System (DPS) cancels the recurring payabilities and triggers calculation/creation of any required adjustment (recon) payabilities as well as the bereavement payment.  Any fortnightly payments that have been made since the date of death are taken into account when the bereavement payment is automatically calculated.

The change being introduced will have implications for death cases where DPS has not been able to process a death case to finality (due to an error or system problem).  In these cases the client will have a date of death recorded, but the ongoing payments will not have been cancelled.  Until the appropriate PIPS case is actioned to terminate payments, etc., the IPS FORT process for subsequent paydays will bypass the client.

This means that the manual calculation of bereavement payments will need to take into account that ongoing payments have not been made since the date of death was recorded.  This, in turn, means that some adjustment to current procedures may be required.

Five Possible Scenarios

Basically, there are five possible processing scenarios that can arise when a death case is actioned.

Scenario 1

DPS processes the death case to finality.  All payments are automated whether or not the date of death is retrospective to the last payday.

Scenario 2

DPS does not process the case to finality and date of death is in the current pension period.  The appropriate PIPS action to terminate payments, etc. is completed before cut-off for the next fortnightly payday.

Scenario 3

DPS does not process the case to finality and date of death is in a past pension period.  The appropriate PIPS action to terminate payments, etc., is completed before cut-off for the next fortnightly payday.

Scenario 4

DPS does not process the case to finality and date of death is in the current pension period.  The appropriate PIPS action to terminate payments, etc. is not completed before cut-off for the next fortnightly payday.

Scenario 5

DPS does not process the case to finality and date of death is in a past pension period.  The appropriate PIPS action to terminate payments, etc., is not completed before cut-off for the next fortnightly payday.

Some explanation for each of these scenarios is provided below.

Scenario 1 -  DPS Successful

DPS Processes Death Case to Finality

In cases where DPS has processed the case to finality, it automatically terminates all payments, etc. and calculates the bereavement payment.  The bereavement payment calculation automatically takes into account any fortnightly payments made since the date of death.

The new edit check in the IPS FORT process has no implications for these cases because all ongoing payments have been cancelled before the next fortnightly cut-off.

Scenario 2 – DPS Fails

Date of Death in Current Pension Period (processed before cut-off)

PIPS Action in Current Pension Period

In these cases, the PIPS action terminates the ongoing payments, etc. and, if appropriate, sets up pension and related payments due for the period from day 1 of the pension period up to the date of death.   The IPS FORT process for the current pension period releases these payments.  State Office staff are responsible for calculating the bereavement payment and authorising its release to the estate or surviving partner.

The new edit check in the IPS FORT process has no implications for these cases because all ongoing payments have been cancelled before the next fortnightly cut-off.

Scenario 3 – DPS Fails

Date of Death in Previous Pension Period (processed retrospectively)

PIPS Action in Current Pension Period

In these cases, the PIPS action terminates the ongoing payments, etc. and, if appropriate, creates a debt in DMARS for the period from the date of death to day 14 of the previous pension period.  State Office staff are responsible for calculating the bereavement payment (taking into account the overpayment) and authorising its release to the estate or surviving partner.

The new edit check in the IPS FORT process has no implications for these cases because all ongoing payments have been cancelled before the next fortnightly cut-off.

Scenario 4 – DPS Fails

Date of Death in Current Pension Period (processed before cut-off)

PIPS Action After Cut-off For Current Pension Period

The new edit check in the IPS FORT process has some implications for these cases as indicated below.  Some change to local procedures will be necessary.

With cases that fit this scenario, because the PIPS action has not been done, the IPS FORT process will bypass all payments for the client on the next payday.  This includes payment for the period from day 1 of the pension period up to the date of death to which the client was entitled.

The PIPS action (when done) will terminate the ongoing payments, etc. from the date of death and create a debt in DMARS for the period from the date of death to day 14 of the previous pension period.

The important points to note with these cases are:

Payment for the period from day 1 of the pension period up to the date of death has not been made; and

An overpayment has not occurred because all payments were actually  bypassed by the IPS FORT.

State Office staff responsible for managing death cases will need to ensure these factors are taken into account when processing bereavement payments.  The underpaid entitlement should be paid to the deceased client's estate.  The DMARS debt should be waived using the Transaction Type “Waiver Other Reasons (CR)”.  Appropriate comments should also be recorded against the debt transaction.

Scenario 5 – DPS Fails

Date of Death in Previous Pension Period (processed retrospectively)

PIPS Action After Cut-off For Current Pension Period

The new edit check in the IPS FORT process has some implications for these cases as indicated below.  Some change to local procedures will be necessary.

With cases that fit this scenario, because the PIPS action has not been done, the IPS FORT process will bypass all payments for the client on the next payday.   However, the client will already have been overpaid in relation to the previous pension period (maybe more than one pension period depending on the delay in being advised of the client's death).

The PIPS action (when done) will terminate the ongoing payments, etc. from the date of death and create a debt in DMARS for the period from the date of death to day 14 of the previous pension period.

The important points to note with these cases are:

Payment for the period from day 1 of the pension period up to the date of death has been made on an earlier payday; and

The DMARS debt may be overstated and must be checked.  The client will have been overpaid for the period from date of death up until day 1 of the pension period in which the date of death was actually recorded.  All payments from that point are bypassed by the IPS FORT process, although the PIPS case does not take account of this.

State Office staff responsible for managing death cases will need to ensure these factors are taken into account when processing bereavement payments.  The relevant portion of the DMARS debt relating to the actual overpaid entitlement should be recovered from the bereavement payment as per normal.  The remainder should be waived using the Transaction Type “Waiver Other Reasons (CR)”.  Appropriate comments should also be recorded against the debt transactions.

NO Contact

The National Office contact officer for these system changes is Andrew Thomson who can be contacted on (02) 6289 4745 or by email.

Roger Winzenberg

Branch Head

Income Support

2 August 2002

C33/2002 BREACH OF PRIVACY - PIPS PC PROCESSING OF MARITAL SEPARATION

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DATE OF ISSUE:  1 AUGUST 2002

BREACH OF PRIVACY - PIPS PC PROCESSING OF MARITAL SEPARATION

Purpose

The purpose of this Departmental Instruction is to;

  •       Provide information to all States about a privacy breach resulting from an incorrectly processed marital separation case, and
  •       Ask States to ensure that marital separations are being processed correctly within the State.

Background

A system problem was identified late last year, which meant that marital separation cases could not be processed in one action through PIPS PC. A system fix was implemented in February.

It has come to light that, between the time the fault was identified and fixed, a local practice of processing cases as illness separated assessments was introduced.  For staff who adopted this practice, instructions were given to readjust the assessment once the system fix was implemented.

The local practice did not include instructions to amend the CO.CO (Client correspondence) facility that can be used to request separate advice letters.

A breach of Privacy has occurred where the local practice failed to revert a case to the correct assessment type following the implementation of the system fix and advices were issued jointly.

Privacy Breach

In June each year, the Department undertakes a bulk mailout to issue approximately 350,000 households with advice letters to persons in receipt of a service pension, age pension or income support supplement.  The majority of these letters will include Payment Summaries for the end of the financial year.  For illness separated assessments, certificates are forwarded jointly to the veteran's address and include advice letters which may include Income/Asset statements for recipients on less than maximum rate.  In the case of marital separations however, automatically generated information is forwarded to the separate addresses of the couple.

Unfortunately a Privacy Breach has occurred where an illness separated assessment was not reverted to marital separation and the veteran was issued with all details for both he and his separated spouse.

Correct Processing Method

Marital separation cases should be processed through PIPS PC using the correct assessment type and not as illness separated.

Any states where alternative procedures may have been introduced should ensure that alternative practices are no longer followed and cases have been correctly assessed since the system fix was implemented.

As in the case detailed above, a breach of privacy can occur should incorrect processes be adopted.

System Problems

All system problems should be reported to the System Delivery Section through State System Support Officers as soon as they come to light.

Where States adopt local workaround practices, they must ensure that corrective action is taken once faults have been corrected.

Roger Winzenberg

Branch Head

Income Support

1 August 2002

C32/2002 REASSESSMENT OF COMSUPER AND DFRDB SUPERANNUATION PENSIONS - JULY 2002,

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DATE OF ISSUE:  25 JULY 2002

REASSESSMENT OF COMSUPER AND DFRDB SUPERANNUATION PENSIONS - JULY 2002

Purpose of instruction

The purpose of this Departmental Instruction is to provide information about the July 2002 reassessment of Comsuper and DFRDB superannuation pensions.

Background

Comsuper and DFRDB superannuation pensions are adjusted bi-annually in January and July.  The CPI increase to be applied to the July 2002 adjustment is 1.8%

Processing date

Reassessment processing to reflect the July 2002 CPI increase to Comsuper and DFRDB superannuation pensions will be 25-27 July 2002.

Effective date

The effective date of the reassessment will be 23 July 2002.

On pension payday 8 August 2002, pensioners will receive a full installment at the new assessed rate.

Advice letter target audience

A letter will be produced for Income Support pensioners in receipt of Commonwealth Superannuation and/or DFRDB and following the reassessment have a variation to their pension payment.  There will be approximately 20,000 advice letters nationally.

Printing and mailing of advice letters

The advice letters will be printed and mailed through the Department's bulk mailing house, Security Mailing Services (SMS) in Sydney.  All letters will be lodged with Australia Post by COB Friday, 2 August 2002.

Streamed advices requiring state office action

The following advices will be streamed and printed by IBMGSA, and sent via courier to each State Office for checking and despatch:

  • special register
  • overseas
  • reduction to nil
  • cases which result in multiple payment boxes (ie., Payment Information Attachment); and
  • enclosure (treatment changes).

'Held' advices to be forced

As part of the batch processing run any advices in 'held' status will be forced to print.  Forced 'held' advices will print at each respective State Office's nominated printer.

Contacts

Advice issues - Simone Cantrill (02) 6289 6489.

Systems issues - Kevin Chapman (02) 6289 6749.

ROGER WINZENBERG

Branch Head

Income Support

23 July 2002

C31/2002 EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

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DATE OF ISSUE:  22 JULY 2002

EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

Purpose of Instruction

The purpose of this Departmental Instruction is to provide information about the Pounds Sterling exchange rate variation exercise.

Introduction

Following the recent variation in foreign exchange rates, it is appropriate for DVA to apply a new exchange rate for income support pension assessment purposes.

New exchange rate A$2.7450

The exchange rate used to convert Pounds Sterling to Australian Dollars for income support assessment purposes has changed from one Pound = A$2.6610 to one Pound Sterling equals A$2.7450 (ie A$1 = ?0.3643).

This rate reflects the average of the “on demand airmail buying rate” for the two weeks to 19 July 2002.

Date of effect
23 July 2002

Effective from 23 July 2002 the current exchange rate will change.

On pension payday 8 August 2002 (pay period 29) pensioners will receive a full instalment at the new assessed rate.

Date of processing run

Processing to implement the new exchange rate is scheduled for the evening of Monday 22 July 2002.

Continued on next page

Automatic superannuation processing

The amount recorded as BRI non-indexed super type 08 or BRI indexed super type 09 will be varied by applying the exchange rate to the amount recorded, to find the new rate of superannuation.  The pension amount will then be reassessed automatically.

Manual cases and MS cases

Cases with actions in frozen status will not be processed automatically.  These cases will be listed on the manual listing for follow up action, and CMS/PIPS cases will be created automatically for State Office action.  Any cases processed through PIPS/PC should be reassessed from the beginning of the pension period for pension payday 8 August 2002 – ie 23 July 2002.

Advice letters

The advice letters for this exercise will be joint advices where both members of a couple are in receipt of BRI and their pension payment varies.  Age Pensioners will receive separate advices.

The letter will advise the new exchange rate, the amount of income and a payment box.  An advice will only be produced for cases where a variation in payment results.

IBM GSA implications

IBM GSA will produce the cartridge and forward it to Security Mailing in Sydney.

Overseas, Special Register and Enclosure Advices

Overseas, Special Register, Enclosure Advice letters (ie cases where a change to treatment entitlement occurs) and reduction to nil cases will be separated by IBM GSA and despatched to the State Office for manual distribution.  This arrangement is the same for daily advice letters.

Mail out of bulk advices

Security Mailing will print and prepare the advices for lodgement with Australia Post by 29 July 2002.

British DP case paid Rent Assistance

Income Support pensioners who are in receipt of Rent Assistance (RA) and who also receive British Disability Pension direct from Britain (not EATS and Composite cases) should have that Disability Pension converted to $A using the BRI exchange rate.  RA should be manually recalculated.  These cases can be extracted through AIS by each state.  If you have any problem please contact Andrew Purcell on the number below.

Note: If DP has already been assessed as income in determining Hardship cases it should not also be assessed as income for RA.

Contact officer

The Income Support Branch contact officer is:

Andrew Purcell           Telephone:   (02) 6289 4832

Roger Winzenberg
Branch Head
INCOME SUPPORT

19 July 2002


POUND STERLING EXCHANGE RATE

Foreign exchange periodExchange rate

3 Dec 98

to

27 January 99

0.3834

2.6082

28 January 99

to

10 Feb 99

0.3719

2.6889

11 Feb 99

to

19 May 99

0.3905

2.5608

20 May 99

to

28 July 99

0.4079

2.4516

New Date of Effect Rules

13 July 99

to

9 August 99

0.4271

2.3414

10 August 99

to

1 Nov 99

0.4105

2.4361

2 Nov 99

to

10 Jan 00

0.3952

2.5304

11 Jan 00

to

6 March 00

0.4069

2.4576

7 March 00

to

1 May 00

0.3927

2.5465

2 May 00

to

29 May 00

0.3807

2.6267

30 May 00

to

10 July 00

0.3907

2.5595

11 July 00

to

16 Oct 00

0.4022

2.4863

17 Oct 00

to

2 April 01

0.3737

2.6759

3 April 01

to

14 May 01

0.3550

2.8169

15 May 01

to

23 July 01

0.3674

2.7218

24 July 01

to

6 August 01

0.3803

2.6295

7 August 01

to

1 October 01

0.3701

2.7020

2 October 01

to

29 October 01

0.3430

2.9155

30 October 01

to

10 December 01

0.3588

2.7871

11 December 01

to

7 January 02

0.3709

2.6961

8 January 02

to

18 March 02

0.3612

2.7685

19 March 02

to

27 May 02

0.3723

2.6860

28 May 02

to

10 June 02

0.3830

2.6110

11 June 02

to

08 July 02

0.3928

2.5258

09 July 02

to

22 July 02

0.3758

2.6610

23 July 02

to

0.3643

2.7450

C30/2002 Income Streams Changes - Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Act 2002

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DATE OF ISSUE:  17 JULY 2002

Income Streams Changes – Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Act 2002

Overview

Purpose

The purpose of this Departmental Instruction is to advise States about changes to the income streams rules contained in the Veterans' Entitlements Act 1986 (the VEA).

Legislation

The amendments are contained in Schedule 3 to the Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Act 2002 which was given Royal Assent on 4 April 2002.  Schedule 3 is divided into two parts:

  • Part 1: Small superannuation accounts; and
  • Part 2: Other income streams amendments.

Other systems enhancements

In addition to these changes, a number of systems enhancements have been made relevant to the processing of income streams.  These changes are detailed in the Stateline issued on 21 September 2001 entitled Changes to Income Stream Processing.

Effective dates

Small superannuation accounts - 1 July 1995

All other income stream amendments – 20 September 2001

Authorised by

Roger Winzenberg

Branch Head

Income Support

17 July 2002

Reason for changes

ATO Small superannuation accounts (Schedule 3, Part 1)

These amendments to the VEA are consequential to the enactment of the Small Superannuation Accounts Act 1995 and mirror changes to the Social Security Act 1991 (SSA) at that time, hence the commencement date of 1 July 1995.

The Superannuation Laws Amendment (Small Accounts and Other Measures) Act 1995 provided for a series of amendments to the SSA which were required as a consequence of the changes made to the administration of small superannuation accounts by the Small Superannuation Accounts Act 1995.  That Act provided that such accounts would be held in the Superannuation Holding Accounts Reserve and administered by the Australian Taxation Office.

The amendments to the SSA provided that small superannuation accounts under the new scheme would receive the same income and asset test treatment as superannuation funds, deferred annuities and approved deposit funds.

The Superannuation Laws Amendment (Small Accounts and Other Measures) Act 1995 did not provide for any amendments to the equivalent provisions of the VEA, hence these changes.

Other income streams amendments (Schedule 3, Part 2)

Income streams are a regular series of payments, made for life or for a fixed term, and purchased with a capital sum or made directly from accumulated superannuation contributions.

In September 1998, the Department of Family and Community Services (FaCS) and the Department of Veterans' Affairs (DVA) introduced changes to the legislation affecting income streams

[4] [53] .  Since then, it has become apparent that further amendments were needed due to the development of new products and the identification of a number of anomalies and unintended consequences from the 1998 changes.  These amendments are intended to streamline the operation of the income streams rules and limit the abuse of those rules.  They mirror those made to the SSA by the Family and Community Services Legislation (Simplification and Other Measures) Act 2001.


Summary of changes

ATO Superannuation Accounts

Issue

VEA sections amended

Key changes to VEA

To align VEA with the SSA so that it is consistent with other legislation regarding small superannuation accounts.

5

5J(1)
5J(1B)
5J(1C)

5J(6A)

5J(7)

ATO Small Superannuation Accounts are now specifically included in the definitions of “investment”, “return” and “superannuation benefit”.  This ensures that such accounts receive the same means test treatment as other types of superannuation.

Other income stream changes

Issue

VEA sections amended

Key changes to VEA

Technical amendment - term

5J(1)

The term “public sector scheme” changed to “public sector superannuation scheme”.

Technical amendment -

nature of contract

5JA(1)

The new rules clarify that it is the income stream that arises under the contract or governing rules that must satisfy the ATE criteria (not the contract).

Asset test exempt income streams change no 1 - actuarial certification to obtain and maintain assets test exempt (ATE) status.

5JA(1)
5JB(1)

5JA(1B)
5JB(1C)

5JA(1C)
5JB(1D)

The Repatriation Commission must be satisfied that for certain classes of providers (those private funds which have a higher risk of failing to make the payments indicated in accordance with the legal agreements) there is in force a current actuarial certificate.


Guidelines will be issued for determining this.

There will be a 6-month period of grace to regain certification if a fund's certificate expires.

ATE income streams change no 2 – changes to commutation rules within 6 months

5JA(2)(h)(i)

5JB(2)(h)(i)

Commutations within the first 6 months will be much more restricted.  An income stream may only be commuted within the first 6 months if it was not funded by the commutation of an earlier income stream.

ATE income streams change no 3 – commutation on grounds of hardship.

5JA(2)(h)(v)
5JB(2)(h)(vi)

Partial commutation is available to provide for “hardship amounts” as defined – new subsection 5JA(7) & 5JB.

ATE income streams change 4 - What if the person who owns the income stream dies?

5JA(2)(i)
   (i) & (ii)

5JB(2)(i)

Contracts or governing rules that provide for transfer to further reversionary beneficiary in the event of the death of the first reversionary beneficiary will be permitted.

5JB(2)(h)
  (iii)&(iv)

For life expectancy or 15 year minimum term (5JB) products only – contracts or governing rules that provide for transfer of the legal or equitable interest to further reversionary beneficiaries if the first has died will be permitted.

ATE income streams change 5 - Joint lifetime annuities paid into single account.

5JA(2A) 5JB(2A)

A joint lifetime annuity (which pays a single income stream into a joint account) will retain its assets test exempt status when the level of payments to the survivor is reduced following the death of one of the partners.

ATE income streams change 6 – debt to result if income stream commuted contrary to the commutation rules

52ZMA

When an income stream is commuted contrary to the contract under which the income stream was originally provided debt recovery provisions apply.

The amount is the difference between the amount of service pension or income support supplement that has been paid and the amount that would have been paid had the income stream been classified as not assets test exempt during the relevant period.

[5] [54]

ATE income streams change 7 - life expectancy or 15-year minimum term income streams (5JB) only – greater flexibility of term.

5JB(2)(a)(i)

If the person's life expectancy is < 15 years, the period of payment of the income stream can be up to life expectancy or now any fractional number between life expectancy and the next whole number rounded up.  For example, if life expectancy is 11.2 years, then the period may be up to 11.2, 11.3, 11.4...or 12.0.  Previously the number could only be 11.2 or 12.0.

ATE income streams change 7, continued - life expectancy or 15-year minimum term income streams (5JB) only, greater flexibility of term.

5JB(2)(ii)

If the person's life expectancy is ?15 years, the period of payment of the income stream can be 15 years, any fractional number between 15 and the life expectancy (eg 17.5) and now, any fractional number up to the next whole number rounded up (eg 18.0).  Previously it could only be 15-17.5 or 18.

Technical amendment - definition of “binding arrangement”

Schedule 5, Item 12(4)

The Minister has the power to exempt specified financial investments for particular individuals from amendments to the means test treatment of income streams.  The changes are a technical amendment.


Income Streams: Actuarial certification of Self Managed Superannuation Funds (SMSFs) and Small Australian Prudential Regulatory Authority Funds (SAFs)

Background

The Australian Prudential Regulatory Authority imposes stringent reserving standards on institutional providers of income streams to ensure that income stream payments can be met under the income stream contract, trust deed or governing rules for the product.  Similar longstanding reserving requirements apply to corporate superannuation funds under the Superannuation Industry (Supervision) Act and its predecessors.

Individuals can also set up their own income streams (superannuation funds) colloquially known as “do-it-yourself” funds. These fall into 2 categories:

  • SMSFs (Self-Managed Superannuation Funds) regulated by the Australian Taxation Office (ATO) since 1999; and

  • SAFs (Small Australian Prudential Regulatory Authority – APRA - Funds) or Small APRA funds – these do not meet the ATO criteria and continue to be regulated by the Australian Prudential Regulatory Authority (APRA).

The use of individual superannuation funds continues to grow and two issues have emerged:

  • Individual superannuation funds have a higher risk of failure than their institutional equivalents – either they cannot continue to make payments in accordance with the legal agreements or cease making payments altogether.

  • Individual superannuation funds can also be used in some circumstances as an estate-planning device and as a device to maximise pension payments.  In some cases, individual funds have been set up where the actual income stream is disproportionately small compared with the assets backing it.  In these circumstances, deprivation may have occurred.

The new requirement for actuarial certification will apply to SMSFs and SAFs as these types of income streams will be specified for the purposes of subsections 5JA(1) and 5JB(1).

Changes to forms

The forms have been updated (see Attachment B) to request type of fund eg commercial or do?it?yourself such as a SMSF or SAF.  If the provider does not send back the form, but instead sends the delegate their schedule, you will need to recontact the provider to request this information

Systems changes

The Stateline entitled “Changes to Income Stream Processing” advised that an enhancement to the VIEW Review facility has been introduced to include a Review Type Super Fund Certification.

Delegates must set a future date for review of any case involving a SMSF or SAF as an actuarial certificate must be provided annually.

Reviews set will be reported as currently in the Fortnightly Report for the fortnight they become due.

How to use the new VIEW Review facility

The review facility is available in VIEW in the “Review” folder under the “Client Activity Tab”.

A review is added using the following steps:

  1. Select the Reviews folder
  2. Click on the VIEW update button.
  3. Click on the add button (+) beneath the Reviews folder.
  4. Enter the Review Date.  This must be in the format dd/mm/yyyy.
  5. Select Review Type of Super Fund Certification from the drop-box.
  6. Enter meaningful comments in the free text Comment field.
  7. Click on the Save button to save details.

Completing a review:

  1. Select the Reviews folder
  2. Click on the VIEW update button.
  3. Select YES from the drop box in the Completed field.
  4. Click on the Save button – the review will be removed from the Client Activity Tab and will be recorded as complete on any requested reports.

What does the actuarial certificate say?

The certificate is to provide that in the actuary's opinion there is a “high probability” that the provider of the income stream will be able to pay the income stream as required under the contract or governing rules.  The certificate is evidence that the fund can pay the income stream for the client's lifetime or life expectancy (as appropriate).

Guidelines

Guidelines will be issued which must be complied with when determining whether an actuarial certificate is in force and as to what constitutes a high probability of payment – subsections 5JA(1B), 5JB(1C).  These guidelines will be based on guidelines developed for the industry.

Which funds will be affected?

Specified classes of providers such as SMSFs and SAFs will be affected by the new legislation and existing fund holders will be required to provide a certificate on an annual basis on and from 4 April 2002.  Since few DVA clients own such funds, most DVA clients holding superannuation investments will not be affected by the new rules.

What about new funds subject to this requirement?

If an actuarial certificate cannot be provided upon request, when the income stream is first assessed after the new rules commence it cannot be classed as an ATE.  The 6 months period of grace only applies to funds where an actuarial certificate has expired.

How long are certificates valid?

Actuarial certificates will only be valid for 12 months from their date of issue.  The pensioner (or the fund's trustee) should provide a new actuarial certificate on an annual basis.

6 months' grace if certificate expires

If the certificate expires, the pensioner will have a further 6 month period of grace from the date the certificate ceases to be in force – new subsections 5JA(1C), 5JB(1D).  During the 6-month period the product is still assessed as assets test exempt.  If the appropriate certificate is not provided by the end of that 6-month period the product will lose its ATE status.  If this happens a pensioner's pension payment may need to be adjusted, but only from the end of the 6-month period.


Income streams: Commutation

Background

Commutation occurs when part or all of an income stream is cashed into a lump sum.

The circumstances in which an assets tested exempt (ATE) income stream could be commuted under the old rules was limited although there was potential for abuse of the rules.

As a consequence, there are a number of changes to the rules relating to commutation and the old and new rules are discussed below.

Commutation within 6 months – old rules

Under subparagraphs 5JA(2)(h)(i) and 5JB(2)(h)(i), an income stream could be commuted within 6 months after its commencement date - see Figure 1 below.  This was intended to provide recourse for a person who may have purchased an inadequate or inappropriate product.

Because of the concern that subparagraphs 5JA(2)(h)(i) [or 5JB(2)(h)(i)] could be misused to afford an ongoing assets test exemption to individuals who wish to retain control of their capital, subsections 5JA(4) [and 5JB(3)] were inserted.  These subsections provided what was described as a “three strikes” policy in the VEA.

Subsections 5JA(4) or 5JB(3) were intended to apply to people who had commuted to new income streams 3 times.  After the third commutation, the Commission had the discretion to determine that no subsequent income stream owned by the person would qualify for an assets test exemption - see Figure 2 below.  Subsections 5JA(4) or 5JB(3) were not intended to apply in circumstances where a number of partial commutations were made where the person could commute part of the capital for some other purpose and still retain the benefits of an assets test exempt income stream.  This was because the original income stream remains intact with the same commencement date and relevant number.

Since 1998, the practice of making repeated commutations from a given income stream suggested that the rules were open to abuse.  Repeated commutations were contrary to the original policy of affording assets test exempt status to income streams which could only be drawn down steadily over a long period with no access to capital.

Commutation within 6 months – old rules

Figure 1 – Commutations from original income stream – old rules

Under the old rules, there was no limitation to the number of partial commutations that could be made from the original income stream:

Figure 2 – Operation of the three strike rule

Under the old rules, people could commute an ATE income stream 2 times within the first six months but upon the 3 — rd commutation, the delegate could invoke subsection 5JA(4) or 5JB(3) with the consequence that any future income streams owned by that person were not accorded ATE status.  By using the rules in this way, a person could have unrestricted commutations from their ATE income streams up to 18 months from the original income stream.

New six month rules

Within the first six months, commutation of an ATE income stream is still allowed but only in the case of an income stream that is a non-commutation funded income stream

[6] [55] .  A non-commutation funded income stream is an ATE income stream that has “not been purchased by transferring directly to the purchase of the income stream a payment resulting from the commutation of another ATE income stream”.

How the new rules operate?

The new rules prevent a person from making commutations within the first 6 months of an income stream that has been purchased from the proceeds of another commuted ATE income stream.

The new rules operate as follows:

Figure 3 – One commutation allowable on second income stream

If the amount or amounts commuted from Income Stream A in Figure 3 above are used to purchase a new Income Stream B, C etc, no further amounts can be commuted from these new income streams.

Figure 4 – Further example of operation of rules, Multiple commutations allowable on original income stream

In Figure 4 above, no further commutations can be made from Income Stream B within 6 months, as it is a commutation funded income stream.  Further partial commutations from the original Income Stream A are allowable. If the amounts withdrawn from the original income stream are not invested in another income stream product (as with the first commutation here) and is used for other purposes, the usual means test rules apply to the proceeds.

Interaction of new 6-month rules with subparagraph 5JA(2)(h)(iii) or 5JB(2)(h)(iii)

We now have a situation where the new 5JA(2)(h)(i) or 5JB(2)(h)(i) only allows non-commutation funded ATE income streams to be commuted within 6-months.

Subparagraph 5JA(2)(h)(iii) has not been changed as a result of these changes.  Subparagraph 5JA(2)(h)(iii) allows unlimited full commutations at any time (including outside 6-months) provided that the “payment resulting from the commutation is transferred directly to the purchase of another income stream arising under a contract, or governing rules that meet the requirements of this subsection or subsection 5JB(2). (Subparagraph 5JB(2)(h)(iii) is similar).

Commutation – hardship old rules

The old rules made no provision for persons withdrawing money from ATE income streams on the grounds of hardship.

Hardship new rules

The new rules allow commutation on the basis of hardship (new subparagraph 5JA(2)(h)(v) and 5JA(2)(h)(v) refers).  See attachment A for definition.

Systems implications

There are very few DVA clients that have ever commuted an ATE product.  To minimise unnecessary messages for the majority of cases, a simple warning has been introduced to refer examiners to the new rules.  This warning is limited to any ATE products that are being either deleted or edited, either from the Summary or the Edit screen.

Explanation of systems changes

The message below will appear when editing, ie, making any change, to an ATE product on the Income Streams Edit screen.

The message below will appear when deleting or editing an ATE product on the main (Summary) Income Streams screen.

Note that because both these messages are warnings that are intended to highlight that the new rules may apply, you will need to decide whether or not the rules do apply whenever the messages appear.

Reversionary beneficiary – old rules

Old paragraph 5JA(2)(i) and 5JB(2)(i) refers.

These rules limited the transfer of an ATE on the death of the person to a reversionary beneficiary in the case of an ATE to which section 5JA applied or to a reversionary beneficiary or to the person's estate if an ATE to which section 5JB applied.

Glossary - beneficiaries

The person or primary beneficiary

The initial client who takes out the income stream

The reversionary beneficiary

Someone to whom the income stream is transferred on the death of the primary beneficiary

Another reversionary beneficiary

Someone to whom the income stream is transferred on the death of the reversionary beneficiary

Reversionary beneficiary – old rules - problems

The above rule only permitted transfer to one reversionary beneficiary and did not explicitly provide for the transfer to another reversionary beneficiary if the first reversionary dies.

Additional reversionary beneficiary – new rules

The new rules allow the transfer on the death of a reversionary beneficiary to another reversionary beneficiary – new paragraph 5JA(2)(i)(i)&(ii):

Income Stream:  I----X       ? 1 — st RB        ?   2 — nd RB  ? ...etc

                                  ?                   ?                      ?

                          Person dies     1 — st RB dies       2 — nd RB dies etc

If the ATE is a Life Expectancy or 15 Year Minimum Term income stream to which section 5JB applies, commutation is allowed:

  • to transfer the income stream on the death of the primary beneficiary to a reversionary beneficiary – new subparagraph 5JB(2)(i)(i);

  • to transfer to the estate of the primary beneficiary if no reversionary beneficiary; or

  • to transfer on the death of a reversionary beneficiary to another reversionary beneficiary or if there is no other reversionary beneficiary to the estate of the reversionary beneficiary.

Income Stream:  I----X       ? 1 — st RB        ?   2 — nd RB  ? ...etc (or estate if

                                  ?                   ?                      ?                     no other RB)

                          Person dies     1 — st RB dies       2 — nd RB dies etc

Superannuation surcharge

No changes to the rules have resulted - partial commutations to cover any superannuation contributions surcharge that the person is liable to pay when purchasing the income stream is allowed – paragraphs 5JA(2)(h)(iv), 5JB(2)(h)(v).

Joint lifetime annuity

Under the old rules an income stream, which was a joint lifetime annuity paying a single income stream into a joint account, which reduced its payments on the death of one of the annuitants, lost its ATE status.

New subsections 5JA(2A) and 5JB(2A) specifically enable such a product to retain its ATE status despite the fall in payments made by the income stream.

Overpayments

The legislation will take account of the financial advantage a pensioner has had through having their income stream accorded ATE status.

The new section 52ZMA provides for the calculation of the debt that arises from the overpayment of a service pension or income support supplement while a person is in receipt of an income stream.  The overpayment arises from a commutation of an assets test exempt income stream that is a contravention of the income stream contract.

The debt is the difference between the amount of pension that has been paid and the amount that would have been paid had the income stream been included as an assessable asset during the relevant period.  The relevant period begins on:

  • the day 5 years before the day the income stream was commuted; or
  • the commencement day of the income stream;
  • or 20 September 2001 (being the earliest date section 52ZMA can be applied);

whichever occurs later.

Subsection 52ZMA(5) provides that in working out the asset value of the income stream, as if it had not been assets test exempt, it should be assumed that the income stream was assets tested from the commencement day.  The asset value of the income stream is to be depleted in accordance with the formula in subsection 52A(4).

Binding arrangements

This gives the Minister the power to exempt specified financial investments for particular individuals from amendments to the means test treatment of income streams.  These provisions only apply where the person entered into the binding arrangement prior to 20 September 1998.

These are products where the arrangement with the provider does not allow the person to commute the income stream or the arrangement may only be terminated on terms that are likely to cause severe detriment to the person.  See new sub-item 12(4) of Schedule 5.

Ensuring that the income stream meets the ATE criteria

Nature of the contract

Prior to these amendments, subsections 5JA(2) or 5JB(2) required that the contract or the governing rules “specify” the different characteristics of an assets test exempt income stream.

Legal advice was received that that this may be defective and that it may be sufficient for the contract or governing rules to merely list the attributes to be an ATE in order to comply.

New rules

The new rules clarify that it is the income stream that arises under the contract or governing rules that satisfies the criteria.

Term for ATE life expectancy products

Old rules

Subparagraph 5JB(2)(a)(i) applies if a person's life expectancy is less than 15 years and subparagraph 5JB(2)(a)(ii) applies if a person's life expectancy is greater than or equal to 15 years.

< 15 years

If a person's life expectancy was not a whole number (for example 11.2 years), the term of a life expectancy income stream product purchased by a person was limited to either:

  • the life expectancy (11.2 years); or
  • rounded up to the next whole number (12 years).

? 15 years

If a person's life expectancy was not a whole number (for example 17.46 years), the term of a life expectancy income stream product purchased by a person was limited to:

  • 15 years; or
  • any fractional number between 15 and the life expectancy (17.46); or
  • the rounded up next whole number (18.00).

It did not include numbers between the fractional life expectancy number and the rounded up next whole number.

New rules

Last year the Department of Family and Community Services (FaCS) changed the Social Security Act 1991 to allow fractional numbers between life expectancy and the next number rounded up. The Stateline, issued on 21 September 2001, explains this more flexible approach and the relevant systems changes were made then as a policy change.  This means, in order to obtain assets test exempt status:

< 15 years

The person can now purchase an income stream with a term of:

  • Life expectancy (11.2); or
  • any fractional number between life expectancy and
    the next rounded up whole number (11.3, 11.4, 11.5...11.9, 12.0).

? 15 years

The person can now purchase an income stream with a term of:

  • 15 years; or
  • any fractional number between 15 and life expectancy rounded up to the next whole number (15.20,...17.48, ...18.00).

Note that the term cannot be less than the person's life expectancy.

See Figures 1 & 2 which show the difference between the old and new rules.

Figure of the difference between the old and new rules

Figure 1 – Income Stream term type when life expectancy is < 15 years

Figure 2 – Income Stream term type when life expectancy is ? 15 years

Persons under the Social Security Act 1991 by DVA

Bring 'Em Backs

Person paid age pension or wife pension by DVA under the Social Security Act 1991 (SSA) are to be assessed applying the Guidelines developed by the Department of Family and Community Services.  These can be found in the Guide to Social Security Law

http://www.fahcsia.gov.au/guides_acts/ssg/ssg-rn.html [56]

which is also linked to CLIK) for an explanation of these rules.

Given that the rules are similar, there is no difference in the application of the new rules

Forms updated

The forms have been merged and updated to reflect the new legislation – see Form D563 Details of Income Stream Product available on DVA intranet (DVA Facts & Forms) and DVA internet site (DVA Facts).

The former D0561 form, which requested authority from the veteran for DVA to obtain financial data from the income stream provider, is no longer needed and has been removed.  Section 128 of the VEA allows DVA to obtain information from a third party for pension assessment purposes.  However it is important that the veteran be informed that a review of their entitlement is being conducted and that information will be obtained from income stream providers.

The remaining forms have been merged and a fax cover sheet added.  The fax cover sheet contains fields into which specific information can be typed, such as the provider fax number.

Eddie Bolanac of the Investment Database Unit regularly updates the provider contact list.  See Attachment B.

If you are sending the forms out to the veteran for a new claim, print only the forms and not the fax cover sheet.  The veteran is then to send the forms on to their provider.  Only use the fax cover sheet if you are contacting an income stream provider.  If, in reply, a provider sends you their own schedule, check to see that all information has been provided, for example whether the income stream is a self-funded super fund or not.

National Office contacts

Please do not hesitate to contact those below for any data collection or other relevant issues.

Eddie Bolonac, (02) 9213 7875 – procedures for handling changes;

Ian Williams, on (02) 6289 6382 - legislation or policy; and
Peter Feinler, (08) 8290 0441 – systems changes.


Attachment A

Veterans' Entitlements Act 1986 – subsection 5JA(7)

Definitions of 'hardship amount', 'liquid asset' and 'unavoidable expenditure'

Definitions

(7) In this section:

hardship amount, in relation to a person, means an amount determined by the Commission for the purposes of this definition if:

(a) the person applies in writing to the Commission to be allowed to commute the whole or part of an income stream because of extreme financial hardship; and

(b) the Commission is satisfied that:

(i) the person's circumstances are exceptional and could not be reasonably foreseen at the time the person purchased the income stream; and

(ii) the person has insufficient liquid assets or other assets (excluding the person's principal home) that could be realised to avoid the extreme financial hardship; and

(iii) that amount is required to meet unavoidable expenditure.

liquid assets, in relation to a person, means the person's cash and readily realisable assets, and includes:

(a) the person's shares and debentures in a public company; and

(b) managed investments; and

(c) insurance policies that can be surrendered for money; and

(d) amounts deposited with, or lent to, a bank or other financial institution by the person (whether or not the amount can be withdrawn or repaid immediately); and

(e) amounts due, and able to be paid, to the person by, or on behalf of, a former employer of the person.

non-commutation funded income stream means an income stream that has not been purchased by transferring directly to the purchase of the income stream a payment resulting from the commutation of another assets test exempt income stream.

unavoidable expenditure, in relation to a person, means one or more of the following:

(a) essential medical expenses of the person, or the person's partner, to the extent that the expenses are not covered by health insurance or other contracts or arrangements;

(b) the cost of:

(i) replacing the person's principal home; or

(ii) essential repairs to the person's principal home;

to the extent that the cost of the replacement or repairs is not covered by an insurance policy;

(c) expenditure to buy replacement essential household goods because of the loss of those goods to the extent that the cost of replacement is not covered by an insurance policy.


Attachment B

UPDATED INCOME STREAM CONTACT LISTS

Purpose

The contact lists provide you with the following information on each major provider of an income stream:

  • provider company name
  • fax number
  • phone number
  • indexation details (for defined benefit super pensions)

Uses

The contact lists can be used to look up:

  • fax details - when requesting completion of a DVA Income Stream schedule form D0563;
  • phone details - when clarifying details which have already been provided;
  • indexation details - when checking the type and date of indexation for defined benefit super pensions;

Fortnightly Run

The contact lists will help you process Income Stream Fortnightly Manuals where you need to phone or fax the provider to obtain an update of a person's current gross income payments.

Updates

The Investment Database Unit (IDU) will continue to update the contact lists.  You may have information about a provider they do not know about, or you may have State specific contact details.  Please let Eddie Bolanac know about any new details you want added.

  Social Security and Veterans' Affairs Legislation Amendment (Budget and Other Measures) Act 1997.
See Departmental Instruction 44/98, 15 October 1998.

[4] (go back) [57]

The relevant period is defined as commencing the day 5 years before the day the income stream was commuted; or either the commencement day of the income stream or 20 September 2001; whichever occurs later.

[5] (go back) [58]

See new subsection 5JA(7) and 5JB(7).

[6] (go back) [59]

C29/2002 CHANGES TO COMPENSATION RECOVERY - VETERANS' AFFAIRS LEGISLATION AMENDMENT (FURTHER BUDGET 2000 AND OTHER MEASURES) ACT 2002

  • Log in [60] to post comments

DATE OF ISSUE:  16 JULY 2002

CHANGES TO COMPENSATION RECOVERY  - VETERANS' AFFAIRS LEGISLATION AMENDMENT (FURTHER BUDGET 2000 AND OTHER MEASURES) ACT 2002

Purpose

The purpose of this Departmental Instruction is to inform States about changes to the compensation recovery provisions contained in Part IIIC of the Veterans' Entitlements Act 1986 (the VEA).

Legislation

The amendments are contained in Schedule 1 of the Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Act 2002, which received Royal Assent on 4 April 2002.  The legislation can be found at: http://scaleplus.law.gov.au/html/comact/11/6469/to... [61]

Start date

The changes commenced on 20 September 2001.

Reason for start date

These amendments were originally contained in the Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Bill 2001. This Bill was not passed by the Parliament and lapsed when Parliament was prorogued upon the announcement of the 2001 election.  This necessitated the introduction of a further Bill hence the delay in passage of the relevant legislation.

The commencement date corresponds with the commencement of similar amendments to the Social Security Act 1991.

Authorised by

Roger Winzenberg

Branch Head

Income Support

12 July 2002


Background

What are the changes?

Amendments to the Compensation recovery provisions involve:

  1. Changes to the treatment of periodic compensation payments in the case of partners of compensation recipients.

  1. The extension of the power to recover compensation debts directly from compensation payers and insurers to permit recovery from compensation payers and insurers where compensation is treated as ordinary income.

  1. Minor changes to the legislation.

Rationale

These amendments flow on from similar changes to the Social Security Act 1991 (SSA) made as part of the simplification initiative to develop a simpler and more coherent social security system

[7] [62] .  The measures are designed to “further improve the delivery of income support benefits though the repatriation system” [8] [63] .

(1) Changes to the treatment of periodic compensation payments in the case of partners of compensation recipients

Old rules

Prior to 20 September 2001, if:

  • a person received periodic compensation payments;
  • the person was not receiving a “compensation affected pension”(CAP) [9] [64] at the time of the event that gave rise to the right to compensation; and
  • the couple were both eligible for a CAP or a compensation affected payment under the Social Security Act 1991 (the SSA);

the couple's combined pensions were reduced by attributing one half of the amount of the periodic compensation payment to each person's CAP and each CAP reduced by an equivalent amount, dollar for dollar

[10] [65] .

Overview of new rules

Under the new rules, which commenced on 20 September 2001, the dollar for dollar reduction will apply only to the pension of the person who receives the compensation

[11] [66] .

If the CAP of the person who receives the compensation payments is fully limited solely because of the operation of Part IIIC (and not for some other reason as well) then the excess will be treated as the ordinary income of the partner

[12] [67] .

Where are the new rules?

The new rules are contained in the following provisions:

  • Impact on the CAP of the person who received the periodic compensation payments – new subsection 59T(2) applies – the person's daily rate of CAP is reduced on a dollar for dollar basis.

  • Impact on the CAP of the partner of the person who received the periodic compensation payments – new subsection 59TA(1) applies - if the compensation recipient's CAP is fully limited then any excess is to be treated as ordinary income for the person's partner. If not fully limited, there is no impact on the partner's pension.

Impact of change

The change will in most cases result in either no change to, or an overall increase in, the couple's income, even though the compensation recipient may lose payment of the CAP altogether. In some cases, the couple will benefit overall from the change (see example below).

Example

The example below illustrates the beneficial nature of the changes in the case of a couple to whose section 59TA applies:

  • A veteran aged 55, married is seriously injured at work on 1 July 2001 and forced to retire;

  • The claim for worker's compensation for the injury is lodged on 2 July 2001;

  • On 5 July 2001, the veteran and his spouse (who is aged 52 and not working) decide to lodge a claim for service pension with the Department of Veterans' Affairs.

  • On 15 July 2001, the insurer accepts liability for the injury on and from 1 July 2001 and decides to make periodic compensation payments totaling     $600.00 per fortnight to the injured veteran.  (NB, for the purposes of this example the treatment of the arrears of compensation payments have not been discussed, only the ongoing impact of the fortnightly periodic payments).

  • On 5 August 2001, the delegate approves the claim for service pension.   Invalidity Service Pension (ISP) is granted to the veteran and Partner Service Pension (PSP) is granted to the spouse with effect from 5 July 2001.

Because the couple's assets and income do not exceed the income and assets test thresholds applicable to a couple who are regarded as owning their home, the couple receives the following payments from DVA:

Pension received

Veteran

Partner

Maximum basic rate

$ 322.70

$ 322.70

Pension supplement

   $ 12.80

$ 12.80

Pharmaceutical allowance

$ 2.90

$ 2.90

Total

$ 338.40

$ 338.40

Question
  1. What is the impact of the periodic compensation payments on the above pensions?

  1. Will the new rules, which take effect on 20 September 2001, change the amount of pension payable to the couple?

Answer

ISP and PSP are compensation affected pensions for the purposes of Part IIIC and both the veteran and spouse have not reached their relevant pension age.  Part IIIC therefore applies.

The veteran is receiving periodic compensation payments covered by Part IIIC.

Section 59T (and on and from 20/9/01, new ss.59T and 59TA) apply because the person was not receiving a CAP at the time of the event that gave rise to the compensation.

The tables below compares the application of the pre and post 20 September  2001 rules to the example above:

Pre 20 September 2001 rules

Pension received by:

Veteran

Spouse

Service pension

$ 338.40

$ 338.40

Compensation payment to:

$ 600.00

-

Amount of periodic payments assessed as ordinary income

N/A

N/A

Less income free area

N/A

N/A

Amount of periodic payments in excess of income free area

N/A

N/A

Reduction in pension due to assessment of excess as ordinary income

N/A

N/A

Amount of pension received after limitation

$38.00

[13] [68]

$38.00

Total pension received

$ 38.00

$ 38.00

Total pension received (combined) after application of Part IIIC

$ 76.00

Post 20 September 2001

[14] [69]

Pension received by:

Veteran

Spouse

Service pension

$ 338.40

$ 338.40

Compensation payment to:

$ 600.00

-

Amount of periodic payments assessed as ordinary income

N/A

$ 261.60

[15] [70]

Less income free area

N/A

$100.00

[16] [71]

Amount of periodic payments in excess of income free area

N/A

$161.60

Reduction in pension due to assessment of excess as ordinary income

N/A

$ 64.64

Amount of pension received after limitation

NIL

[17] [72]

$ 273.76

Total pension received

NIL

$ 273.76

Total pension received (combined) after application of Part IIIC

$ 273.76

(2) EXTENSION OF POWERS TO RECOVER FROM COMPENSATION PAYERS AND INSURERS IN CERTAIN CIRCUMSTANCES

Old rules

The old rules did not enable the direct recovery of compensation payments from compensation payers and insurers in circumstances where the periodic compensation is treated as ordinary income. This occurs for example, if the person was in receipt of a CAP at the time of the event that gave rise to the entitlement to compensation.

New rules

The new rules are contained in amendments to the following sections:

  •         Section 59ZA – recovery notice to compensation payers; and
  •         Section 59ZG – recovery notice to insurers.

A number of minor changes (primarily to reflect the fact that pensions are no paid on a daily basis and the existence of new sections 59T and 59TA) were also made to:

  •     Section 59W – recovery direct from the person;
  •     Section 59Y – preliminary notice to compensation payers; and
  •     Section 59ZE – preliminary notice to insurers.

Advantages of new rules

The new rules applying on and after 20 September 2001:

  • will enable debts to be recovered up front from the compensation payer/insurer preventing payment of the compensation to the recipient;
  • are advantageous for the Commonwealth as it will reduce the level of bad debts and will allow quicker recovery of the full amount of the debt before the compensation recipient receives the payment;
  • benefit compensation recipients as up-front recovery from the compensation arrears is less likely to cause hardship than an ongoing impost on the compensation recipient's income support payment.

(3) MINOR CHANGES TO PART IIIC

What are the minor changes?

Other minor changes to the legislation are summarised below:

What is considered compensation?

Subsection 5NB(4) provides that a payment will not be compensation for the purposes of Part IIIC in certain circumstances.

The circumstances include those where the recipient has made a contribution towards the payment (eg by paying insurance premiums) and those where the agreement provides for a reduction in payments where the contributor is eligible for or receives a CAP.

The amended paragraph (5NB(4)(b)) clarifies the position where the agreement provides for a reduction but the payments have been calculated without reference to that provision in the agreement.  In these cases, the payment will not be regarded as compensation.

Criminal injuries compensation

New subsections 5NB(6A) and (6B) have been added to clarify that payments made to compensate a person for a criminal injury does not constitute compensation for the purposes of the Act.

(4) DELEGATIONS

Delegations

The existing delegation of 18 October 2000 has been reviewed and already provides for delegation of the relevant powers where amended.

(5) REVIEW OF CASES

Review of cases

Any cases affected by the changes to the above rules should be reviewed and any adjustments backdated to 20 September 2001, the commencement of the relevant changes.

Family and Community Services Legislation (Simplification and Other Measures) Act 2001.

[7] (go back) [73]

Second Reading Speech, Minister Scott, Veterans' Affairs Legislation Amendment (Further Budget 2000 and other Measures) Bill 2000.

[8] (go back) [74]

A CAP is invalidity service pension (ISP); partner service pension (PSP) and income support supplement (ISS). Cases will also arise where the partner is in receipt of compensation affected payments under the Social Security Act 1991.

[9] (go back) [75]

See old subsection 59T(4).

[10] (go back) [76]

See new subsection 59T(2).

[11] (go back) [77]

See new subsection 59TA(2).

[12] (go back) [78]

Under old subsection 59T(4), both the veterans and the partner's pensions are reduced by half the amount per fortnight of the periodic payments received by the veteran.

[13] (go back) [79]

The SI increase in pension is ignored for the purposes of this example.

[14] (go back) [80]

Under the new rules, new section 59TA, the excess is treated as ordinary income.

[15] (go back) [81]

The income free area applicable on 20 September 2001was $200.00, combined (point SCH6-E6, Table E-1).

[16] (go back) [82]

New subsection 59T(2) provides that the person's (the veteran's) daily rate of CAP is reduced by the amount of the person's daily rate of periodic compensation.  In this case the CAP is reduced to NIL.

[17] (go back) [83]

C28/2002 DISPOSAL OF ASSETS RULE CHANGES 2002

  • Log in [84] to post comments

DATE OF ISSUE:  16 JULY 2002

DISPOSAL OF ASSETS RULE CHANGES 2002

Purpose

This instruction provides information relevant to the service pension and income support supplement assessment of disposal of assets.  The instruction explains the impact on disposal of assets rules resulting from amendments to the Veterans' Entitlements Act 1986 (VEA) and the Social Security Act 1991 (SSA) commencing 1 July 2002.

What has changed?

The VEA/SSA disposal of assets rules have changed as follows:

  • The disposal of assets “pension year” rules will be replaced with a more readily understood “tax year” rule for disposals that occur on or after 1 July 2002; and
  • Disposals of assets in excess of $30,000 during a five-year rolling period will be assessed as deprived assets for five years from the date that the $30,000 “free area” is exceeded.  That is, the date(s) that any excess deprivation occurred during any five-year rolling period that does not commence prior to 1 July 2002.

The $30,000 “free area” rule will work concurrently with the existing $10,000 annual disposal of assets limit.  There will however, be no double counting of deprived assets as a result of the change.

Authorised by

ROGER WINZENBERG

BRANCH HEAD

INCOME SUPPORT

General Background

Rationale

There has been growing concern that “gifting” has become a favourite tool for many financial planners who exploit gifting to increase the income support pension entitlements of their clients.

Allowing people to increase their pension by giving away $10,000 of assets year after year is inconsistent with a targeted, needs based, income support system and the stated Government goal of encouraging people to support themselves where possible.

The Government recognises that there may however be compelling reasons why a welfare recipient may from time to time need to provide financial assistance to for example, a family member.  Accordingly the $10,000 “free area” that applied to a pension year will continue to be applicable but the pension year rule will be replaced by a tax year rule.  This will work concurrently with a $30,000 “free area” that applies over a 5-year rolling period and thereby further limiting the opportunity to adopt regular gifting strategies to gain higher pension amounts.

The change from “pension year” to a “tax year” concept aims to simplify the annual periods to which the annual disposal “free area” applies.  Tax or financial year is a concept that is widely understood.

Target Population

As this initiative provides disincentives to pensioners to dispose of substantial asset amounts, the numbers that will be affected in the future is anticipated to be minimal.

Commencement date

The commencement date for the changes is 1 July 2002.  The pension year rule will be replaced by a tax year rule for all disposals on or after that date.

Although the initial five-year rolling period rule will commence on 1 July 2002, the earliest possible date that a person (or couple) could exceed the $30,000 asset disposal “free area” would be 1 July 2005.  Prior to that date, the $10,000 annual disposal “free area” rule only, would impact on a person's income support pension.


Legislation

Legislation

The changes to the VEA/SSL disposal of assets rules are contained in the Social Security and Veterans' Entitlements Legislation Amendment (Disposal of Assets – Integrity of Means Testing) Act 2002 No. 54, 2002 that received Royal Assent on 29 June 2002.

Note:  The social security law changes mirror the VEA changes.  When assessing social security age/wife pension cases affected by the 1 July 2002 disposal of assets rule changes please refer to the Social Security Policy and Legislation guidelines available via:

Start/Departmental/Service delivery reference tools/Social security PAL.

What legislative references have changed?

The policy changes are relatively simple in concept however there are new legislative references and certain existing references have been amended.

New subdivision BB, Dispositions of assets on or after 1 July 2002 and amended subdivision B-Dispositions of Assets before 1 July 2002 both in Div 11, Part IIIB of the VEA impact on:

  • Part I, VEA Definitions relevant to disposal of assets;
  • The 'disposal preclusion period' that applies for the purposes of the Part IIIAB, VEA Pension Bonus Scheme rules;
  • Disposal of assets by or to a private trust or private company and disposal of assets rules specific to concessional primary production trusts.
  • Section 48D, VEA treatment of transactions that constitute both a disposal of ordinary income and a disposal of assets;
  • Amounts not excluded under section 52(1), VEA where disposal of assets has occurred; and
  • other minor changes to the assets test including special residence and hardship rules.


Disposal of Assets 2002 Policy Changes

$10,000 allowable asset disposal limits

Prior to 1 July 2002, a person or a couple could dispose of assets to the value of $10,000 per pension year without that disposal impacting on the pension assessment.  Sections 52G and 52H have been amended so that this rule is limited to disposals of assets that occur prior to 1 July 2002.

Disposals of assets in excess of the $10,000 assets disposal “free area” in a pension year are considered to be a deprived assets for five years from the date of disposal.  This rule has not changed however, for disposals that occur on or from 1 July 2002:

  • The $10,000 yearly limit will work concurrently with the $30,000 limit over a five-year rolling period; and
  • the pension year rule will be replaced with a tax year rule.

New sections 52JA and 52JC refer to the $10,000 free limit in a tax year.

$30,000 Free Area

The $10,000 annual limit remains unchanged however the total amount of assets that a person (or a couple) can dispose over a rolling period of five years is restricted to $30,000.  Amounts in excess of the $30,000 “free area” are assessed as deprived assets for a period of five years from the date(s) that deprivation of assets occurred.

This means that even though a person may not have exceeded the $10,000 per year limit, any amount in excess of $30,000 over the five year rolling period may be assessed as a deprived asset and deemed.

The earliest possible date that the new $30,000 free area can be exceeded is

1 July 2005.  Prior to that date the $10,000 deprivation limit would be applicable (see example below that demonstrates the interaction between the two limits).

Important note:  Disposals of assets that occur prior to 1 July 2002 are not assessable as part of the $30,000 limit over a five year rolling period (subsections 52JB(4) and 52JD(6) of the VEA refer).

Example

1 July 2002

A veteran service pensioner gives away $30,000 held in his bank account.  He has exceeded the tax year limit and accordingly $20,000 is assessed as a deprived asset for 5 years commencing 1 July 2002.  The other $10,000 counts towards the 5-year rolling period limit that commenced on 1 July 2002.

1 July 2003

The veteran gives away a further $10,000 cash.  The amount does not exceed the tax year limit.  It does however count toward the allowable limit for the 5-year rolling period.  There is now $20,000 accumulated over the 5-year period.

1 July 2004

The veteran gives away $15,000 in cash.  He has exceeded the tax year limit by $5,000.  The $5,000 is assessed as a deprived asset for 5 years commencing 1 July 2004.  The other $10,000 is added to the $20,000 already disposed in the 5-year rolling period bringing it up to the maximum $30,000 that a person can dispose of over the 5 year rolling period without affecting pension.

1 July 2005

The veteran gives away $5,000.  This is below the tax year limit of $10,000 however it is added to the 5-year rolling period limit.  The veteran has disposed of $35,000 over the 5-year rolling period exceeding the allowable limit by $5,000.  The $5,000 is therefore assessed as a deprived asset for 5 years from 1 July 2005.

No double counting

Although the $10,000 annual disposal limit and the $30,000 five year rolling period disposal limit will work concurrently, there will be no double counting of amounts assessed as a deprived asset.  Sections 52JA, 52JB, 52JC and 52JD and a definition of “Equal amounts” (section 5QAA) interact to ensure that no double counting of a disposal amount can occur.

Deprived assets

If a pensioner or pensioner couple dispose of an asset for no consideration or less than adequate consideration for that asset, any amount in excess of either of the allowable disposal of assets limits are considered to be deprived assets.

The term, deprived asset is defined in subsection 5J(2B) of the VEA as a financial asset and is subject to the deemed income rules.  The meaning of deprived asset has not changed however, it has been extended to the new sections 52JA to 52JD of the VEA.  These references relate to assets disposals on or after 1 July 2002 that are:

  • in excess of the $30,000 “free area” applicable during a five year rolling period; and
  • assets disposals in excess of $10,000 in a tax year.

Pension Year

For the purposes of disposal of assets prior to 1 July 2002, a pension year is defined in subsection 5L(9) of the VEA.  Determination of a pension year is dependent on whether a person is a member of a couple or not.  Pension year may vary based on:

  • The marital status of the person at any particular time while in receipt of an income support pension; and
  • The date of commencement of income support pension (nb this may have been a social security pension, service pension or income support supplement).

A new pension year begins on each anniversary of the relevant date.  Pension year is not relevant to disposals of assets that occur on or after 1 July 2002 however the rule will continue to apply to disposals of assets occurring to and including 30 June 2002

(Subsection 5L(9A) refers.)

Final Pension Year

The final pension year applicable to any pensioner(s) ends on 30 June 2002.  From 1 July 2002, the $10,000 assets disposal limit will be applicable to tax years.

Because pension years will be different for each pensioner, the final pension year ending on 30 June 2002 will be less than 12 months in duration unless the pension year of a pensioner or pensioner couple commenced on 1 July.

The duration of the final pension year ending 30 June 2002 will not alter the duration that a deprived asset is assessed.  That is, the deprived assets are assessed for a period of five years from the date that the deprivation occurred.

(subsection 5L(9A) refers.)

Pre-pension Year

Where a person is a claimant for a pension, benefit or allowance, a

pre-pension year for disposal of assets purposes is a period of 12 months prior to the date of the commencement of pension and each preceding period of 12 months (subsection 5L(10A) refers).

If a person disposes of an amount in excess of $10,000 in any of the five

pre-pension years prior to commencement of an income support pension or benefit, the excess amount is assessable as a deprived asset for five years from the date that the disposal(s) occurred.

New subsection 5L(10B) limits the pre-pension year rule to disposals of assets to and including 30 June 2002.  From 1 July 2002, either of the two disposal limits may apply to a disposal of assets during the 5 tax years prior to commencement of pension.  Disposals that occur prior to 1 July 2002 must not be assessed under the 5-year rolling period rule.

Final
Pre-Pension Year

It should be noted that the final pre-pension year that ends on 30 June 2002 will be less than 12 months in duration unless the pension year of a pensioner or pensioner couple commenced on 1 July.

The duration of the final pre-pension year ending 30 June 2002, will not alter the duration that a deprived asset is assessed.  That is, the deprived assets are assessed for a period of five years from the date that the deprivation occurred.

Pre-pension year rules do not apply to disposals of assets occurring on or after 1 July 2002.

(Section 5L(10B) refers)

Tax year rule

For disposal of assets on or after 1 July 2002, sections 52JA (for an individual) and 52JC (for members of a couple) introduces a tax year rule that replaces the pension year rule.

A tax year is defined in subsection 5Q(1) and means a year of income (within the meaning of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997.  Basically a tax year is a period commencing on 1 July and ending on 30 June of each year.  Having wider application than the disposal of assets rules, the subsection 5Q(1) definition of tax year did not require amendment.

NB under the SSL changes the references are to financial year rather than a tax year.

Rolling Period rule

Subsection 52JB(4) (for individuals) and subsection 52JD(6) (for members of a couple) define the rolling period relevant to the $30,000 disposal of assets “free area” rule.

If there is a disposition of assets on or after 1 July 2002, the rolling period is the period comprising the tax year in which the relevant disposition took place and such (if any) of the 4 previous tax years as occurred after 30 June 2002.  This means that disposals that occurred prior to 1 July 2002 are not counted in the rolling period.

For disposals of assets that occur after 30 June 2002, the rolling period rule replaces the pre-pension year rule.  This means that whether or not a disposal of assets occurs prior to commencement of pension it will be counted as a deprived asset if the $30,000 disposal of assets “free area” is exceed.  This contrasts with the pre-pension year rule that applied to dispositions that occurred before 1 July 2002.  Prior to 1 July 2002 a person could dispose of $10,000 in each pre-pension year (that is a total of $50,000 over the five year period) without adversely impacting on the rate of pension.

Tax year applicable to rolling period

It is important to note that the 5-year rolling period rule is based on tax years commencing 1 July 2002.

(Subsections 5JB(4) and 5JD(6) refer.)

Transition between pension year and tax year

In the transition from pension year to tax year assessment it is possible that a person can dispose of $10,000 in the 12 months after the pension year without exceeding their annual disposal of assets limit.

For example, in the case of a person who has a pension year that commences on 20 June, he/she could dispose of $10,000 on 25 June 2002 and then dispose of a further $10,000 on 5 July 2002.  As the person's pension year ceased on 30 June 2002, he/she has not exceeded the annual limit applicable prior to 1 July 2002.  If the person does not dispose of further amounts prior to 30 June 2003, ie the end of the tax year, he/she will not exceed the initial annual limit applicable from 1 July 2002.

NB this transitional arrangement may also impact on the switch from pre-pension year and pension bonus preclusion arrangements.  For more information refer to the relevant blocks.

Ceasing to be a member of a couple

If a pensioner couple cease to be members of a couple.  The amount of disposed assets is counted in the assessment of the person who made the disposition only.

If a pensioner couple jointly dispose of assets and the couple separate, the disposed assets are split between the two former members of a couple.

This includes amounts that are part of the amount accumulating towards the $30,000 limit over a 5-year rolling period.

(Subsections 52JC(3) and 52JD(3) refers.)

Effect of death

In the event that a person who has disposed of an asset passes away and that person had a partner, any amount of disposals that were held in the pension assessment in respect of the deceased person will no longer be assessable.  This includes amounts that are part of the amount accumulating towards the $30,000 limit over a 5-year rolling period.

In the event that a person passes away and that person's partner had disposed of assets, any amount of disposals that were held in the pension assessment in respect of the surviving partner will continue to be assessable.  This includes amounts that are part of the amount accumulating towards the $30,000 limit over a 5-year rolling period.

(Subsections 52JC(4), 52JC(5), 52JD(4) and 52JD(5) refer.)

Section 48D

Section 48D relates to transactions that constitute both a disposal of income and a disposal of assets.  The rule ensures that where there is no assessable deprived asset, the disposed income is not assessable.

The section has been amended so that it cannot be applied to disposals that occur on or after 1 July 2002.  Effective 1 July 2002, all disposed income relating to transactions that constitute both a disposal of income and a disposal of assets will have the disposal of income ignored.  Deemed income rules will apply to the deprived asset.

Pre-1 July 2002 Pension Bonus Preclusion Rules

Under section 45UT of the VEA a member(s) of the Pension Bonus Scheme (PBS) can not dispose of assets in excess of $10,000 without attracting the PBS disposal preclusion period rule.

If a disposal in excess of $10,000 was made in a designated year the scheme member(s) is classed as a non-accruing member of the scheme for a period of five years that commences on the day that the disposal exceeded the $10,000 disposal limit.

A designated year is defined in subsection 45UT(3) of the VEA as the twelve-month period ending on the person's special date of eligibility for a designated pension and each preceding twelve month period.

A person's special date of eligibility for a designated pension is the relevant pension age for service pension and qualifying age for income support supplement.  (Section 45TB refers.)

Section 45UT cannot be applied to disposals of assets that occur on or after 1 July 2002.

1 July 2002 PBS Preclusion Rules

Commencing 1 July 2002 the PBS disposal preclusion rules apply if a person (or couple) make a disposal of assets in excess of:

  • $10,000 in a tax year commencing on or after 1 July 2002; or
  • $30,000 in a five year rolling period commencing on or after 1 July 2002.

Once a member of the scheme exceeds one of the disposal limits he or she will be classed as a non-accruing member of the scheme for five years commencing on the date that the relevant disposal limit was exceeded.

(Section 45UTA refers.)

Disregarded Assets rule change

Subsection 52(1) that relates to disregarded assets has been amended to prevent assets from being disregarded under the post 30 June 2002 disposal of assets rules.

This means that even though an asset may have been disregarded as an asset previously, if that asset has been disposed of and the amount of the disposal exceeds:

  • $10,000 in a tax year that occurs on or after 1 July 2002; or
  • $30,000 over a five year rolling period (not including pre-July 2002 assets disposals),

the excess disposal amount will be assessed under the disposal of assets provisions for a period of five years commencing on the date that the excess disposal(s) occur.  This is an extension of pre-existing assets deprivation rules.

Effect of a Charge or Encumbrance

If a person disposes of assets in excess of:

  • $10,000 in a tax year that occurs on or after 1 July 2002; or
  • $30,000 over a five year rolling period (not including pre- July 2002 assets disposals),

section 52C cannot be utilised to reduce the value of the deprived asset.  This is an extension of pre-existing assets deprivation rules.

Special Residences & Special Residents

Minor amendments have been made to VEA paragraph 52Q(3)(e) and 52U(4)(e) that relate to special residences and special residents.  The existing references to disposals of assets applicable to pre-1 July 2002 disposals of assets are extended to disposals of assets that occur on or after 1 July 2002.  That is, where the person(s) disposes or assets in excess of:

  • $10,000 in a tax year that occurs on or after 1 July 2002; or
  • $30,000 over a five year rolling period (not including pre-July 2002 assets disposals).

Hardship Provisions

Minor amendments have been made to VEA subparagraph 52Y(1)(b)(i) and paragraph 52Z(7)(a) so that existing references to disposals of assets applicable to pre-1 July 2002 disposals of assets are extended to disposals of assets that occur on or after 1 July 2002. That is, where the person(s) disposes or assets in excess of:

  • $10,000 in a tax year that occurs on or after 1 July 2002; or
  • $30,000 over a five year rolling period (not including pre-1 July 2002 assets disposals).

Private Trusts & Private Companies

Minor amendments have been made to Subdivision I of Division 11A, Part IIIB – Modification of asset deprivation rules so that existing references to disposals of assets applicable to pre-1 July 2002 disposals of assets are extended to disposals of assets that occur on or after 1 July 2002. That is, where the person(s) disposes or assets in excess of:

  • $10,000 in a tax year that occurs on or after 1 July 2002; or
  • $30,000 over a five year rolling period (not including pre-1 July 2002 assets disposals).

Amendments to paragraphs 52ZZZG(1)(c) and 52ZZZG(1)(d) references are also extended to assets deprivations occurring on or after 1 July 2002.  These two references are specific to concessional primary production trust assessments.


PROCEDURAL INFORMATION

System Impact

With the exception of wording changes to advice letters produced via IAS, there are no visible changes to the various systems.  Therefore the same system procedures should be adopted when entering disposal of assets data.

Once the correct data is entered the behind the scenes programming will determine whether the disposal is a pre-1 July 2002 or a post 30 June 2002 assessment.  Based on the date that a disposal occurred, the system will determine the case based on the applicable pre-1 July 2002 or post 30 June 2002 rules.

Please note there is no overlap in the pre 1 July 2002 and post 30 June 2002 assessments.  It is however possible that the total amount of deprived assets assessable up to 30 June 2007 (ie 5 years) may include both pre-1 July 2002 and post 30 June 2002 deprived assets.  All deprived assets would remain assessable until the relevant fifth anniversary of the date that the deprivation occurred.  On 1 July 2007 no pre-1 July 2002 disposals should be assessed except for overpayment purposes.

Recording of the pension year on the deprived asset continues to be mandatory although it will only be applicable to pre-1 July 2002 disposals.

An updated version of the 'Guide to changes to Deprived Assets' will be made available via Clik.

IAS advice wording changes

A paragraph in the 'Full Obligations' section has been amended as follows:

Some examples of what you need to tell us about

  • If you give away $10,000 or more worth of assets in a tax year or $30,000 or more in a five-year rolling period that commences on, or any time after 1 July 2002.  Assets may be cash or non-cash assets such as a car or other property.

Gifts paragraphs of the 'New Grant General Information Sheet' has also been amended as follows.

Gifts

A gift is an asset that is given away or disposed of without receiving the market value of that gift in return.  A gift may be either a cash amount or non-cash assets such as a car or other property.

You must notify us if you give away a total of $10,000 or more in a tax year or  $30,000 over a rolling five-year period.

The amount above either limit will continue to be counted as if it were still your asset for a period of 5 years and may therefore continue to affect your pension.  We will also deem income on the value of any gift above either limit for 5 years.

Standard Letters

A range of standard letter paragraphs have been amended to reflect the 1 July 2002 rule changes.

Fact Sheets & Y&YP

Amendments have been made to the electronic version of 'You and Your Pension' and 20 Fact Sheets so that they reflect the 1 July 2002 disposal of assets rule changes.

To prevent defective administration care should be taken to ensure that the latest information is disseminated to pensioners.

If you are providing a hard copy of 'You and Your Pension', 2001 edition please insert Fact Sheet IS92, 'Giving Away Income and Assets'.  The 2003 edition of 'You and Your Pension' will reflect the 1 July 2002 rules.

Contact Officers

For further information in relation to the changes to the disposal of assets rules, information should initially be sought from your local office contact.

  • Adam Bridge – TAS
  • Kristie Chynoweth – T&C and DM
  • Geraldine Howard – QLD
  • Scott Sandercock – SA
  • Ritu Gosain – NSW
  • Kim Gooding – WA
  • Asanka De Silva – VIC

Should additional information be sought please contact:

Oona O'Beirne in income support policy or Peter Feinler in the system development sections of National Office income support.

C27/2002 EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

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DATE OF ISSUE:  8 JULY 2002

EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

Purpose of Instruction

The purpose of this Departmental Instruction is to provide information about the Pounds Sterling exchange rate variation exercise.

Introduction

Following the recent variation in foreign exchange rates, it is appropriate for DVA to apply a new exchange rate for income support pension assessment purposes.

New exchange rate A$2.6610

The exchange rate used to convert Pounds Sterling to Australian Dollars for income support assessment purposes has changed from one Pound = A$2.5458 to one Pound Sterling equals A$2.6610 (ie A$1 = ?0.3758).

This rate reflects the average of the “on demand airmail buying rate” for the two weeks to 05 July 2002.

Date of effect
9 July 2002

Effective from 9 July 2002 the current exchange rate will change.

On pension payday 25 July 2002 (pay period 28) pensioners will receive a full instalment at the new assessed rate.

Date of processing run

Processing to implement the new exchange rate is scheduled for the evening of Monday 8 July 2002.

Continued on next page

Automatic superannuation processing

The amount recorded as BRI non-indexed super type 08 or BRI indexed super type 09 will be varied by applying the exchange rate to the amount recorded, to find the new rate of superannuation.  The pension amount will then be reassessed automatically.

Manual cases and MS cases

Cases with actions in frozen status will not be processed automatically.  These cases will be listed on the manual listing for follow up action, and CMS/PIPS cases will be created automatically for State Office action.  Any cases processed through PIPS/PC should be reassessed from the beginning of the pension period for pension payday 25 July 2002 – ie 9 July 2002.

Advice letters

The advice letters for this exercise will be joint advices where both members of a couple are in receipt of BRI and their pension payment varies.  Age Pensioners will receive separate advices.

The letter will advise the new exchange rate, the amount of income and a payment box.  An advice will only be produced for cases where a variation in payment results.

IBM GSA implications

IBM GSA will produce the cartridge and forward it to Security Mailing in Sydney.

Overseas, Special Register and Enclosure Advices

Overseas, Special Register, Enclosure Advice letters (ie cases where a change to treatment entitlement occurs) and reduction to nil cases will be separated by IBM GSA and despatched to the State Office for manual distribution.  This arrangement is the same for daily advice letters.

Mail out of bulk advices

Security Mailing will print and prepare the advices for lodgement with Australia Post by 15 July 2002.

Continued on next page


British DP case paid Rent Assistance

Income Support pensioners who are in receipt of Rent Assistance (RA) and who also receive British Disability Pension direct from Britain (not EATS and Composite cases) should have that Disability Pension converted to $A using the BRI exchange rate.  RA should be manually recalculated.  These cases can be extracted through AIS by each state.  If you have any problem please contact Andrew Purcell on the number below.

Note: If DP has already been assessed as income in determining Hardship cases it should not also be assessed as income for RA.

Contact officer

The Income Support Branch contact officer is:

Andrew Purcell           Telephone:   (02) 6289 4832

Roger Winzenberg
Branch Head
INCOME SUPPORT

05 July 2002


POUND STERLING EXCHANGE RATE

Foreign exchange periodExchange rate

3 Dec 98

to

27 January 99

0.3834

2.6082

28 January 99

to

10 Feb 99

0.3719

2.6889

11 Feb 99

to

19 May 99

0.3905

2.5608

20 May 99

to

28 July 99

0.4079

2.4516

New Date of Effect Rules

13 July 99

to

9 August 99

0.4271

2.3414

10 August 99

to

1 Nov 99

0.4105

2.4361

2 Nov 99

to

10 Jan 00

0.3952

2.5304

11 Jan 00

to

6 March 00

0.4069

2.4576

7 March 00

to

1 May 00

0.3927

2.5465

2 May 00

to

29 May 00

0.3807

2.6267

30 May 00

to

10 July 00

0.3907

2.5595

11 July 00

to

16 Oct 00

0.4022

2.4863

17 Oct 00

to

2 April 01

0.3737

2.6759

3 April 01

to

14 May 01

0.3550

2.8169

15 May 01

to

23 July 01

0.3674

2.7218

24 July 01

to

6 August 01

0.3803

2.6295

7 August 01

to

1 October 01

0.3701

2.7020

2 October 01

to

29 October 01

0.3430

2.9155

30 October 01

to

10 December 01

0.3588

2.7871

11 December 01

to

7 January 02

0.3709

2.6961

8 January 02

to

18 March 02

0.3612

2.7685

19 March 02

to

27 May 02

0.3723

2.6860

28 May 02

to

10 June 02

0.3830

2.6110

11 June 02

to

08 July 02

0.3928

2.5258

09 July 02

to

0.3758

2.6610

C26/2002 EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

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DATE OF ISSUE:  8 JULY 2002

EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

Purpose of Instruction

The purpose of this Departmental Instruction is to provide information about the Pounds Sterling exchange rate variation exercise.

Introduction

Following the recent variation in foreign exchange rates, it is appropriate for DVA to apply a new exchange rate for income support pension assessment purposes.

New exchange rate A$2.5458

The exchange rate used to convert Pounds Sterling to Australian Dollars for income support assessment purposes has changed from one Pound = A$2.6110 to one Pound Sterling equals A$2.5458 (ie A$1 = ?0.3928).

This rate reflects the average of the “on demand airmail buying rate” for the two weeks to 07 June 2002.

Date of effect
11 June 2002

Effective from 11 June 2002 the current exchange rate will change.

On pension payday 27 June 2002 (pay period 26) pensioners will receive a full instalment at the new assessed rate.

Date of processing run

Processing to implement the new exchange rate is scheduled for the evening of Monday 10 June 2002.

Continued on next page

Automatic superannuation processing

The amount recorded as BRI non-indexed super type 08 or BRI indexed super type 09 will be varied by applying the exchange rate to the amount recorded, to find the new rate of superannuation.  The pension amount will then be reassessed automatically.

Manual cases and MS cases

Cases with actions in frozen status will not be processed automatically.  These cases will be listed on the manual listing for follow up action, and CMS/PIPS cases will be created automatically for State Office action.  Any cases processed through PIPS/PC should be reassessed from the beginning of the pension period for pension payday 27 June 2002 – ie 11 June 2002.

Advice letters

The advice letters for this exercise will be joint advices where both members of a couple are in receipt of BRI and their pension payment varies.  Age Pensioners will receive separate advices.

The letter will advise the new exchange rate, the amount of income and a payment box.  An advice will only be produced for cases where a variation in payment results.

IBM GSA implications

IBM GSA will produce the cartridge and forward it to Security Mailing in Sydney.

Overseas, Special Register and Enclosure Advices

Overseas, Special Register, Enclosure Advice letters (ie cases where a change to treatment entitlement occurs) and reduction to nil cases will be separated by IBM GSA and despatched to the State Office for manual distribution.  This arrangement is the same for daily advice letters.

Mail out of bulk advices

Security Mailing will print and prepare the advices for lodgement with Australia Post by 17 June 2002.

Continued on next page


British DP case paid Rent Assistance

Income Support pensioners who are in receipt of Rent Assistance (RA) and who also receive British Disability Pension direct from Britain (not EATS and Composite cases) should have that Disability Pension converted to $A using the BRI exchange rate.  RA should be manually recalculated.  These cases can be extracted through AIS by each state.  If you have any problem please contact Andrew Purcell on the number below.

Note: If DP has already been assessed as income in determining Hardship cases it should not also be assessed as income for RA.

Contact officer

The Income Support Branch contact officer is:

Andrew Purcell           Telephone:   (02) 6289 4832

Roger Winzenberg
Branch Head
INCOME SUPPORT

07 June 2002


POUND STERLING EXCHANGE RATE

Foreign exchange periodExchange rate

3 Dec 98

to

27 January 99

0.3834

2.6082

28 January 99

to

10 Feb 99

0.3719

2.6889

11 Feb 99

to

19 May 99

0.3905

2.5608

20 May 99

to

28 July 99

0.4079

2.4516

New Date of Effect Rules

13 July 99

to

9 August 99

0.4271

2.3414

10 August 99

to

1 Nov 99

0.4105

2.4361

2 Nov 99

to

10 Jan 00

0.3952

2.5304

11 Jan 00

to

6 March 00

0.4069

2.4576

7 March 00

to

1 May 00

0.3927

2.5465

2 May 00

to

29 May 00

0.3807

2.6267

30 May 00

to

10 July 00

0.3907

2.5595

11 July 00

to

16 Oct 00

0.4022

2.4863

17 Oct 00

to

2 April 01

0.3737

2.6759

3 April 01

to

14 May 01

0.3550

2.8169

15 May 01

to

23 July 01

0.3674

2.7218

24 July 01

to

6 August 01

0.3803

2.6295

7 August 01

to

1 October 01

0.3701

2.7020

2 October 01

to

29 October 01

0.3430

2.9155

30 October 01

to

10 December 01

0.3588

2.7871

11 December 01

to

7 January 02

0.3709

2.6961

8 January 02

to

18 March 02

0.3612

2.7685

19 March 02

to

27 May 02

0.3723

2.6860

28 May 02

to

10 June 02

0.3830

2.6110

11 June 02

to

0.3928

2.5458

C25/2002 SENIOR AUSTRALIANS TAX OFFSET (SATO)

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DATE OF ISSUE:  8 JULY 2002

SENIOR AUSTRALIANS TAX OFFSET (SATO)

Purpose

The purpose of this departmental instruction is to explain what the Senior Australians tax offset (SATO) is, who is eligible and how to receive the offset.

Background

SATO was introduced in the 2001 Budget and is administered by the Australian Tax Office (ATO).  SATO provides eligible people with an increased effective tax-free threshold.

What is SATO?

SATO is a tax offset (formerly known as a tax rebate) available to people who satisfy the four eligibility conditions. It allows eligible people to earn more income before they have to pay tax or Medicare levy.

SATO is applied against the tax liability assessed on a person's taxable income. In some cases, SATO will reduce a person's tax liability to nil. There is also an increased Medicare levy threshold ($20,000) for persons who are eligible for SATO.

Eligibility

To eligible for SATO you must satisfy the four following conditions:

  1. meet the age requirements,
  2. be eligible to receive a Commonwealth of Australia age pension or a  payment from DVA, regardless of whether or not you received such a payment,
  3. have not been in prison for the whole income year, and
  4. satisfy the income threshold that applies to you.

Continued on next page

The age requirements

The first condition is the age requirement.  You satisfy the age condition of SATO if, on 30 June 2002, you were a male aged 65 years or more or a female aged 62 years or more.

Age condition – veterans and war widows

Veterans, war widows and war widowers satisfy the age condition of SATO at the earlier veteran pension age of 60 years or more for men and 57 years or more for women; ages as at 30 June 2002.  The age criterion is not restricted to veterans with qualifying service for the purposes of SATO.

Partners of veterans

To be eligible at the earlier veteran pension age the claimant must be either a veteran or war widow or war widower.  Those who receive a benefit because they are the partner of a veteran (and are not themselves a veteran, war widow or war widower) do not satisfy the age condition of SATO at the earlier age.  Partners will satisfy the age condition of SATO at the age pension age.

Factsheet

Factsheet PAT24: Senior Australians Tax Offset contains more detailed information about SATO.

Changes to SATO assessment

There are some changes to the second eligibility condition of SATO.

Previously, veterans, war widows and war widowers satisfied the second condition if they were in receipt of a service pension or income support supplement.  The recent legislative amendments extended this eligibility criterion to those persons who were eligible, but not in receipt of a payment, benefit or allowance under the Veterans' Entitlements Act 1986. These changes take effect from 1 July 2000.

People who are eligible for SATO because of the extended criteria in condition 2 (eligibility for Commonwealth age pension or payments from DVA), can claim for the 2002 income year by completing the relevant questions on the income tax return.

Amendment to 2001 tax assessments.

People can seek an amendment to their 2001 income year assessment if they qualify for SATO under the new rules, because the new rules are retrospective, effective from 1 July 2000.

Continued on next page


Taxpack 2002

Note: the following information is specific to SATO claims for 2001/02 tax assessments.

Taxpack 2002 and Taxpack for retirees outline SATO eligibility.  Questions are included for taxpayers to indicate whether the earlier pension age applies to them.

To claim SATO a person must complete questions 6 and T2 in Taxpack 2002 OR questions 1 and 19 in Taxpack for retirees.

Veterans, war widows and war widowers must complete label Y at question 6 in Taxpack 2002 OR question 1 in Taxpack for retirees to be assessed for SATO at the earlier age.

The ATO will do the rest.

133 254

The Taxpack information includes some generic information about who is a veteran, war widow or war widower.  This is to assist people to determine whether they are eligible for SATO at the earlier age.  This information is followed by the DVA website details and the general enquiry number 133 254.

Information in Taxpack and on the internet is designed to be as simple as possible, however, there is a likelihood that some people will still contact DVA for assistance in filling out their tax return.

It is essential that people who answer calls to this number are made aware of SATO administration and eligibility.

DVA website

The DVA website (www.dva.gov.au [88]) will be updated with a link to information specific to SATO.  Information will also be available on the DVA intranet on the Budget page within the National Office Income Support site at [89]http://sharepoint/servingourcustomers/incomesupport/Pages/Default.aspx [89]

This information is more detailed than the information included in Taxpack 2002.

It is hoped that people will be able to gain the necessary information for SATO from the website to minimise queries.  It is most important for people to note that self identification is only an issue for people aged above 60 and less than 65 (males) and above 57 and less than 62 (females).

Continued on next page


Q&A sheet for DVA staff

DVA staff need only answer questions relating to veteran, war widow and war widower eligibility and veteran pension age.  A Q&A sheet to assist with likely questions has been distributed to Income Support Managers for distribution to staff and managers likely to answer calls to the 133 254 number.

All other queries about SATO should be referred to the Personal Tax Infoline: 132 861 press 1.

Legislation

Legislation amending the eligibility criteria was passed on 27 June 2002.  This change was contained in the Taxation Laws Amendment Act (No.2) 2002 and affects section 160AAAA and 160AAAB of the Income Tax Assessment Act 1936.  Eligibility for veterans to receive SATO at the earlier veteran pension age is determined by sections 160AAAA and 160AAAB of the Income Tax Assessment Act 1936.

The Veterans' Entitlements Act 1986 required no legislative changes.

NO Policy contacts

If you have any queries about this information please contact Elizabeth Quinn on (02) 6289 4773 or Jacqui Mitchell on (02) 6289 6372.

Roger Winzenberg

Branch Head

Income Support

5 July 2002

C24/2002 RETRIEVAL OF PAYMENTS TO ATO - PROCEDURAL CHANGES & IMPACT ON PAYMENT SUMMARY PROCESSING

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DATE OF ISSUE:  20 JUNE 2002

RETRIEVAL OF PAYMENTS TO ATO - PROCEDURAL CHANGES & IMPACT ON PAYMENT SUMMARY PROCESSING

Purpose

This Departmental Instruction provides information concerning the impact of the new payment retrieval functionality on processing the retrieval of payments made to the Australian Tax Office (ATO).

Background

On 15/04/2002 the online Retrieval functionality was implemented into IPS.  A Stateline issued on 14/04/2002 provided details of the system changes and the new functionality.

Previously a manual process was used to effect retrieval of monies from organisations.  Specifically, payments being retrieved from the ATO were manually processed in bulk at the end of the financial year with subsequent manual alteration to the Payment Summaries for affected clients.

Benefits – Payment Summary Impact

The new functionality provides for comprehensive details of payment retrievals and reissues to be recorded/displayed against the original payments in VIEW.  Updates can be done in real time and do not require a stock take at the end of the financial year.

In addition, the programs that produce the Payment Summaries have been updated to automatically take account of tax instalments that have been retrieved from the ATO.  This will result in time savings for staff who previously were required to manually amend Payment Summaries for those clients who had tax instalments retrieved from the ATO during the financial year.


New Procedures

Retrieval of payments made to Group and Shared destinations should now to be done online to take advantage of the automatic recording of details and subsequent adjustment to payment records.  However, the new functionality has some built-in limits requiring that retrieval of payments be processed within 4 paydays of the original payment date.

To take advantage of the automatic adjustment of Payment Summary totals, retrieval of payments from the ATO should be processed immediately the Department becomes aware of the need to do so.

Staff should not wait till the end of the financial year to process these retrievals as they will not be able to use the new online functionality and therefore, the Payment Summaries will require manual amendment.

Any payments that cannot be retrieved within 4 paydays must be processed using the current manual procedures.

NO Contact

The National Office contact officer for these system changes is Brett Peluso who can be contacted on (03) 9284 6228 or by email.

Roger Winzenberg

Branch Head

Income Support

C23/2002 JUNE 2002 STATUTORY INCREASE - ADVICE LETTER, PAYMENT SUMMARY AND MEDICARE LEVY EXEMPTION CERTIFICATE MAILOUT

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DATE OF ISSUE:  14 JUNE 2002

JUNE 2002 STATUTORY INCREASE - ADVICE LETTER, PAYMENT SUMMARY AND MEDICARE LEVY EXEMPTION CERTIFICATE MAILOUT

Purpose of Instruction

This Departmental Instruction is to provide information about the processing arrangements for the June 2002 Statutory Increase (SI) advice letter, Payment Summary (formerly named Group Certificate), and Medicare Levy Exemption Certificate mailout.

ROGER WINZENBERG

BRANCH HEAD

INCOME SUPPORT

12 June 2002

Overview

Introduction

In June each year, the Department undertakes a bulk exercise to issue approximately 350,000 households with advice letters to persons in receipt of service pension, age pension or income support supplement.  The majority of these letters will include PAYG (Pay As You Go) Payment Summaries for the end of the financial year.  (The Australian Taxation Office (ATO) advised, as part of the new tax reforms introduced in the 2000/2001 financial year, Group Certificates have been renamed 'PAYG Payment Summary - individual non business).

Medicare Levy Exemption Certificates will also be issued at this time.

Significant issues

The June 2002 mailout will incorporate the following events for payday 11 July 2002.

  • Production of advice letters to all service pensioners, age pensioners and income support supplement recipients;
  • Adjustment of pension rates, allowances and thresholds in accordance with adjustments to the Income Free Area and Assets Free Area;
  • Increase to the deeming thresholds - singles rate from $33,400 to $34,400 and couples rate from $55,800 to $57,400;
  • A Full Income and Assets Attachment will be provided for - all less than maximum rate pensioners who are either assets tested or income tested where the total of their assets is within (or equal) to $10,000 of their prescribed assets limit;


Significant issues Contd
  • A Tailored Income and Assets Attachment will be provided for - all less than maximum rate pensioners who are income tested and where the total of their assets is greater than $10,000 of their prescribed assets limit;
  • Full Obligations will be provided for all less than maximum rate pensioners - this is in line with the Repatriation Commission policy that pensioners receiving reduced rate of pension be provided with their full obligations and full income and asset details at a minimum interval of once every two years;
  • Full obligations will be suppressed for maximum rate pensioners, however reference will be made to previous obligations issued;
  • Maximum rate pensioners will receive the Financial Obligations paragraph (including their Prescribed Rates) in their advice letter;
  • End of financial year Payment Summary production - ATO have advised of formatting and wording changes to the Payment Summary for this years issue - please see example provided showing ATO changes, which includes the provision of a Date of Birth field;
  • Standalone Payment Summaries ie., payment summaries without a covering letter, and Statement of Earnings - issued to those eligible pensioners who do not receive an advice letter - changes are to be made this year to reduce the number of Standalone Payment Summaries returned to the State Offices for issue;
  • Production of Medicare Levy Exemption Certificates (MLEC) - there are changes to the format of the MLEC to be issued this year;
  • Advice to pensioners of any gain or loss of treatment eligibility; and
  • Payment of Telephone Allowance to those eligible.

Production of Advice Letters

Processing Weekend -

20/06/02 -

24/06/02

Processing is scheduled to run from Thursday evening 20 June until Monday evening 24 June 2002 with any pension variations effective from 1 July 2002 for payday 11 July 2002.


Critical Dates

Processing period within DVA - (includes 'advices' processing).

Thursday (pm) 20 June 2002 - Monday (pm) 24 June 2002

Commence Dispatch of production data to SMS and 'sign-off' duties.

Monday, 24 June 2002 (pm)

Commence printing advice letters (SMS)

Tuesday, 25 June 2002

All production data delivered to SMS

Tuesday, 25 June 2002 (pm)

Progressive lodgement of all State's Advice Letters with Australia Post (SMS) to be completed.

Friday, 5 July 2002

Letter Production

Security Mailing Services, Kingsgrove, Sydney will print the advice letters, add inserts and envelope them.  Production of letters is expected to occur over period 25June – 5 July 2002.

Lodgement of Letters

Letters will be progressively lodged with Australia Post for posting commencing Monday, 1 July 2002.  All letters are to be posted by Friday, 5 July 2002.

Letter Content

Letters

Prior to the issue of this Departmental Instruction, the June SI State Contact Officers, System Support Officers and Managers Income Support were provided with copies of the proposed paragraph sequencing and mock-ups of advice letters for this run.

A number of recommendations were received and have been taken into consideration for the final version of paragraphs and sequencing.  Details of the Paragraph Sequencing and Target Audience can be found at Attachment A.  Copies of the expected advice letter content for this run are reproduced at Attachment B to this DI.


Full Obligations - for All Less than Maximum Rate Pensioners

Full Obligations are to be provided for all less than maximum rate SP/ISS/AP recipients.  This is in line with the Repatriation Commission policy that pensioners receiving reduced rate of pension be provided with their full obligations and full income and asset details at a minimum interval of once every two years

Financial Obligations including Prescribed Rates for Maximum Rate Pensioners

The Financial Obligations paragraph (including the Prescribed Rates) will be present in the advice for all maximum rate SP/ISS/AP pensioners.

Full Income and Assets Attachment

A Full Income and Assets Attachment will be sent to those less than maximum rate service pensioners, income support supplement recipients and age pensioners who are either:

  • Assets tested; or
  • Income tested where the total of their assets is within (or equal to) $10,000 of their prescribed assets limit.


Tailored Income and Assets Attachment

A Tailored Income and Assets Attachment will be sent to those less than maximum rate service pensioners, income support supplement recipients and age pensioners who are:

  • Income tested where the total of their assets is greater than $10,000 of their prescribed assets limit.

The Tailored Income and Assets Attachment will list all of the client's income and assets but will exclude any miscellaneous assets in their assessment unless those miscellaneous assets earn income.

Assets to be excluded are:

  • Home contents;
  • Vehicles, boats, trailors, caravans, motor bikes;
  • Life insurance;
  • Collectibles; and
  • Other personal assets.

This change is designed to reduce the advice of miscellaneous assessment items and unnecessary obligations and to aid pensioner understanding of the content of their advice letters.

A new paragraph will be added to the Tailored Income and Assets Attachment advising pensioners that their miscellaneous assets are not listed in the attachment.

It should be noted that the Tailored Income and Assets Attachment will be introduced as part of the daily advices processing from 21 — st June 2002 and will be produced under the same circumstances as for the June SI processing.

Telephone Allowance

Pensioners entitled to a telephone allowance payment will receive a paragraph advising them about their quarterly payment.  The TA paragraph will advise pensioners that ....'TA is a separate payment and is not included in your total fortnightly payment information referred to in the letter.'


Non Taxable Pensioners

Those pensioners whose pensions are not taxable (eg, service pension on the grounds of permanent incapacity and under 65 years of age for males, 62 years for females) will receive an advice letter only.  A Medicare Levy Exemption Certificate (MLEC) will be issued separately for these clients.  Their MLEC certificates will be sent from the mailing house directly to them.

PAYG (Pay As You Go) Payment Summary -individual Non-business
  • Service Pension, or
  • Age Pension, or
  • Income Support Supplement

The information previously reported on a Group Certificate is now reported on a Pay As You Go (PAYG) Payment Summary - individual non-business.  Payment Summaries will be issued to all pensioners whose pensions are taxable.

Payment Summaries without Pay As You Go (PAYG) withholding's (tax deductions) will form part of the advice letter sent from the mailing house.

In previous years, Payment Summaries for those pensioners who had PAYG withholding's (tax deductions) during the year, were sent to the State Offices for checking prior to mailing - they will now form part of the advice letter sent from the mailing house.

Changes to the administrative processes have enabled these changes to be introduced, and have been designed to reduce the workload on State Office staff.

The Payment Summary will be sequenced to print after the Payment Information Attachment at the end of the advice but before the General Information Sheet (GIS).


Standalone Payment Summaries - reduction in the numbers to be returned to State Offices for Dispatch

In previous years, it has been the practice to forward all Standalone Payment Summaries back to the State Offices for them to dispatch to the client.  In 2001, 17,158 standalone payment summaries were returned to the State Offices for appropriate action.  This year we estimate that there will be approximately 6,500 standalone payment summaries returned to the State Offices.

The Standalone Payment Summaries comprise the production of payment summaries for the following clients:

  • Those pensioners who had PAYG withholding's (tax deductions) during the year;
  • Deceased - produced for pensioners who had passed away during the financial year;
  • Others - Comprising Overseas clients, Unknown Addresses, MOA 52 (Working Rule B Widows), and pensioners in part payment during the year;
  • Education Allowance Payment Summaries; and
  • Special Register addressed Payment Summaries.

Changes for the 2002 issue of Standalone Payment Summaries are:

  • The Payment Summaries for pensioners who have had PAYG withholdings during the year will be sent with the advice letter;
  • Payment Summaries for those clients who died during the year will not be produced for any state as these can be reprinted when requested, using the Reprint Payment Summary facility found in the Advices Tab in VIEW - this facility was implemented in 2001;
  • Standalone Payment Summaries for Special Register clients will print as part of the advice letter where an advice letter is produced.  These advices will continue to be returned to the State Offices for enveloping and dispatching to the client;
  • There are an estimated 6,568 Standalone Payment Summaries remaining in the 'Others' and 'Education Allowance' categories - for 2002 these will be printed at the Mailing House and forwarded to the State Offices for dispatch to the client.


Page Numbering of Advice Letters

The Payment Summary will print as part of the advice letter.  It is sequenced to print after the Payment information Attachment (showing payboxes) but before the General Information Sheet.  The Payment Summaries do not have page numbers printed on them.

Please note that the exclusion of page numbers from the payment summaries has resulted in some confusion for pensioners over the past couple of years.  The Payment Summaries are sequenced between pages that are numbered.  The page numbering sequence, takes into account the payment summary pages for counting purposes although, page numbers are not printed on the actual Payment Summaries.  Pensioners may ring concerned that some pages are missing from their letter.  It should be explained that there are no missing pages just missing page numbers.

Automatic Payment Summary (Group Certificate) Reprint Facility

From 1 July 2002, reprints of payment summaries for financial year 2001/2002 can be generated using the 'Payment Summary Reprint' facility located under the Advices Tab in VIEW - this replaces the provision of a Payment Summary Template used in previous years.

Please note: the 'year of issue' will not print in the Payment Summary heading for reprinted payment summaries requested via VIEW.  The 'Payment From' and 'Payment To' date range will accurately reflect the correct year/dates payment range.  The 'Authorising Person' will reflect the respective State's Deputy Commissioner based on the date the reprint is requested.


Medicare Levy Exemption Certificates

(MLEC)

A Medicare Levy Exemption Certificate will be issued to those Gold Card beneficiaries who are not in receipt of a taxable income support pension and who do not receive an advice letter ie,

  • War widows who do not receive income support supplement; or
  • Those veterans who are eligible for a gold card due to their disability entitlement, and who are not in receipt of an income support payment; or
  • Australian veterans with Qualifying Service and over 70 years of age, who are not in receipt of an income support payment; or
  • Those pensioners whose pensions are not taxable (eg, service pension on the grounds of permanent incapacity and under 65 years of age for males, 62 years for females).

The number of medicare levy exemption days, where applicable, will be stated on the Payment Summary for all other pensioners.

Medicare Levy Exemption Certificates

(MLEC) - New Format

The Medicare Levy Exemption Certificate (MLEC) has a new format this year.  In previous years the MLEC had duplicate information printed on the certificate advising the recipient, if lodging a tax return to detach the bottom half and pin it to their return.  ATO have advised that the requirement to attach or return the MLEC with a tax return is no longer required.  The pensioner should retain the certificate as a record.

The return address to print on the MLEC will no longer be GPO Box 9998 in Your Capital City as in other years.  The return address will be the GPO Box specific to each State, as per the advices.

Please see Attachment C for a sample of the revised MLEC format.

Reprints of MLEC

System Support Officers and State Office contact officers have been provided with a Medicare Levy Exemption Certificate (MLEC) word document to enable them to produce a MLEC.

General Information Sheet (GIS)

Each letter will have a General Information Sheet (GIS).  The GIS will be sequenced to print after the Payment Summary - the GIS must be used as the consistent last page to enable the enveloping machines at the mailing house, to identify the last page of each persons letter ie., gatemarking purposes.


Letter Content

Details of the proposed content of the letters, including sample letters and sequencing of paragraphs are included in Attachments A and B.

Insert

A 'pensioner flyer' produced by the Australian Taxation Office (ATO), in conjunction with Centrelink and DVA will be included with all advice letters issued in this exercise.  It is hoped that this flyer will significantly reduce the number of queries the State Office receives about taxation matters.  The brochure is titled “Do you Need to lodge a Tax Return?”.  This brochure will be included with all Payment Summaries.

Each of the State offices will be supplied with a quantity of the flyers to insert with their Special Register, Enclosures and Standalone Payment Summaries.


Issues Requiring State Office Action

Special Register and Overseas

Overseas cases for Tasmania will be sent on a cartridge to Security Mailing Services for printing.  Other State's letters for overseas clients will be printed by IBM in Clayton, Melbourne and forwarded to the State Offices with other daily advice output for checking and mailing.

All Special Register letters will be printed at the IBM Printhub in Clayton, Melbourne and forwarded to each of the State Offices with other daily output for checking and mailing.  States will be provided with the following insert to be included in letters to these pensioners:

  • ATO brochure “Do you need to lodge a tax return?”

Advice Schedule Reports - Hard Copy and Online Access

Each State Office will receive a 'hard copy' of the advice schedule reports from the June SI processing run.  These will be printed at the IBM Printhub in Melbourne and forwarded to each State's System Support Officer (SSO).

Access to this information will also be available 'on-line'. Instructions for accessing the advice schedule reports will be provided separately to this instruction.

Enclosure Letters

As is the procedure for quarterly processing Enclosure (treatment) advice letters will be printed at the IBM Printhub and sent via courier to each State Office.  It is suggested that these be checked for accuracy, and reconciled against the reports received by each State Office to ensure they reflect the correct treatment paragraphs.


'HELD' Advices to be Forced

As part of the Batch processing run all advices in 'Held' status will be forced to print.  Forced held advices will now print in each respective State Office's nominated printer as part of the production run.  Please ensure your nominated printer is fully operational on Thursday evening, 20 June 2002 as the forced advices will print at that time.  All forced advices will need to be checked to ensure the information in them is correct prior to posting.

Handling of Daily Advices

Cases processed in advance for payday 11 July 2002 should have the daily advice dispatched prior to the June advice letter being sent.

Daily payment advices processed after the processing run on 20-24 June 2002 for 11 July 2002, should be held by the State Offices until confirmation is received from the June SI Business Co-ordinator to release such advices.  This will ensure that pensioners who have pension variations processed for payday 11 July 2002 will receive their daily advice after the quarterly advice rather than in advance of it.

To minimise the number of daily advices to be held while the June advices are processed, it is suggested that only manual cases (and essential processing) should be processed for payday 11 July 2002.


State Office Contacts

State Office Contact Officers

NSW  - Genia Sacharczuk  - 02 9213 7106

VIC - David Price - 03 9284 6379

QLD - Steve Jensen - 07 3223 8835

SA - Graham Bate - 08 8290 0425

WA - John Gliddon - 08 9366 8417

TAS - Bryon Kelly - 03 6221 6684

ACT - Kristie Chynoweth - 02 6289 6019

National Office Contacts

Feedback from State Offices

Any concerns regarding letters produced as part of this run should be directed to the June SI Business Co-ordinator in National Office - Pat Webb.  At the end of this process we will be collating all State feedback to analyse any issues raised and develop solutions to address any concerns raised.  Any problems noted should be reported to the Business Co-ordinator, together with any background information detailing the issue.  We will be particularly interested in enquiries or comments relating to the Tailored Income and Asset Attachment.  Please ensure that any problems are reported as early as possible.

Contacts

Any queries regarding advice wording, data cartridges, mail house printing and letter lodgement should be referred to:

Pat Webb

(02) 6289 6444 (Phone)

(02) 6289 6553 (Fax)

OR

Bob Turner

(02) 6289 6079 (Phone)

(02) 6289 6553 (Fax)


ATTACHMENT A

HOUSEHOLDS TO RECEIVE PAYMENT SUMMARIES AND/OR MEDICARE LEVY EXEMPTION CERTIFICATES

JUNE 2002 - APPROXIMATES BASED ON 2001 STATISTICS

Type

NSW

VIC

QLD

SA

WA

TAS

AUST

SP

58,823

39,971

39,368

18,598

18,036

  7,939

182,735

ISS

28,275

19,780

15,834

  6,834

  5,411

  2,825

78,959

AP

  2,971

  2,101

  1,526

     724

     710

    124

   8,156

Sub Total - Advices Only

90,069

61,852

56,728

26,156

24,157

10,888

269,850

MLEC

28,566

19,857

16,730

  6,293

  6,769

  2,422

  80,837

*Pay Sums without a letter

*(8,867)

1928

(2,306)

1268

(2,782)

1740

(1,306)

652

(1,400)

689

(497)

291

(17,158)

6568

Total

120,563

82,977

75,198

33,101

31,615

13,601

357,255

* The figures presented in brackets represent the number of standalone payment summaries returned to the State Offices in 2001.  The bolded figure directly underneath those figures are the expected number of standalone payment summaries to be returned to the State Offices for dispatch in 2002.


PARAGRAPH SEQUENCING AND TARGET AUDIENCE

An advice will be produced for all Service Pensioners, Income Support Supplement recipients and Age Pensioners.

***LESS THAN MAXIMUM RATE SP/ISS/AP pensioners will receive the following paragraphs:

  • The Full Income and Assets Attachment.  This will be sent to those:

Less than Maximum Rate of SP/ISS/AP pensioners who are either:

  • Assets tested; or
  • Income tested where the total of their assets is within (or equal to) $10,000 of their prescribed asset limit.

  • A Tailored Income and Asset Attachment will be sent to those:

Less than Maximum Rate of SP/ISS/AP pensioners who are:

  • Income tested and where the total of their assets is greater than $10,000 below their prescribed asset limit.

The Tailored Income and Assets Attachment will list all of the client's income and assets but will exclude their miscellaneous assets unless those miscellaneous assets earn income.

  • Full Obligations will be sent to:

All Less than Maximum Rate SP/ISS/AP pensioners

***MAXIMUM RATE SP/ISS/AP will receive the following paragraphs:

  • Financial Obligations paragraph which includes their prescribed rates in the body of the advice.

WILL NOT receive

  • Full Income and Assets Attachment
  • Full Obligations


JUNE 2002 SI - PARAGRAPH SEQUENCING AND TARGET AUDIENCE

PARAGRAPH

TO WHOM

State specific letterhead

All

Opening paragraph(Introduction - RTRAIN)

All

  • IFA/AFA Max Rate No Change - (Introduction - RSQFAN)
  • IFA/AFA variation /effective date (Introduction - RSQFAC)

Continuations on Maximum Rate

Variations

Increase to Maximum Rate/effective date (Qtly Mar/Sept - INCMAX)

Those increased to Maximum Rate.

Your DP has been varied - VARYDP

Your DP has not varied - CONTDP

Not being used

Opening Reasons(Cost of living changes to the Income and Assets Test) - (Introduction -RSCIAT)

All

Payment Information - PAYONE

All

Payment Diversion Table - PAYMUL

All

Payment Summaries (formerly known as Group Certificates) - RSQGCA

Taxable

Payment Summaries are enclosed - GCCLTE/GCPTNE

PAYG without Withholdings (without Tax Deduction) cases

Payment Summaries issued separately - GCPTSP/GCCLSP

PAYG Withholding (Tax Deduction) cases

Medicare Levy Exemption Certificate issued separately - (Gpcert - RSMLEC)

Non Taxable (PI cases)

Medicare Levy Exemption (Gpcert - QTMLEC)

Taxable

Contact ATO if questions re: TAX

- QTYCTX

ALL (not PI)

Payment Summary - Centrelink - advising the Centrelink will issue a Pay Sum - RSQGCC

Those who transfer to DVA from Centrelink during a Financial Year

Telephone Allowance -

All eligible for TA payment


PARAGRAPH

TO WHOM

Partial Income and Assets - reference to attached Income/Assets List - is info correct - IATAIL, IAFULL

Those who receive Income and Assets Attachment (ie Less than Max Rate SP/ISS/AP)

Events You Must Tell Us About

Less than Maximum Rate SP/ISS/AP

Financial Obligations (incl Prescribed Rates) IALMMJ, IALMMS, IALAPM, IALPAJ, )

All Maximum Rate SP/ISS/AP (except Blinded)

Other Obligations (Partial Obs) (Reference to previous) - OBQTLY, OBQTAP

Maximum Rate SP/ISS/AP

Treatment Paragraphs

Those who have a treatment change

Changes You Have Already Told Us About - (Other Info - THECAN)

All

Your Right of Review - APPLAP, APPLSP

SP/ISS/AP Variations only

State Specific Closing

All

Signature Block (State specific)

All

Payment Information Attachment

All excluding continuations.

Full Income and Asset Attachment

Less than Maximum Rate SP/ISS/AP who are:

. Asset tested; or

. Income tested with assets < $10,000 of their prescribed assets limits

Tailored Income and Asset Attachment

Less than Maximum Rate SP/ISS/AP who are:

. Income Tested with assets > $10,000 of their prescribed assets limit

Full Obligations

All Less than Maximum Rate SP/ISS/AP

Payment Summaries

Taxable

General Information Sheet

All

MEDICARE LEVY EXEMPTION CERTIFICATE

Sample of new format


ATTACHMENT B

JUNE 2002 SI PARAGRAPH CONTENT

Example 1:

  • LESS THAN MAXIMUM RATE - VARIATION (INCREASE)
  • ASSETS TESTED
  • MARRIED ASSESSMENT
  • DP PAYABLE - not varied
  • TA IN PAYMENT
  • TAXABLE
  • FULL INCOME AND ASSETS ATTACHMENT
  • FULL OBLIGATIONS
  • PAYMENT SUMMARIES ENCLOSED
  • GIS

Commonwealth Department of

Veterans' Affairs

Contact:

Telephone: STATE OFFICE

AMP Place

10 Eagle Street

Brisbane Qld 4000

Postal Address:

GPO Box 651 Brisbane Qld 4001

Telephone:

General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1300 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs

This is to advise you that your T-PENSION-SP-ISS-AP has been T-INC-RE-NIL.  This change will take effect from 1 July 2002.


Cost of living changes to the Income and Assets Test

Recent increases in the cost of living have been applied to the following income and assets limits for T-PENSION-SP-ISS-AP:

  • Income Free Area - this is the amount of income you can have before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Assets Value Limit - this is the amount of assets you can have (other than your family home) before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Deeming Thresholds - these are the amounts of financial assets you can have before the higher deemed interest rates are applied to the assessment of T-PENSION-SP-ISS-AP.

For details on these changes please refer to the General Information Sheet which is attached to this letter.

Payment Information

Please refer to the enclosed Payment Information Attachment to see a breakdown of your payments.

The following table shows where your pension payments are going.

Date

Name

Payment Destination

Amount Deposited

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

Payment Summaries (formerly known as Group Certificates)

The Australian Taxation Office (ATO) advised as part of the tax reforms introduced in the 2000/01 financial year, that Group Certificates have been renamed 'Payment Summary'.

As it is the end of the 2001/02 financial year Payment Summaries are being issued.  You will need this information if you are required to lodge a tax return.

Payment Summary for T-CLIENT-NAME is enclosed with this letter.

Payment Summary for T-PTNR-NAME is enclosed with this letter.

Medicare Levy Exemption

If you have been eligible for full treatment at departmental expense during the past financial year, you are eligible for full or half exemption from payment of the Medicare Levy for that period.  The number of days you are eligible for full or half Medicare Levy Exemption is shown on your Payment Summary.

You should contact the Australian Taxation Office on 13 2861 if you have any questions about taxation.

Telephone Allowance

Your quarterly telephone allowance will be paid on T-DATE-Of-PAYMENT, together with your pension payment.  Your telephone allowance is a separate payment and is not included in your total fortnightly payment information referred to in the letter.  The current telephone allowance rates are:

Singles Rate - $18.00

Couples Rate (each) - $9.00

World War I Veterans - $59.70

Events You Must Tell Us About

Details of your obligations to notify us of changes to your circumstances are included in the attachment 'Important Information You Should Retain'.  These apply to both you and your partner and it is important that you both read them.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner


PAYMENT INFORMATION ATTACHMENT

The Department now calculates T-PENSION-SP-ISS-AP payments on a daily basis.  This means that your fortnightly pension payment is now made up of 14 days of entitlement of pension.  Therefore, when there is a change to your circumstances on any particular day in the fortnight - your pension will be adjusted from that day.  For that reason your pension payment may be different for one or two paydays after a reassessment.

Listed below are the payment tables showing the different amounts of pension you will receive on the paydays that are affected, with the final payment table showing your ongoing payment.

PAYMENTS TO XXXXX  XXXXXXX and XXXXX XXXXXXX for

Pension Payday 11 JULY 2002

TOTAL FORTNIGHTLY PAYMENTxxx.xxxxx.xx

This is made up of:

- xxxxxxxxx xxxxxxxxxxxxxxx.xxxxx.xx

- xxxxxxxxxxx xxxxxxxxxxxx    x.xx    x.xx

PAYMENTS TO XXXXX  XXXXXXX and XXXXX XXXXXXX for

Pension Payday 25 JULY 2002

TOTAL FORTNIGHTLY PAYMENTxxx.xxxxx.xx

This is made up of:

- xxxxxxxxx xxxxxxxxxxxxxxx.xxxxx.xx

- xxxxxxxxxxx xxxxxxxxxxxx    x.xx    x.xx


INCOME AND ASSETS USED TO ASSESS YOUR PAYMENT

(Information current as at T-ADVICE-PRINT-DATE)

You are receiving T-PENSION-SP-ISS-AP at less than the maximum rate payable.

The amount that you are paid depends on your combined income and assets but does not include the home in which you live.  The pension is calculated under two separate tests: an income test and as assets test.  The test that pays the lower rate of pension is the one that applies.

You are currently paid under the assets test.  The total of your assessed fortnightly income is T-TOTAL-FORT-INCOME.  The total of all your assets (excluding any deductible assets) is T-TOTAL-ASSETS.

Details of how your pension has been assessed are shown below.

FINANCIAL ASSETS

Savings and Cheque Accounts

Description

Account Number

Asset Amount

XXXXXXXX

XXXXXXXXXXX

$  XX.XX

@@@@@@@@@@

XXXXXXXX

$XXX.XX

IMPORTANT: We understand that the balances in these types of accounts may fluctuate regularly.

Listed Securities and Unlisted Public Securities

Description

No. of Shares

Asset Amount

XXXXXX

X,XXX

$XX,XXX.XX

QQQQQQQQQQQQQ

XXX

$    X,XXX.XX

Managed Investments

Description

Units

Asset Amount

VVVVVVVVVV

XX

$XX.XX

CCCCCCCCCCCCC

XXX

$XX.XX

Note: Income from financial assets is deemed.

IMPORTANT: You only need to notify the department if there are any changes to the value of your financial assets, as shown above.  You do not need to advise of any changes to the interest rates of these investments.

Total Financial Assets

FINANCIAL ASSETS VALUE

DEEMED INTEREST RATE

DEEMED INCOME PER FORTNIGHT

$XX,XXX.XX

3.5%

$X.XX

$         XX.XX

5.5%

$X.XX

$XX,XXX.XX

$XX.XX

What is Deemed Income?

For pension purposes, income from financial assets such as accounts with banks, building societies and credit unions, loans, bonds, debentures, gifts, shares, managed investments and bullion is deemed.  The value of all your financial assets is added together, and deemed interest rates are applied to calculate the income.

At present, deemed income is calculated as follows, regardless of the actual interest rates, on the total of all your financial assets:

$0 to T-MARRIED-THRSH-DEEMED-AMT – at T-INC-DEMING-INT-RATE%

T-MARRIED-THRSH-DEEMED-AMT + at T-INC-DEEMING-HIGH-RATE%

If your investments are earning more than the T-INC-DEEMING-INT-RATE% or T-INC-DEEMING-HIGH-RATE% deeming rates, this additional income will not affect the rate of your T-PENSION-SP-ISS-AP.

OTHER INCOME AND ASSETS

The following assets are those, which do not have deeming, applied to them but are still used to determine your rate of pension.

Home Assets

The asset and/or income values shown below are the amounts used for pension purposes.

  • Market value of household contents - $XX,XXX.XX

Miscellaneous Assets

  • T-MISC-ASSET-DESCRIPTION with a net market value of $X,XXX.XX

Direct Income

  • T-DESCRIPT-MISC-EARNINGS - $XXX.XX per fortnight


IMPORTANT INFORMATION YOU SHOULD RETAIN

(Information current as at T-ADVICE-PRINT-DATE)

Events You Must Tell Us About

You must tell us within 14 days (28 days if you are living overseas or receive remote area allowance) if any of the events listed below occur.  These events may affect the amount of T-PENSION-SP-ISS-AP you receive.  If you do not tell us of any of these changes you may be overpaid.  We are entitled under section 205 of the Veterans' Entitlements Act 1986 to recover this overpayment and an administrative charge may also be applied.

You will also need to tell us the date any changes to your circumstances occur.

When you are telling us of changes to your circumstances you should do this by telephoning or visiting any Department of Veterans' Affairs Office, or by writing to the Deputy Commissioner.

Obligations – Financial

You are currently receiving T-PENSION-SP-ISS-AP under the assets test.  As you are paid at less than the maximum rate payable, you must notify us if:

  • Your income from all sources increases above T-TOTAL-INCOME-PLUS-4 pf; or
  • The total of your financial assets increase; or
  • Your total assets increase to more than T-PRESCR-ASSET-AMT.  (Please note that this figure does not reflect your actual total amount of assets.  If your assets exceed this amount your pension will be assessed under the assets test).

This action will ensure that your T-PENSION-SP-ISS-AP is paid at the correct rate.

Obligations – Homeowner

As a homeowner, you must tell us full details if:

  • You sell your home
  • You leave your home because of age or ill health
  • You rent or sublet your home
  • You leave your home for any period in excess of twelve months

Obligations – General

  • You change your postal and/or residential address
  • You leave Australia
  • You are granted any pension or benefit from the Department of Family and Community Services, an overseas authority or from any other authority
  • You (or your partner) make a claim or receive workers compensation, sickness or accident insurance other than a payment of disability or war widow/ers pension from this department.
  • You are imprisoned after conviction for an offence.

Conclusion

The above are your full obligations to the Department.  If you have any queries about any of the above matters please contact this office at the address or telephone number shown at the top of this letter.


Commonwealth Department of

Veterans' Affairs

2002 PAYG Payment Summary - Individual Non Business

Service Pension

Original

DVA File No: QX999999

Payer's ABN:          288 665 94

Tax File Number:   111 111 111

Payment From: 01/07/2001

Payment to: 30/06/2002

Date of Birth: DD/MM/CCYY

Client's Name

1st Line of Client's Address

2nd Line of Client's Address

3rd Line of Client's Address

Gross payments:

$0.00

Medicare Levy Full or Half

Exemption Days: 0

Remote Area

Allowance: $0.00

ThousandsHundredsTensUnits

Total tax withheld -

whole dollars only in wordsNILNILNILNIL

Total tax withheld (whole dollars)$0.00

Authorised Person:20/06/02

?-------------------------------------------------------------------------------------------------------------------------------------

Commonwealth Department of

Veterans' Affairs

2002 PAYG Payment Summary - Individual Non Business

Service Pension

Client Copy

DVA File No: QX999999

Payer's ABN:          288 665 94

Tax File Number:   111 111 111

Payment From: 01/07/2001

Payment to: 30/06/2002

Date of Birth: DD/MM/CCYY

Client's Name

1st Line of Client's Address

2nd Line of Client's Address

3rd Line of Client's Address

Gross payments:

$0.00

Medicare Levy Full or Half

Exemption Days: 0

Remote Area

Allowance: $0.00

ThousandsHundredsTensUnits

Total tax withheld - NILNILNILNIL

whole dollars only in words

Total tax withheld (whole dollars)$0.00

Authorised Person:20/06/02

If you need to lodge a tax return, detach the ORIGINAL by cutting along the dotted line, and attach it to your tax return and keep the CLIENT COPY for your records.

See Notes On Reverse ?


Notes

  1.    Total tax withheld

If you have an amount in this box you need to lodge a tax return. This ensures that you receive any refunds of tax you may be entitled to.

2. Gross payments

The 'Gross payments' shown on this statement do not include non-taxable payments such as pharmaceutical allowance, telephone allowance or disability pension. This is the amount you should show as income in your tax return.

3. Remote Area Allowance (RAA)

This amount is not taxable but if you need to lodge a tax return it will reduce any tax offset you may be entitled to.

4. Medicare Levy Exemption

The holders of Veterans' Affairs Gold treatment cards are eligible for full or half exemption from the payment of the Medicare Levy. Where applicable, the number of Medicare Levy full or half Exemption days is shown on this form.

  1.    Terminology changes

A PAYG Payment Summary-Individual Non Business was formerly known as a group certificate.  A tax offset was called a rebate in previous years.

6. Further assistance

If you have any taxation enquiries, particularly in relation to whether you are eligible for full or half Medicare Levy Exemption, read TaxPack 2002 or TaxPack 2002 for retirees, or call the Australian Taxation Office on 13 2861. Pension enquiries should be directed to the Department of Veterans' Affairs.

Notes

  1.    Total tax withheld

If you have an amount in this box you need to lodge a tax return. This ensures that you receive any refunds of tax you may be entitled to.

2. Gross payments

The 'Gross payments' shown on this statement do not include non-taxable payments such as pharmaceutical allowance, telephone allowance or disability pension. This is the amount you should show as income in your tax return.

3. Remote Area Allowance (RAA)

This amount is not taxable but if you need to lodge a tax return it will reduce any tax offset you may be entitled to.

4. Medicare Levy Exemption

The holders of Veterans' Affairs Gold treatment cards are eligible for full or half exemption from the payment of the Medicare Levy. Where applicable, the number of Medicare Levy full or half Exemption days is shown on this form.

5. Terminology changes

A PAYG Payment Summary-Individual Non Business was formerly known as a group certificate.  A tax offset was called a rebate in previous years.

6. Further assistance

If you have any taxation enquiries, particularly in relation to whether you are eligible for full or half Medicare Levy Exemption, read TaxPack 2002 or TaxPack 2002 for retirees, or call the Australian Taxation Office on 13 2861. Pension enquiries should be directed to the Department of Veterans' Affairs.


This is an example only of the General Information Sheet (GIS) for Service Pensioners that will be used in the June mailout.  There is a separate GIS for income support supplement recipients and age pensioners. PLEASE NOTE: All rates and thresholds have been updated to reflect changes.

GENERAL INFORMATION ON SERVICE PENSION RATES AND LIMITS

(Information current as at T-ADVICE-PRINT-DATE)

MAXIMUM RATES OF SERVICE PENSION (excludes pharmaceutical allowance)

Singles Rate$421.80 (per fortnight)

Couples Rate (each)$352.10 (per fortnight)

PENSION INCOME LIMIT (per fortnight)

Before Service Pension ReducesCut Off*

Singles Rate$116.00$1,185.00

Couples Rate (combined)$204.00$1,979.00

These limits may increase for each dependent child or student up to the age of T-CHILD-AGE, or if rent assistance is payable.

PENSION ASSETS LIMIT

Before Service Pension ReducesCut Off*

Home Owner

Singles Rate$145,250$288,000

Couples Rate (combined)$206,500$443,500

Non Home Owner

Singles Rate$249,750$392,500

Couples Rate (combined)$311,000$548,000

These limits may increase for each dependent child or student up to the age of T-CHILD-AGE, or if rent assistance is payable.

NOTE: *Income and assets cut off limits applies to all service pensioners except blinded service pensioners.

GOLD CARD INFORMATION

NOTE 1: These income and asset limits apply to the Gold Card only.  Different income and asset limits apply to the pension.  These limits can be found at the top of the page.

NOTE 2: If you are aged 70 years or over, and you are a veteran who served in Australia's Defence Force, and you have qualifying service from any conflict (or you are an Australian Mariner with qualifying service from World War 2), the Gold Card income and assets cut off limits shown below, DO NOT APPLY TO YOU as your Gold Card is NOT affected by your income and assets.

GOLD CARD INCOME CUT OFF LIMIT

Singles Rate$328.00 (per fortnight)

Couples Rate (combined)$570.00 (per fortnight)

Add $69.60 per fortnight for each dependent child or student to the age of T-CHILD-AGE.

GOLD CARD ASSETS CUT OFF LIMIT

Home Owner

Singles Rate$173,750

Couples Rate (combined)$255,500

Non Home Owner

Singles Rate$278,250

Couples Rate (combined)$360,000

Add approximately $6,000 for each dependent child or student up to the age of T-CHILD-AGE.

DEEMING

Deeming assumes that any money you have invested in financial assets is earning a particular amount of income regardless of the actual amount earned.  The deeming rates are:

Singles

Low Rate:- 3% interest up to the threshold of $34,400

High Rate:- 4.5% interest for the remaining balance

Couples

Low Rate:- 3% interest up to the threshold of $57,400

High Rate:- 4.5% interest for the remaining balance

ILLNESS SEPARATED COUPLES

Couples separated due to ill health are paid at the single rate of service pension, but have their income and assets assessed as a couple.

RENT ASSISTANCE

You may be eligible for rent assistance if you pay rent to a non-government body or landlord.  The amount of rent assistance you receive depends on the amount of rent you pay and your family circumstances.  Rent assistance is paid at the rate of 75 cents in the dollar for every dollar you pay over the set rent limits.

When calculating the amount of rent assistance payable to a service pension recipient, any disability pension received by that person or their partner, is counted as income and may reduce the rate of rent assistance payable.


Maximum Amount of Rent Assistance Payable (per fortnight)

No children1-2 children3 or more

children

Singles Rate$88.00$102.80$116.60

Couples Rate

(combined)$82.80$102.80$116.60

Rent Limits (per fortnight)

No children1-2 children3 or more

children

Singles Rate$78.00$102.60$102.60

Couples Rate

(combined)$127.00$151.80$151.80


Example 2:

  • LESS THAN MAXIMUM RATE - VARIATION (INCREASE)
  • INCOME TESTED WITH ASSETS < $10,000 OF THEIR PRESCRIBED ASSETS LIMIT
  • SINGLE ASSESSMENT
  • NIL DP PAYABLE
  • NIL TA IN PAYMENT
  • TAXABLE
  • FULL INCOME AND ASSETS ATTACHMENT
  • FULL OBLIGATIONS
  • PAYMENT SUMMARIES ENCLOSED
  • GIS

Commonwealth Department of

Veterans' Affairs

Contact:

Telephone: STATE OFFICE

AMP Place

10 Eagle Street

Brisbane Qld 4000

Postal Address:

GPO Box 651 Brisbane Qld 4001

Telephone:

General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1300 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs

This is to advise you that your T-PENSION-SP-ISS-AP has been T-INC-RE-NIL.  This change will take effect from 1 July 2002.

Cost of living changes to the Income and Assets Test

Recent increases in the cost of living have been applied to the following income and assets limits for T-PENSION-SP-ISS-AP:

  • Income Free Area - this is the amount of income you can have before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Assets Value Limit - this is the amount of assets you can have (other than your family home) before your T-PEBNSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Deeming Thresholds - these are the amounts of financial assets you can have before the higher deemed interest rates are applied to the assessment of T-PENSION-SP-ISS-AP.

For details on these changes please refer to the General Information Sheet which is attached to this letter.

Payment Information

Please refer to the enclosed Payment Information Attachment to see a breakdown of your payments.

The following table shows where your pension payments are going.

Date

Name

Payment Destination

Amount Deposited

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

Payment Summaries (formerly called Group Certificates)

The Australian Taxation Office (ATO) advised as part of the tax reforms introduced in the 2000/01 financial year, that Group Certificates have been renamed 'Payment Summary'.

As it is the end of the 2001/02 financial year Payment Summaries are being issued.  You will need this information if you are required to lodge a tax return.

Payment Summary for T-CLIENT-NAME is enclosed with this letter.

Medicare Levy Exemption

If you have been eligible for full treatment at departmental expense during the past financial year, you are eligible for full or half exemption from payment of the Medicare Levy for that period.  The number of days you are eligible for full or half Medicare Levy Exemption is shown on your Payment Summary.

You should contact the Australian Taxation Office on 13 2861 if you have any questions about taxation.

Your Income and Assets

As your service pension is assessed under the income test, assets not affecting your rate of service pension have not been included in the attached list of income and assets.  You should advice the Department if this information is incorrect.

Events You Must Tell Us About

Details of your obligations to notify us of changes to your circumstances are included in the attachment 'Important Information You Should Retain'.  It is important that you read them.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner

ATTACHMENTS - in order of appearance

  • Payment Information Attachment - YES
  • Full Income and Assets Attachment - YES
  • Full Obligations - YES
  • Payment Summary/s              - YES
  • General Information Sheet - YES


Example 3:

  • LESS THAN MAXIMUM RATE - VARIATION (INCREASE)
  • INCOME TESTED WITH ASSETS > $10,000 BELOW THEIR PRESCRIBED ASSETS LIMIT
  • MARRIED ASSESSMENT
  • DP PAYABLE - not varied
  • TA IN PAYMENT
  • TAXABLE
  • TAILORED INCOME AND ASSETS ATTACHMENT ie., excluding all miscellaneous assets apart from those which earn income
  • FULL OBLIGATIONS
  • PAYMENT SUMMARIES ENCLOSED
  • GIS

Commonwealth Department of

Veterans' Affairs

Contact:

Telephone: STATE OFFICE

AMP Place

10 Eagle Street

Brisbane Qld 4000

Postal Address:

GPO Box 651 Brisbane Qld 4001

Telephone:

General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1300 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs

This is to advise you that your T-PENSION-SP-ISS-AP has been T-INC-RE-NIL.  This change will take effect from 1 July 2002.

Cost of living changes to the Income and Assets Test

Recent increases in the cost of living have been applied to the following income and assets limits for T-PENSION-SP-ISS-AP:

  • Income Free Area - this is the amount of income you can have before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Assets Value Limit - this is the amount of assets you can have (other than your family home) before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Deeming Thresholds - these are the amounts of financial assets you can have before the higher deemed interest rates are applied to the assessment of T-PENSION-SP-ISS-AP.

For details on these changes please refer to the General Information Sheet which is attached to this letter.

Payment Information

Please refer to the enclosed Payment Information Attachment to see a breakdown of your payments.

The following table shows where your pension payments are going.

Date

Name

Payment Destination

Amount Deposited

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

Payment Summaries (formerly known as Group Certificates)

The Australian Taxation Office (ATO) advised as part of the tax reforms introduced in the 2000/01 financial year, that Group Certificates have been renamed 'Payment Summary'.

As it is the end of the 2001/02 financial year Payment Summaries are being issued.  You will need this information if you are required to lodge a tax return.

Payment Summary for T-CLIENT-NAME is enclosed with this letter.

Payment Summary for T-PTNR-NAME is enclosed with this letter.

Medicare Levy Exemption

If you have been eligible for full treatment at departmental expense during the past financial year, you are eligible for full or half exemption from payment of the Medicare Levy for that period.  The number of days you are eligible for full or half Medicare Levy Exemption is shown on your Payment Summary.

You should contact the Australian Taxation Office on 13 2861 if you have any questions about taxation.

Telephone Allowance

Your quarterly telephone allowance will be paid on T-DATE-Of-PAYMENT, together with your pension payment.  Your telephone allowance is a separate payment and is not included in your total fortnightly payment information referred to in the letter.  The current telephone allowance rates are:

Singles Rate - $18.00

Couples Rate (each) - $9.00

World War I Veterans - $59.70

Your Income and Assets

As your service pension is assessed under the income test, some assets not affecting your rate of service pension have not been included in the attached list of income and assets.  You should advise the Department within 14 days (28 days if your are living overseas or receive Remote Area Allowance) if the information in this list is incorrect.

Events You Must Tell Us About

Details of your obligations to notify us of changes to your circumstances are included in the attachment 'Important Information You Should Retain'.  These apply to both you and your partner and it is important that you both read them.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner

ATTACHMENTS

  • Payment Information Attachment - YES
  • Tailored Income and Assets Attachment - YES
  • Full Income and Assets Attachment - NO
  • Full Obligations - YES
  • Payment Summary/s              - YES
  • General Information Sheet - YES


SAMPLE - TAILORED INCOME AND ASSETS ATTACHMENT- SAMPLE

INCOME AND ASSETS USED TO ASSESS YOUR PAYMENT

(Information current as at T-ADVICE-PRINT-DATE)

You are receiving T-PENSION-SP-ISS-AP at less than the maximum rate payable.

The amount that you are paid depends on your combined income and assets but does not include the home in which you live.  The pension is calculated under two separate tests: an income test and an assets test.  The test that pays the lower rate of pension is the one that applies.

You are currently paid under the income test.  The total of your assessed fortnightly income is T-TOTAL-FORT-INCOME.  The total of all your assets (excluding any deductible assets) is T-TOTAL-ASSETS.

Details of how your pension has been assessed are shown below.

FINANCIAL ASSETS

Savings and Cheque Accounts

Description

Account Number

Asset Amount

XXXXXXXX

XXXXXXXXXXX

$  XX.XX

@@@@@@@@@@

XXXXXXXX

$XXX.XX

IMPORTANT: We understand that the balances in these types of accounts may fluctuate regularly.

Listed Securities and Unlisted Public Securities

Description

No. of Shares

Asset Amount

XXXXXX

X,XXX

$XX,XXX.XX

QQQQQQQQQQQQQ

XXX

$    X,XXX.XX

Managed Investments

Description

Units

Asset Amount

VVVVVVVVVV

XX

$XX.XX

CCCCCCCCCCCCC

XXX

$XX.XX

Note: Income from financial assets is deemed.

IMPORTANT: You only need to notify the department if there are any changes to the value of your financial assets, as shown above.  You do not need to advise of any changes to the interest rates of these investments.

Total Financial Assets

FINANCIAL ASSETS VALUE

DEEMED INTEREST RATE

DEEMED INCOME PER FORTNIGHT

$XX,XXX.XX

3.5%

$X.XX

$         XX.XX

5.5%

$X.XX

$XX,XXX.XX

$XX.XX

What is Deemed Income?

For pension purposes, income from financial assets such as accounts with banks, building societies and credit unions, loans, bonds, debentures, gifts, shares, managed investments and bullion is deemed.  The value of all your financial assets is added together, and deemed interest rates are applied to calculate the income.

At present, deemed income is calculated as follows, regardless of the actual interest rates, on the total of all your financial assets:

$0 to T-MARRIED-THRSH-DEEMED-AMT – at T-INC-DEMING-INT-RATE%

T-MARRIED-THRSH-DEEMED-AMT + at T-INC-DEEMING-HIGH-RATE%

If your investments are earning more than the T-INC-DEEMING-INT-RATE% or T-INC-DEEMING-HIGH-RATE% deeming rates, this additional income will not affect the rate of your T-PENSION-SP-ISS-AP.

OTHER INCOME AND ASSETS

The following assets are those, which do not have deeming, applied to them but are still used to determine your rate of pension.

Income Streams - Long Term

Description

Asset Amount

Gross Income

Deductible Amount

Assessed Income

Summit Master Trust

$128,513.36

$314.92

$248.63

$66.19

Property

In working out the net market value shown below we have taken into account the value of any mortgages and secured loans.

  • Property at Lot 22 Ocean View Rd, NORTH HEAD, with a net market value of $160,000.00.

Direct Income

  • T-DESCRIPT-MISC-EARNINGS - $XXX.XX per fortnight

***** This is a new paragraph - highlighted for advice 'mock-up' purposes only - the information will not be presented like this in the actual advice but print as a regular paragraph.  Please note:  Where there is a Miscellaneous Asset earning income in an assessment - it will be listed in the attachment.

Miscellaneous Assets Note

As you are paid under the income test, some of the miscellaneous assets recorded in your pension assessment do not currently affect the rate of pension you are paid and have not been listed above.  Miscellaneous assets may include the value of home contents, life assurance policies, vehicles, boats or tailors.


Example 4:

  • LESS THAN MAXIMUM RATE - Permanently Incapacitated- VARIATION (INCREASE)
  • INCOME TESTED WITH ASSETS < $10,000 OF THEIR PRESCRIBED ASSETS LIMIT
  • MARRIED ASSESSMENT
  • NIL DP PAYABLE
  • TA IN PAYMENT
  • NON TAXABLE
  • FULL INCOME AND ASSETS ATTACHMENT
  • FULL OBLIGATIONS
  • PAYMENT SUMMARIES NOT ISSUED
  • MLEC ISSUED AND SENT SEPARATELY
  • GIS

Commonwealth Department of

Veterans' Affairs

Contact:

Telephone: STATE OFFICE

AMP Place

10 Eagle Street

Brisbane Qld 4000

Postal Address:

GPO Box 651 Brisbane Qld 4001

Telephone:

General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1300 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs

This is to advise you that your T-PENSION-SP-ISS-AP has been T-INC-RE-NIL.  This change will take effect from 1 July 2002.

Cost of living changes to the Income and Assets Test

Recent increases in the cost of living have been applied to the following income and assets limits for T-PENSION-SP-ISS-AP:

  • Income Free Area - this is the amount of income you can have before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Assets Value Limit - this is the amount of assets you can have (other than your family home) before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Deeming Thresholds - these are the amounts of financial assets you can have before the higher deemed interest rates are applied to the assessment of T-PENSION-SP-ISS-AP.

For details on these changes please refer to the General Information Sheet which is attached to this letter.

Payment Information

Please refer to the enclosed Payment Information Attachment to see a breakdown of your payments.

The following table shows where your pension payments are going.

Date

Name

Payment Destination

Amount Deposited

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

Medicare Levy Exemption Certificate

A Medicare Levy Exemption Certificate showing the number of days your are eligible for full or half Medicare Levy exemption will be issued to you separately.

Telephone Allowance

Your quarterly telephone allowance will be paid on T-DATE-Of-PAYMENT, together with your pension payment.  Your telephone allowance is a separate payment and is not included in your total fortnightly payment information referred to in the letter.  The current telephone allowance rates are:

Singles Rate - $18.00

Couples Rate (each) - $9.00

World War I Veterans - $59.70

Your Income and Assets

As your service pension is assessed under the income test, assets not affecting your rate of service pension have not been included in the attached list of income and assets.  You should advise the Department if this information is incorrect.


Events You Must Tell Us About

Details of your obligations to notify us of changes to your circumstances are included in the attachment 'Important Information You Should Retain'.  These apply to both you and your partner and it is important that you both read them.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner

ATTACHMENTS

  • Payment Information Attachment - YES
  • Full Income and Assets Attachment - YES
  • Full Obligations - YES
  • Payment Summary/s              - NO
  • General Information Sheet - YES


Example 5:

  • LESS THAN MAXIMUM RATE INCREASED TO MAXIMUM RATE
  • INCOME TESTED WITH ASSETS > $10,000 BELOW THEIR PRESCRIBED ASSETS LIMIT
  • MARRIED ASSESSMENT
  • NIL DP PAYABLE
  • TA IN PAYMENT
  • TAXABLE
  • PAYMENT SUMMARIES ENCLOSED
  • GIS

Commonwealth Department of

Veterans' Affairs

Contact:

Telephone: STATE OFFICE

AMP Place

10 Eagle Street

Brisbane Qld 4000

Postal Address:

GPO Box 651 Brisbane Qld 4001

Telephone:

General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1300 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs

You have been increased to the maximum rate of T-PENSION-SP-ISS-AP.  This change will take affect from 1 July 2002.

Cost of living changes to the Income and Assets Test

Recent increases in the cost of living have been applied to the following income and assets limits for T-PENSION-SP-ISS-AP:

  • Income Free Area - this is the amount of income you can have before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Assets Value Limit - this is the amount of assets you can have (other than your family home) before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Deeming Thresholds - these are the amounts of financial assets you can have before the higher deemed interest rates are applied to the assessment of T-PENSION-SP-ISS-AP.

For details on these changes please refer to the General Information Sheet which is attached to this letter.

The following table shows where your pension payments are going.

Date

Name

Payment Destination

Amount Deposited

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

Payment Summaries (formerly known as Group Certificates)

The Australian Taxation Office (ATO) advised as part of the tax reforms introduced in the 2000/01 financial year, that Group Certificates have been renamed 'Payment Summary'.

As it is the end of the 2001/02 financial year Payment Summaries are being issued.  You will need this information if you are required to lodge a tax return.

Payment Summary for T-CLIENT-NAME is enclosed with this letter.

Payment Summary for T-PTNR-NAME is enclosed with this letter.

Medicare Levy Exemption

If you have been eligible for full treatment at departmental expense during the past financial year, you are eligible for full or half exemption from payment of the Medicare Levy for that period.  The number of days you are eligible for full or half Medicare Levy Exemption is shown on your Payment Summary.

You should contact the Australian Taxation Office on 13 2861 if you have any questions about taxation.

Telephone Allowance

Your quarterly telephone allowance will be paid on T-DATE-Of-PAYMENT, together with your pension payment.  Your telephone allowance is a separate payment and is not included in your total fortnightly payment information referred to in the letter.  The current telephone allowance rates are:

Singles Rate - $18.00

Couples Rate (each) - $9.00

World War I Veterans - $59.60

Financial Obligations

You need to tell us within 14 days (28 days if you are living overseas or receive remote area allowance) if your combined income from all sources increases above T-TOTAL-INCOME-PLUS-4 per fortnight or your combined assets, apart from your home, exceed T-PRESCR-ASSET-AMT.  Income includes deemed income from your financial assets and income from other sources.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

Your Right of Review

If you do not agree with this variation to your pension, you may apply to have it reviewed by a Review Officer at this office.  If you do decide to apply, you must do so within three months of being advised of this decision.  Such a request for review must be in writing, and must set out your reasons for seeking this review.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner

ATTACHMENTS

  • Financial Obligations with Prescribed Rates - YES
  • Payment Information Attachment - YES
  • Tailored Income and Assets Attachment - NO
  • Full Income and Assets Attachment - NO
  • Full Obligations - NO
  • Payment Summary/s              - YES
  • General Information Sheet - YES


Example 6:

  • MAXIMUM RATE CONTINUATION ON MAXIMUM RATE
  • INCOME TESTED
  • MARRIED ASSESSMENT
  • DP PAYABLE - not varied
  • TA IN PAYMENT
  • TAXABLE
  • PAYMENT SUMMARIES ENCLOSED
  • GIS

Commonwealth Department of

Veterans' Affairs

Contact:

Telephone: STATE OFFICE

AMP Place

10 Eagle Street

Brisbane Qld 4000

Postal Address:

GPO Box 651 Brisbane Qld 4001

Telephone:

General inquiries: 133 254

Non-metropolitan callers: 1800 555 254

Dialling from interstate: 1300 13 1945

Facsimile: (07) 32238585

T-ADVICE-PRINT-DATE

YOUR FILE NUMBER IS T-FILE-NUMBER

T-ADVICE-SALUTATION,

I am writing to you about your T-PENSION-SP-ISS-AP payment from Veterans' Affairs

You currently receive the maximum rate of T-PENSION-SP-ISS-AP and this amount remains unchanged.

Cost of living changes to the Income and Assets Test

Recent increases in the cost of living have been applied to the following income and assets limits for T-PENSION-SP-ISS-AP:

  • Income Free Area - this is the amount of income you can have before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Assets Value Limit - this is the amount of assets you can have (other than your family home) before your T-PENSION-SP-ISS-AP is reduced below the maximum rate payable;

  • Deeming Thresholds - these are the amounts of financial assets you can have before the higher deemed interest rates are applied to the assessment of T-PENSION-SP-ISS-AP.

For details on these changes please refer to the General Information Sheet which is attached to this letter.

The following table shows where your pension payments are going.

Date

Name

Payment Destination

Amount Deposited

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

13/07/00

XXXXXX DDDDD

CBA 59404040

$XXX.XX

TOTAL

$XXX.XX

Payment Summaries (formerly known as Group Certificates)

The Australian Taxation Office (ATO) advised as part of the tax reforms introduced in the 2000/01 financial year, that Group Certificates have been renamed 'Payment Summary'.

As it is the end of the 2001/02 financial year Payment Summaries are being issued.  You will need this information if you are required to lodge a tax return.

Payment Summary for T-CLIENT-NAME is enclosed with this letter.

Payment Summary for T-PTNR-NAME is enclosed with this letter.

Medicare Levy Exemption

If you have been eligible for full treatment at departmental expense during the past financial year, you are eligible for full or half exemption from payment of the Medicare Levy for that period.  The number of days you are eligible for full or half Medicare Levy Exemption is shown on your Payment Summary.

You should contact the Australian Taxation Office on 13 2861 if you have any questions about taxation.

Telephone Allowance

Your quarterly telephone allowance will be paid on T-DATE-Of-PAYMENT, together with your pension payment.  Your telephone allowance is a separate payment and is not included in your total fortnightly payment information referred to in the letter.  The current telephone allowance rates are:

Singles Rate - $18.00

Couples Rate (each) - $9.00

World War I Veterans - $59.60

Financial Obligations

You need to tell us within 14 days (28 days if you are living overseas or receive remote area allowance) if your combined income from all sources increases above T-TOTAL-INCOME-PLUS-4 per fortnight or your combined assets, apart from your home, exceed T-PRESCR-ASSET-AMT.  Income includes deemed income from your financial assets and income from other sources.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been processed before this letter was sent.  If this is the case, we will send you another letter providing details of your new pension assessment when that change has been finalised.  This normally takes no more than 4 weeks.

If you have any questions about matters concerning Income Support issues you should contact our Income Support Staff on 1300 550 452.  For any other inquiries please contact the Department at the address or telephone number shown at the top of this letter.

Yours sincerely,

DAVID MACKRELL

Deputy Commissioner

ATTACHMENTS

  • Financial Obligations with Prescribed Rates - YES
  • Payment Information Attachment - NO
  • Tailored Income and Assets Attachment - NO
  • Full Income and Assets Attachment - NO
  • Full Obligations - NO
  • Payment Summary/s              - YES
  • General Information Sheet - YES


MLEC - NEW FORMAT FOR 2002 ISSUE ATTACHMENT C

Medicare Levy Exemption

Dear Beneficiary

Please find below your Medicare Levy Exemption Certificate.  This Certificate shows the number of days you were eligible for full or half exemption from payment of the Medicare Levy because you were eligible for full treatment at the expense of this Department.

Please note: If you lodge an income tax return YOU DO NOT NEED TO ATTACH this Certificate to your tax return.  However, you should retain the Certificate for your records.

If you have any enquiries about the number of days, please contact your nearest DVA office.   If you have any enquiries about whether you are fully or half exempt from the payment of Medicare levy, read TaxPack 2002 or TaxPack 2002 for retirees, or contact the Australian Taxation Office on 132 861.

Yours faithfully

Deputy Commissioner

IF YOU LODGE AN INCOME TAX RETURN, YOU DO NOT NEED TO ATTACH THIS CERTIFICATE TO YOUR TAX RETURN.  PLEASE RETAIN THIS SHEET FOR YOUR RECORDS.

Commonwealth Department of

Veterans' Affairs

Medicare Levy Exemption Certificate

YourThe number of days you are

File No is   NX123456eligible for full or half                                                                      Medicare Levy Exemption

During 2001/02 is

365

Smith, Joseph

150 Smith Street

SMITHFIELD   NSW   2003

C22/2002 Repatriation Health Card - For All Conditions (Gold Card)

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DATE OF ISSUE:  14 JUNE 2002

Repatriation Health Card – For All Conditions (Gold Card)

Purpose

The purpose of this Departmental Instruction is to provide legislation, policy and procedural systems information about the 2002/2003 Budget Initiative, “Extension of Gold Card eligibility to Post WWII Australian veterans with QS”, commonly known as the “extend Gold Card” initiative.

Commencement

The changes commence on 1 July 2002.

Contacts

First point of contact for inquiries relating to:

  • systems - Stephen Harkin (07-3223-8398); or
  • policy - Fiona Thompson (07-3223-8766).

Authorised by

JOSEPHINE SCHUMANN

Branch Head

HEALTH eBUSINESS

ROGER WINZENBERG

Branch Head

INCOME SUPPORT


Part 1 – Policy and Legislation

Extension of Gold Card eligibility

Extension of eligibility

From 1 July 2002, access to the Repatriation Health Card – for all conditions (Gold Card) will be extended to veterans of Australia's Defence Force who:

  • are 70 year of age, or over, as at 1 July 2002; and
  • have qualifying service.

Legislative Ref: new subsection 85(4B) VEA

Legislation

The Veterans' Entitlements Amendment (Gold Card Extension) Act 2002 No. 12, 2002 received Royal Assent on 4 April 2002.  Schedule 1 of this Act inserts new subsection 85(4B) which extends access to the Gold Card to the new group.

Link to Act: http://scaleplus.law.gov.au/html/bills/0/2002/0/2 — 0020314ve.htm [93]

Rationale

This extension will make the Gold Card available to older veterans of conflicts including (but not limited to) the Korean War, the Malayan Emergency, the Indonesian Confrontation and the Vietnam War.  Approximately 2,000 veterans will receive a Gold Card ready for use from 1 July 2002.

Importantly, this initiative also takes the longer view, providing for access to the Gold Card in years to come for veterans of later conflicts such as the Gulf War, East Timor and Australia's current deployment in the coalition against terror.

Card benefits - treatment

More information: For detailed information on the benefits available with the Gold Card, refer to HSV 60, Repatriation Health Card - for all conditions (Gold Card) on DVA Facts: http://internet-mirror/factsheets/default.htm [94]

Card benefits - PA

The Gold Card entitles the holder to receive the Pharmaceutical Allowance (PA).  Legislative ref: para 118A(1)(c)

Some Gold Card holders may already receive PA as part of their Service Pension or Disability Pension entitlement, or in some cases if they already hold a Repatriation Health Card – for Specific Conditions (White Card), or receive PA as part of a Centrelink entitlement.  Note that in cases where PA is already received, it will not be paid twice.

Legislative ref: ss 118B(1A), 118B(2).


Part 2 – Systems and Procedural

Procedural

Claim form

A new claim form, Application for Gold Card, for Veterans of Australia's Defence Force, D3057 has been made available to State Offices in brochure format.  This has replaced the previous Application for Gold Card form and brochure which was only applicable to WW2 veterans.  The new form is available on DVA Forms.

Link: http://internet-mirror/clientforms/default.htm [95]

Fact Sheet

The existing Fact Sheet, Repatriation Health Card – For All Conditions (Gold), HSV 60, has been updated and is available on DVA Facts.

Link: http://internet-mirror/factsheets/default.htm [94]

Standard Letters

A new suite of letters, dealing with acknowledgments, grants and rejections, is available in IS Standard Letters through MS Word/File/IS Standard Letters.  The new folder created to hold these letters, is entitled 'Gold Card – Post WW2'.

CLIK

Relevant parts of CLIK have been updated to reflect the changes.

System –  TQO

A new eligibility type of TQO has been created for this extension of eligibility.  A large number of DVA systems (e.g. PIPS/PC, CCPS, DPS) read treatment and card eligibility.  These have been updated to recognise the new eligibility type of TQO.

Daily advices

Daily advices have been updated to recognise the new TQO eligibility type, ensuring existing treatment paragraphs are triggered if and when required.


Recording Qualifying Service

VIEW enhancement

VIEW has been enhanced to allow all qualifying service decisions (successful and unsuccessful) to be recorded in the Service Details folder.  This folder resides under the Personal Details Tab in VIEW.

When to record

Each time a qualifying service decision is made, that decision should be recorded in VIEW.  For example, when a claim for Gold Card or Service Pension is made.  There are only certain types of CMS classifications that will allow QS to be recorded.  For the extension of Gold Card eligibility, through CM.CI (Classify Income Support), the classification to use is: GOLD CARD POST WWII (ITEM 16).

Note: there is no change to the way CMS cases are registered when recording QS – these cases will continue to be registered on the mainframe.

How to record

The table below outlines the steps involved in recording a QS decision in VIEW.

Step

Action

1

Register a CMS case

2

Open Personal Details Tab in VIEW

3

Open the 'Service Details' folder and switch to 'Update' mode

4

  • Record details
  • Decision
  • Conflict
  • Decision Date
  • Decision Body
  • Comments (if applicable – the comments box is a free text field and can be used to record information relating to that particular record).

Procedural Material

Detailed procedures and “Cheat Sheets” have been issued to State Contact Officers to assist staff to use the new facilities.  These are available in TRIM 0232442E and 0232444E.


Recording Eligibility

EATERS – EN.GC

Recording of Gold Card eligibilities will be moved from the mainframe to VIEW.  This means that the EATERS transaction, EN.GC, will be decommissioned from 15 June 2002.  After that date, any additions or changes to eligibility types should be done through VIEW update.

CMS

CMS has been updated to cater for TQO eligibility (and qualifying service recording in VIEW).  It has been semi-automated.  In most instances, a case will only have to be registered in CMS.  The case attributes and stages will be automatically updated as the case is progressed through VIEW.

Recording TQO in VIEW

TQO (Gold Card – Post World War 2) eligibility is now recorded in VIEW.  The following table shows you how to record eligibility through VIEW.

Note: the system will automatically select the eligibility type based on the conflict that is recorded in the Service Details folder under Qualifying Service Details.  For example, if Australian – Korea/Malaya conflict is recorded, an eligibility of '(TQO) Full Treatment – Post WW2 Qualifying Service' will be automatically recorded.

Step

Action

1

Register a CMS Case:

  • GOLD CARD POST WWII (ITEM 16)

2

Open Eligibility Folder Tab in VIEW

3

Open the 'Treatment Eligibility' folder and switch to 'Update' mode

4

Record details:

  • Eligibility level (ON/OFF)
  • Effective Date
  • Decision Body
  • Decision Date

5

Save changes

6

Send Standard Letter


Pharmaceutical Allowance Processing

PA eligibility

The majority of Gold Card holders will already receive Pharmaceutical Allowance (PA) through another entitlement.  However, Gold Card holders who do not already receive PA, and who are eligible for Gold Card under the new extension of eligibility, will be eligible to receive PA.

PA processing

When recording TQO, the system will automatically check for payment of PA.

IF PA is...

THEN...

Not in payment with DVA

  1. 'DP Grant' will be registered (system will auto action); and
  2. Grant PA through PIPS using that classification (officer to action).

In payment with DVA

No CMS case will be registered.

C21/2002 FINANCIAL HARDSHIP RULES - CHANGES RELEVANT TO UNREALISABLE FINANCIAL ASSETS (VETERANS' AFFAIRS LEGISLATION AMENDMENT (FURTHER BUDGET 2000 AND OTHER MEASURES) ACT 2002)

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DATE OF ISSUE:  JUNE 2002

FINANCIAL HARDSHIP RULES – CHANGES RELEVANT TO UNREALISABLE FINANCIAL ASSETS (VETERANS' AFFAIRS LEGISLATION AMENDMENT (FURTHER BUDGET 2000 AND OTHER MEASURES) ACT 2002)

Background

Purpose

The purpose of this Departmental Instruction is to inform States about amendments to the Veterans' Entitlements Act 1986 (the VEA) concerning the treatment of financial assets which are regarded as unrealisable for the purposes of the hardship provisions under the assets test.

Legislation

The amendments are contained in Schedule 2 of the Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Act 2002, which received Royal Assent on 4 April 2002.

Start date

The changes commenced on 20 September 2001.

Reason for start date

These amendments were originally contained in the Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Bill 2001. This Bill was not passed by the Parliament and lapsed when Parliament was prorogued upon the announcement of the 2001 election.  This necessitated the introduction of a further Bill hence the delay in passage of the relevant legislation.

Financial hardship rules and reason for changes

What are the financial hardship rules?

Section 52Y of the Veterans' Entitlements Act 1986 (the VEA) contains the rules for access to the financial hardship rules that apply to the assets test.

These rules must be applied by the Commission if the person or the person's partner has an unrealisable asset

[18] [97] ; and the delegate is satisfied that the person would suffer severe financial hardship if the financial hardship rules were not applied.

Reason for hardship rules

Sections 52Y and 52Z were added to the VEA in 1991 and were designed to “cater for those people who have substantial assets which reduce their entitlement under this Bill but which produce little or no income and cannot readily be sold or used as a security for a loan

[19] [98] ”.

Reason for changes

A person may obtain a hardship determination in relation to an unrealisable asset that is also a “financial asset”

[20] [99]

If the unrealisable asset is a financial asset, the extended deeming provisions contained in sections 46D and 46E are applied.  The application of the extended deeming provisions will not affect the amount of pension if the rate of pension continues to be determined by reference to the assets test.  The situation is different if the rate of pension commences to be determined by the income test.  In these circumstances, a lower rate of pension could be assessed by attaching a deemed income to the value of the unrealisable financial asset. Usually, the income deemed on such an investment will exceed the actual income earned by the person from the unrealisable asset.

Outcome an unintended consequence

This outcome is an unintended consequence flowing from the introduction of the extended deeming rules in 1996

[21] [100] .  Such an outcome is not justified in view of the circumstances that led to the grant of the hardship determination in the first place.

Advantages of changes

Under the current legislation, there is discretion for the Minister to determine that specified financial assets are not to be subject to the deeming rules contained in sections 46D or 46E

[22] [101] . This requires the person to first satisfy the delegate that a section 52Y determination is warranted and then approach the Minister for a determination for relief from the deeming rules.

The changes remove the need for this and automatically prevent the application of the extended deeming provisions to the unrealisable financial asset. In these circumstances, only the actual return on the investment is assessed as ordinary income.

What are the legislative changes?

New rules

The new rules prevent the application of the deeming rules and state that the return (if any) is to be assessed as ordinary income.

New subsection 46K(2)(b)

Generally, any return on a financial asset that a person actually receives is not regarded as ordinary income - subsection 46K(1)

[23] [102] .

Subsection 46K(2) provides for exceptions to this rule.  The exceptions involve financial assets, which are not to be regarded as financial assets for the purposes of sections 46D or 46E.

Subsection 46K(2) has been amended to make it clear that the actual return that any person receives on an unrealisable financial asset is treated as ordinary income.

New paragraph 46L(1A)

Section 46L makes provision for specified financial investments or classes of financial investments not to be regarded as financial assets for the purposes of section 46D or 46E.

From 20 September 2001, a new subsection 46L(1A) is added to 46L.  This subsection makes it clear that where a determination is made in relation to a person under s.52Y, any unrealisable financial asset of the person or the person's partner is not regarded as a financial asset for the purposes of section 46D or 46E.

What are the procedural changes?

Procedural changes

Whilst no cases have been identified to date, these changes should be borne in mind when considering cases where hardship is an issue.

State Office processing staff must now recognise that if a financial asset is determined to be unrealisable under s.52Y for the purposes of the hardship provisions, it must be exempted from the deeming provisions.  This requires the following manual action:

Step

Action

1

Locate the financial asset, which has been determined to be an unrealisable asset for the purposes of the hardship provisions.

2

Set the deeming exemption indicator to 'S' for 'State Office Deeming Exemption' against that particular financial asset.  This will remove the asset from the deemed income calculation.

3

For loans, bonds or debentures, record the actual rate of interest being earned, derived or received by the pensioner (if any).

4

For other financial assets, record the actual income p/f being earned, derived or received by the pensioner (if any).

Further information

Contact Officer

For further information about these changes, please contact Ian Williams    (02) 6289 6382.

Authorised by

Roger Winzenberg

Branch Head

Income Support

Roger Winzenberg

Branch Head

Income Support

   June 2002

See subsections 5L(11) and (12).

[18] (go back) [103]

Veterans' Entitlements Amendment Act 1991, Explanatory Memorandum.

[19] (go back) [104]

Defined in subsection 5J(1) of the VEA.

[20] (go back) [105]

Social Security and Veterans' Affairs Legislation Amendment Act 1995.  Previously the deeming rules only extended to bank and other deposits and income producing loans, bonds and debentures.

[21] (go back) [106]

Section 46L.

[22] (go back) [107]

The purpose of subsection 46K(1) is to ensure that there is no double counting of income from the financial asset which would ordinarily be subject to the deeming rules contained in sections 46D and 46E.

[23] (go back) [108]

C20/2002 EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

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DATE OF ISSUE:  27 MAY 2002

EXCHANGE RATE VARIATION OF POUNDS STERLING - EFFECT ON INCOME SUPPORT PENSIONERS IN RECEIPT OF BRITISH RETIREMENT INCOME (BRI)

Purpose of Instruction

The purpose of this Departmental Instruction is to provide information about the Pounds Sterling exchange rate variation exercise.

Introduction

Following the recent variation in foreign exchange rates, it is appropriate for DVA to apply a new exchange rate for income support pension assessment purposes.

New exchange rate A$2.6110

The exchange rate used to convert Pounds Sterling to Australian Dollars for income support assessment purposes has changed from one Pound = A$2.6860 to one Pound Sterling equals A$2.6110 (ie A$1 = ?0.3830).

This rate reflects the average of the “on demand airmail buying rate” for the two weeks to 24 May 2002.

Date of effect
28 May 2002

Effective from 28 May 2002 the current exchange rate will change.

On pension payday 13 June 2002 (pay period 25) pensioners will receive a full instalment at the new assessed rate.

Date of processing run

Processing to implement the new exchange rate is scheduled for the evening of Monday 27 May 2002.

Continued on next page

Automatic superannuation processing

The amount recorded as BRI non-indexed super type 08 or BRI indexed super type 09 will be varied by applying the exchange rate to the amount recorded, to find the new rate of superannuation.  The pension amount will then be reassessed automatically.

Manual cases and MS cases

Cases with actions in frozen status will not be processed automatically.  These cases will be listed on the manual listing for follow up action, and CMS/PIPS cases will be created automatically for State Office action.  Any cases processed through PIPS/PC should be reassessed from the beginning of the pension period for pension payday 13 June 2002 – ie 28 May 2002.

Advice letters

The advice letters for this exercise will be joint advices where both members of a couple are in receipt of BRI and their pension payment varies.  Age Pensioners will receive separate advices.

The letter will advise the new exchange rate, the amount of income and a payment box.  An advice will only be produced for cases where a variation in payment results.

IBM GSA implications

IBM GSA will produce the cartridge and forward it to Security Mailing in Sydney.

Overseas, Special Register and Enclosure Advices

Overseas, Special Register, Enclosure Advice letters (ie cases where a change to treatment entitlement occurs) and reduction to nil cases will be separated by IBM GSA and despatched to the State Office for manual distribution.  This arrangement is the same for daily advice letters.

Mail out of bulk advices

Security Mailing will print and prepare the advices for lodgement with Australia Post by 3 June 2002.

Continued on next page


British DP case paid Rent Assistance

Income Support pensioners who are in receipt of Rent Assistance (RA) and who also receive British Disability Pension direct from Britain (not EATS and Composite cases) should have that Disability Pension converted to $A using the BRI exchange rate.  RA should be manually recalculated.  These cases can be extracted through AIS by each state.  If you have any problem please contact Andrew Purcell on the number below.

Note: If DP has already been assessed as income in determining Hardship cases it should not also be assessed as income for RA.

Contact officer

The Income Support Branch contact officer is:

Andrew Purcell           Telephone:   (02) 6289 4832

Roger Winzenberg
Branch Head
INCOME SUPPORT

27 May 2002


POUND STERLING EXCHANGE RATE

Foreign exchange periodExchange rate

3 Dec 98

to

27 January 99

0.3834

2.6082

28 January 99

to

10 Feb 99

0.3719

2.6889

11 Feb 99

to

19 May 99

0.3905

2.5608

20 May 99

to

28 July 99

0.4079

2.4516

New Date of Effect Rules

13 July 99

to

9 August 99

0.4271

2.3414

10 August 99

to

1 Nov 99

0.4105

2.4361

2 Nov 99

to

10 Jan 00

0.3952

2.5304

11 Jan 00

to

6 March 00

0.4069

2.4576

7 March 00

to

1 May 00

0.3927

2.5465

2 May 00

to

29 May 00

0.3807

2.6267

30 May 00

to

10 July 00

0.3907

2.5595

11 July 00

to

16 Oct 00

0.4022

2.4863

17 Oct 00

to

2 April 01

0.3737

2.6759

3 April 01

to

14 May 01

0.3550

2.8169

15 May 01

to

23 July 01

0.3674

2.7218

24 July 01

to

6 August 01

0.3803

2.6295

7 August 01

to

1 October 01

0.3701

2.7020

2 October 01

to

29 October 01

0.3430

2.9155

30 October 01

to

10 December 01

0.3588

2.7871

11 December 01

to

7 January 02

0.3709

2.6961

8 January 02

to

18 March 02

0.3612

2.7685

19 March 02

to

27 May 02

0.3723

2.6860

28 May 02

to

0.3830

2.6110

C19/2002 Forgoing Future Military Compensation Rehabilitation Scheme (MCRS) Payments and Application of section 1166 of the Social Security Act 1991

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DATE OF ISSUE:  13 MAY 2002

Forgoing Future Military Compensation Rehabilitation Scheme (MCRS) Payments and Application of section 1166 of the Social Security Act 1991

Purpose

The purpose of this instruction is to advise of a change to the social security policy guidelines relating to section 1166 of the Social Security Act 1991 (SSA).

This policy change mirrors a change made by the Repatriation Commission in relation to section 59P of the Veterans' Entitlements Act 1986 (VEA).  Please refer to departmental instruction C05/2002 [111] of 11 February 2002 for further information relating to that decision.

Issue

Section 43 of the Safety, Rehabilitation and Compensation Act 1988 (SRCA) contains a statutory right for certain persons who may be eligible for a payment under Part II or Part IV of the VEA to apply to Comcare to “request that an amount of compensation under this Act to which the person is, or may become, entitled be not paid to, or for the benefit of, the person”.  That is, the person can forgo the MCRS payment in order to receive disability pension payable under the VEA.

Please note this provision and the policy change are specific to MCRS payments only.

The policy relating to section 1166 of the SSA and section 59P of the VEA was in conflict with the SRCA provision.  That is, forgoing a future MCRS payment under section 43 of the SRCA was not recognised as a legitimate reason for failing to pursue the MCRS compensation claim or receive an amount awarded.

Corrective Action

As of 6 May 2002, the relevant section of the Guide to Social Security Law has been amended.  A person can now elect under section 43 of the SRCA, to forgo their right to a MCRS payment in favour of a payment under Part II or Part IV of the VEA without loss of payability of the social security compensation affected payment.

The guide reference is : http://www.fahcsia.gov.au/guides_acts/ssg/ssguide-3/ssguide-3.1/ssguide-3.1.9/ssguide-3.1.9.20.html [112]

SO Impact

Social security age pensions including those administered under the agency arrangement by DVA are compensation affected payments for the purposes of Part 3.14 of the SSA.

In the event that an age pensioner takes action under section 43 of the SRCA (as outlined above) this is an acceptable reason not to claim MCRS compensation.  In these circumstances the person is not required under section 1166 to pursue a claim for compensation.

The disability pension payable under Part II or Part IV of the VEA will be assessed as ordinary income for SSA purposes.

Contact

Queries relating to this policy change should be referred to Oona O'Beirne in the income support policy unit.

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

13 May 2002

C18/2002 Advice Reprint Facility in VIEW

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DATE OF ISSUE:  10 MAY 2002

Advice Reprint Facility in VIEW

Purpose

The purpose of this Departmental Instruction is to provide information about the new advice reprint facility in VIEW.

Background

The new folder in VIEW is one of the deliverables of the DOCGEN2 Project.  The folder will replace the current mainframe reprint facility (using TSO) which is only available to the System Support Officers in the State Offices, and will be used to reprint all mainframe stored advices.

Note:  After the full implementation of DOCGEN2 later this year, advices will be stored in TRIM and retrieved using a post DOCGEN2 folder in VIEW.  All mainframe advices produced prior to DOCGEN2 will continue to be retrieved using the pre DOCGEN2 folder.

Overview of new facility

Reprint requests will be submitted using the new folder in VIEW.  A nightly batch job will pick up all advice requests and print the advice locally for the next working day.  See Attachment A for detailed instructions on the new facility.

What advices can be reprinted

The following automatic advices can be reprinted:

  • PIPS PC
  • IPS
  • Batch (including Death Processing, End of Bereavement, Student Child Reviews, $FORT, DMRS, BRI, Super and Statutory Increases)

Who will have access

All SPOCs, Overpayment and Bereavement Units will have access to the new facility.

Contact Officer

The National Office contact is Simone Cantrill (Business User Coordinator DOCGEN2) 02 6289 6489.

Any problems with the new facility should be referred to the System Support Officer who will advise the National Office Advices Help Desk.

ROGER WINZENBERG

Branch Head

Income Support

8 May 2002


ATTACHMENT A

Accessing Advice Reprint Folder

The new folder is located in the Advices Tab in VIEW and is called Reprint Advices – Pre DOCGEN2.  From this folder there are two subfolders:

  • Period
  • Date Range

Period Subfolder

The first subfolder selects the period or type of advice.  The options are:

  • Daily (includes all PIPS PC, IPS and batch except for quarterly advices)
  • Quarterly (March, June & September Statutory Increases)
  • Yearly (includes all PIPS PC, IPS, batch and quarterly advices for a calendar year)

Date Range Subfolder

The second subfolder specifies the date range for the advice to be reprinted:

Daily

Archived daily advices are available from 1990.  Start and end date fields must be completed using DD/MM/YYYY format and be within the same calendar year.

Quarterly

Quarterly advices are only retained for a period of seven years.  Select the required quarter from the drop down box.

Yearly

Enter year using YYYY format.

Submitting requests

After entering the required information in the Period and Date Range Subfolders a message box will be displayed with 'Information Inserted Successfully'.  The request will be included in the nightly batch reprint job.

Printing

Advice reprints for each state will print the next working day on the  following state office printers:

NSW — NSWN6M

VIC — V11075LX

QLD — Q746

SA — SA2NALX

WA — W11ALX

TAS — TAS1LX

Reports

The following two reports will be produced:

  • Advice Request Summary (derived from the information entered into VIEW and will list requests in logon order).
  • Advice Reprint Summary (produced from batch run and will list advices found in file number order).

C17/2002 Recovery of certain moneys from financial institutions paid after death

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DATE OF ISSUE:  9 MAY 2002

Recovery of certain moneys from financial institutions paid after death

Purpose

This departmental instruction provides procedural information relating to recovery of outstanding moneys from a financial institution after the death of a pensioner.

This instruction supersedes Stateline (TRIM reference 0210918E) distributed on 21 February 2002 regarding debt recovery from financial institutions after the death of a pensioner.

Background

Effective 1 July 2001, a range of legislative amendments to the Veterans' Entitlements Act 1986 (VEA) debt recovery provisions occurred (DI C08/2001 [115], Enhance Debt Recovery dated 22 June 2001 refers).

As part of those amendments a new section 205AB was inserted into the VEA (see Attachment B of Attachment A - “Refund of $ - Fin Inst”).

Under subsection 205AB(2), the Commission may recover from a financial institution, any payments of pension, benefit or other pecuniary amount paid.  A written notice must be issued by the Commission to recover such a debt.

Background, continued

The recovery action is applicable to any account/s either in the deceased pensioner's name alone or in a joint account in the name of the deceased pensioner and any other person.

A subsection 205AB(2) notice to a financial institution for return of funds in respect of a debt owed to the Commonwealth by the deceased must be in writing.

Standard Letters

Standard letters relating to the initial 205AB recovery action have been created.  There are two standard letters under the “Bereavement” tab to use when recovering moneys after the death of a pensioner:

  1. The first letter is to send to the appropriate financial institution to recover outstanding moneys (see Attachment A “Refund of $ - Fin Inst”).
  2. The second letter is to send to the deceased estate.  This letter provides details of the amount of the debt, how the debt arose, and the method of recovery (see Attachment B “Refund of $ Fin Ins – advice to estate”).

Compliance

Subsection 205AB(3) provides for the imposition of a penalty if a financial institution fails to comply with a notice under 205AB.  These penalties are imposed in accordance with 4AA of the Crimes Act 1914 (refer to step 3 in the table below for case referral when non-compliance occurs).

Procedures

State Office Procedures

The following table outlines the steps that should be undertaken when recovering moneys from a financial institution after the death of a pensioner:

Step

Action

1

Send Standard letter “Refund $ - Fin Inst” to the appropriate financial institution requesting that it repays the amount outstanding to the Receiver of Public Moneys within 14 days.  The amount of money to be repaid is the lesser of the following amounts:

  • amount of overpayment; or
  • the balance of the account.

2

Send standard letter “Refund $ Fin Ins – advice to estate” to the deceased estate as soon as possible explaining:

  • why recovery action is being taken; and
  • how much is being recovered.

3

If the financial institution does not comply within 14 days of the initial written request under section 205AB of the VEA, then refer the case to the Fraud Control Unit for further action:

Tony Walsh, Director

Fraud Control Unit

21 — st Floor

PO Box 21

WODEN  ACT  2606

Contact Officer

If you have any enquiries relating to this topic, please contact Kerry-Anne Cloutt on (07) 3223 8452.

ROGER WINZENBERG

Branch Head

Income Support

9 May 2002


Attachment A – Copy of Standard Letter “Refund of $ - Fin Inst”

1234567

N — ATIONAL O — FFICE

Dear

Recovery of Commonwealth Moneys Paid to Deceased Pensioner

Pensioner's Full Name

Date of Death

Account Number

The above named was in receipt of a payment from this Department credited to the above account at your branch.

This Department has been informed that       died on      .  As this information was only recently provided to this Department, it was not possible to prevent payments forwarded for paydays (insert date) from being credited to the above account number.  As a result an amount of $(amount overpaid) has been overpaid.  This money represents a debt to the Commonwealth and is recoverable under s205AB of the Veterans' Entitlements Act 1986.

Please pay the Receiver of Public Moneys within 14 days the lesser of the following amounts:

  • amount of the overpayment being $     ; or
  • the balance of the account.

If the account has been closed, or there are insufficient funds held in that account to cover the full amount of the overpayment, please advise the name and address of the person or firm to whom the proceeds of the account were paid, and the date on which the account was closed.  This information is requested under section 128 of the Veterans' Entitlements Act 1986.  A copy of this section is enclosed in “Attachment A”.

You should treat this letter, as a recall of funds not entitled to form part of the estate.

Your reply or return of funds within 14 days is requested.

Please note that if you do not repay the money, your financial institution may be in breach of the Veterans' Entitlements Act 1986 and vulnerable to criminal prosecution under the Crimes Act 1914.  This request is made pursuant to section 205AB of the Veterans' Entitlements Act 1986.  A copy of this section is enclosed in “Attachment B”.

Should you have any queries regarding this letter please contact me on       or fax me on      .  You will need to quote the Reference Number (insert reference number).

If you are calling from outside the metropolitan area, please dial our FREECALL number shown at the bottom of this letter.

Yours sincerely

Delegate of the Repatriation Commission

      <e>>


Attachment A

Section 128 of the Veterans' Entitlements Act 1986:

Secretary may obtain information etc.

(1)      The Secretary may, for the purposes of this Act, by notice in writing given to a person (including a person employed in or in connection with a Department of the Government of the Commonwealth, of a State or of a Territory or by any authority of the Commonwealth or of a State or Territory), require the person:

(a) to:

(i) provide the Department, or an officer specified in the notice, with such information as the Secretary requires; or

(ii) produce to the Department, or to an officer so specified, any documents in the custody or under the control of the person;

within the period (not being less than 14 days after the notice is given) and in the manner specified in the notice; or

(b)  to appear before an officer specified in the notice at such reasonable time (not being a time earlier than 14 days after the notice is given) and place as are specified in the notice to answer questions.

(2)      Without limiting the generality of subsection (1), the Secretary may:

(a) by notice in writing given to a person who is indebted to the Commonwealth under or as a result of this Act, require the person:

(i) to provide the Department, or an officer specified in the notice, within the period specified in the notice (not being less that 14 days after the notice is given), with such information concerning the person's financial situation as is required by the notice or to produce to the Department, or to an officer so specified, within that period, such documents concerning that situation as are so specified; and

(ii) if the person's address changes, to notify the Department or an officer so specified, within 14 days of the change, of the new address; or

(b)  by notice in writing given to a person who the Secretary believes may have information concerning the whereabouts of a person who is indebted to the Commonwealth under or as a result of this Act or the financial situation of such a person, require the person to provide the Department, or an officer specified in the notice, within the period specified in the notice (not being less than 14 days after the notice is given), with such information concerning those matters as is required by the notice or to produce to the Department, or to an officer so specified, within that period, such documents concerning those matters as are specified in the notice.

(2A)   The Secretary may require the information or answers to questions under this section to be verified or given, as the case may be, on oath or affirmation, and either orally or in writing, and for that purpose the Secretary or an officer to whom information or answers are verified or given may administer an oath or affirmation.

(3)     The oath or affirmation to be taken by a person for the purposes of this section is an oath or affirmation that the evidence the person will give will be true.

(4)     A person must not fail to comply with a notice under subsection (1).

Penalty: $1,000 or imprisonment for 6 months, or both.

(4A) An offence under subsection (4) is an offence of strict liability.

        Note: For strict liability, see section 6.1 of the Criminal Code.

(4B)   Subsection (4) does not apply to the extent that the person is not capable of complying with the notice.

Note: The defendant bears an evidential burden in relation to the matter in subsection (4B). See subsection 13.3(3) of the Criminal Code.

(5)     A person shall not, in purported compliance with a notice under subsection (1), intentionally furnish information or give evidence that is false or misleading in a material particular.

Penalty: $2,000 or imprisonment for 12 months, or both.

  1. This section binds the Crown in right of the Commonwealth, of each of the States, of the Australian Capital Territory, of the Northern Territory and of Norfolk Island.
  2. This section does not require a person to furnish information, produce a document or give evidence to the extent that, in doing so, the person would contravene a law of the Commonwealth (not being a law of a Territory).


Attachment B

Section 205AB of the Veterans' Entitlements Act 1986:

(1)If:

(a)a payment or payments of a pension, benefit or other pecuniary amount are made to a financial institution for the credit of an account kept with the institution; and

(b)the Commission is satisfied that the payment or payments were intended to be made for the benefit of someone who was not the person or one of the persons in whose name or names the account was kept;

the Commission may give a written notice to the institution setting out the matters mentioned in paragraphs (a) and (b) and requiring the institution to pay to the Commonwealth, within a period (being a reasonable period) stated in the notice, the lesser of the following amounts:

(c) an amount specified in the notice, being the amount, or the sum of the amounts, of the payment or payments;

(d) the amount standing to the credit of the account when the notice is given to the institution.

  1. If:
  1. a payment or payments of a pension, benefit or other pecuniary amount that are intended for the benefit of a person are made to a financial institution for the credit of an account that was kept with the institution by the person or by the person and one or more other persons; and
  2. the person died before the payment or payments were made;

the Commission may give written notice to the institution setting out the matters mentioned in paragraphs (a) and (b) and requiring the institution to pay the Commonwealth, within a period (being a reasonable period) stated in the notice, the lesser of the following amounts:

  1. an amount specified in the notice, being the amount, or the sum of the amounts, of the payment or payments;
  2. the amount standing to the credit of the account when the notice is received by the institution.

  1. A financial institution must comply with a notice given to it under sub-section (1) or (2).

Penalty: 300 penalty units

It is a defence to a prosecution of a financial institution to comply with a notice given to it under subsection (1) (payment made to wrong account) or under subsection (2) (death of a person whose name the account was kept) in respect of a payment or payments of a pension, benefit or other pecuniary amount, any amount recovered by the Commonwealth from the institution in respect of the debt reduces any debt owed to the Commonwealth by any other person in respect of the payment or payments.


Attachment B – Copy of Standard Letter “Refund of $ Fin Ins – advice to estate”

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N — ATIONAL O — FFICE

Dear

Estate of the late

I regret the need to write to you at this time about the Veterans' Entitlements payments previously paid to the above named.

This Department pays pensions, benefits and allowances by means of an automated process whereby money is transferred directly to a pensioner's nominated account.  To avoid any delays, payment details are given to the financial institution at least 5 days before the actual payment date.  Because of this it is sometimes difficult to prevent Veterans' Entitlements payments being paid after the pensioner's death.

It was not possible to prevent the instalments for payday(s)       from being credited to      ' account number       at the      .  Therefore an overpayment of $       has occurred.

As this is an overpayment of public money, I am authorised under section 205AB of the Veterans' Entitlements Act 1986 to recover the above amount from the financial institution.  I have written to the financial institution requesting repayment of the overpaid amount.

If you have any questions about this matter please contact me on      .  You will need to quote this Reference Number       when you call.  If you are calling from outside the metropolitan area, please dial our FREECALL number shown at the bottom of this letter.

Yours sincerely

Delegate of the Repatriation Commission

      <e>>

C16/2002 PENSION BONUS SCHEME - DETERMINING WHETHER A PERSON CLAIMING PENSION HAS REGISTERED FOR THE PENSION BONUS SCHEME OR IS ELIGIBLE FOR A PENSION BONUS

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DATE OF ISSUE:  1 May 2002

PENSION BONUS SCHEME – DETERMINING WHETHER A PERSON CLAIMING PENSION HAS REGISTERED FOR THE PENSION BONUS SCHEME OR IS ELIGIBLE FOR A PENSION BONUS

Purpose

The purpose of this Departmental Instruction is to remind DVA staff that when a person claims service or age pension or income support supplement or is enquiring about doing so, care must be taken to ascertain whether they are registered for the Pension Bonus Scheme (PBS) or could register and have their registration backdated.

Background

Recently there have been a number of cases where a person who is registered for the PBS has claimed and been granted pension without being invited to claim their bonus.

In some of these cases, the problem has arisen because the person has claimed partner service pension on the veteran's claim form.  It is understood that, although there are separate claim forms for veterans and partners to claim service pension, a single claim form is being accepted covering both the veteran and the partner.  Whilst the form asks the veteran whether s/he is registered for the PBS, it does not ask the same question of the partner.  The result is that in such cases pension is often being granted to the partner, without ascertaining whether s/he is eligible for a bonus.

In some other cases, pension is being granted without seeking a PBS application form, even though the pension claim form clearly states that the person is registered for the Scheme with either Centrelink or DVA.

Because under the legislation a person cannot be granted the bonus once they are in receipt of pension, such persons are being disadvantaged and a number of cases have been accepted for payment under the defective administration guidelines.

Form amendment

As part of the Review of Income Support Claim and Review Forms currently being undertaken, the service pension claim form is to be amended to ask the partner whether s/he is registered for the PBS with DVA or Centrelink.  In the meantime, would you please ensure that appropriate questions are asked of any claimant or prospective claimant who is over pension age to ascertain whether they might be eligible for a bonus, or might be well advised not to proceed with the pension claim in order to be eligible for or maximise a bonus at some time in the future.

Amendment to CLIK

The Claims Chapter in CLIK is also being amended to reflect this instruction.

Other amendments to CLIK relating to PBS

The following amendments are also being made to the PBS CLIK Chapters:

  • corrections to “Factors that affect the calculation of a Bonus” in Section 7 in respect of calculating a bonus where the person's marital status has changed during their overall qualifying period or where they have become a war widow(er) during that period; and

  • an addition to “Work requirements of the pension bonus scheme” in Section 5, specifying that if a person is undertaking aid work funded by the Australian Government, the hours worked overseas can be counted as gainful work carried on in Australia for the purpose of the work test.

Roger Winzenberg

Branch Head

INCOME SUPPORT

30 April 2002

C15/2002 VETERANS' CHILDREN EDUCATION SCHEME (VCES) LIMITS FOR ADDITIONAL TUITION AND SPECIAL FINANCIAL ASSISTANCE EFFECTIVE FROM1 JANUARY 2002

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DATE OF ISSUE:  23 APRIL 2002

VETERANS' CHILDREN EDUCATION SCHEME (VCES) LIMITS FOR ADDITIONAL TUITION AND SPECIAL FINANCIAL ASSISTANCE EFFECTIVE FROM1 JANUARY 2002

Replaced by DI No.

C — 16/2007 [118]

The purpose of this instruction is to advise the new maximum annual limits for Additional Tuition and Special Financial Assistance which may be approved by the State Offices under 5.3 of the Scheme.

In 1995 the previous limits were set at:

Additional Tuition - annual limit

Primary Student$1,040

Secondary Student$1,300

Tertiary Student$1,560

Special Financial Assistance  - annual limit

All students $1,560

Apart from a GST adjustment in 2000, there has been no increase in the limits since 1995.  The new limits provide for increases in the cost of tuition and educational aids since the 1995 adjustment.

The new limits are:

Additional Tuition - annual limit

Primary student$1,300

Secondary student $1,600

Tertiary student$2,000

Special Financial Assistance - annual limit

All students$2,000

Where there is a need for further assistance beyond these limits application may be made to National Office.

Mark Johnson

Branch Head, Disability Compensation

23 April, 2002

C14/2002 SYSTEM CHANGES TO PROFIT ASSESSMENT RULES FOR EARLY WITHDRAWALS FROM SUPER FUND INVESTMENTS

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DATE OF ISSUE:  23 APRIL 2002

SYSTEM CHANGES TO PROFIT ASSESSMENT RULES FOR EARLY WITHDRAWALS FROM SUPER FUND INVESTMENTS

BACKGROUND

Purpose

This Departmental Instruction provides information about system changes made to profit assessment for early withdrawal from superannuation fund investments.

Background

Information about changes to the assessment rules for superannuation fund investments has previously been provided in:

  • A Stateline 'Changes to Superannuation Rules' issued in July 2001; and
  • A Stateline 'Changes to Profit Assessment Rules for Early Withdrawals from Super Fund Investments Effective from 1 July 2001' issued in September 2001 that advised procedures for handling cases manually pending system changes.

Interim Manual Procedures

Manual procedures entailed:

  • State Office staff checking a client's age at the date of a withdrawal from a superannuation fund investment to ensure that profit is not added for any client aged 55 or older; and
  • National Office staff identifying cases for referral to State Offices for manual processing for deletion of profit where the client would attain 55 years prior to the 12 month anniversary of the profit withdrawal date.


SYSTEM CHANGES

System Changes

System changes to PIPS PC, $FORT Processing and Advices have been completed with implementation occurring on 24 April 2002.  These changes fully replace the manual procedures previously advised.

PIPS PC

PIPS PC has the following changes:

  • The Add Profit facility on the Managed Investment and Profit screens has been changed to prevent profit being added where a client has attained 55 years on or after 1/7/01;
  • New warning messages will appear if profit is added to or present in the assessment with an expiry date prior to the current date.  These warning messages cater for profit expiry at age 55 or after 12 months as appropriate.
  • Calculate History will automatically delete profit that has an expiry date prior to or on a History date.  Note, however, that Calculate History will only delete profit from the correct expiry date if the expiry date coincides with a History date; if not, the deletion will be from a later date, and another PIPS PC case will be needed to delete profit from the correct expiry date.  A warning message will appear whenever Calculate History deletes profit.

$FORT

The Profit Delete sub-program has been changed to ensure that profit is deleted from the earlier of 12 months from the date of the withdrawal or the date the person attains 55 years of age.

Advices

Minor wording changes have been made to advices to correctly refer to when the profit deletion has occurred.

NO Contact
  • The National Office contact officer for these system changes is Peter Feinler (08) 8290 0441
  • The National Office contact for policy advise on these cases is Ian Williams (02) 6289 6382

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

23 April 2002

C13/2002 INDEXATION OF BRITISH RETIREMENT INCOME (BRI)

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DATE OF ISSUE:  15 APRIL 2002

INDEXATION OF BRITISH RETIREMENT INCOME (BRI)

Introduction

The British Government has announced that the National Insurance benefit will rise in April 2002 by 1.7% in line with their Retail Price Index.  The pensions effected are listed below and should be recorded on PIPS/PC as superannuation income (Indexed BRI):

  • service pensioners in receipt of British Department of Social Security pension who live in any country other than Australia, Canada, South Africa or New Zealand;

service pensioners in receipt of a British Indexed pension i.e. public service, navy, teachers etc., regardless of the country of residence.

Date of Effect

The date of effect for the 1.7% variation is 16 April 2002 to be available on payday 2 May 2002.


The conversion factor for this indexation is 1.017

The amount, in Pounds Sterling, of income recorded as British Retirement Income Indexed BRI will be multiplied by applying a conversion factor, to find the new rate of superannuation.  The conversion factor is calculated as follows:

The variation percentage

-----------------------------     +  1  =  Conversion factor

     100

The pension amount will then be reassessed accordingly.

The conversion factor for this indexation is 1.017

Date of processing run

This exercise is scheduled for processing on Tuesday evening 16 April 2002.

Manual cases and MS cases

When cases are in frozen status they will be lifted for subsequent manual processing by state office staff.

IBM GSA implications

IBM GSA will be printing the advices and despatching them to the State Offices for manual distribution.  Special Register cases will have an advice produced, these cases will be listed on the exception report.  A full advice will be generated for any fringe benefit/change of treatment cases.

Advice letters

An advice will be generated for those cases where a 'variation' in pension payment occurs as a result of the indexation exercise.  A standard one page, 2 sided, advice containing the indexation information and payment information line advising pensioners of their fortnightly payment will be produced.  Where a joint advice is generated both the veteran and partner will each have a payment information line.

Before the advices are despatched from your State, a sample check should be carried out to ensure they contain the correct State Office address, signature block, payment information and the pensioner is a recipient of Indexed BRI.


Pensioners visiting overseas countries

If a service pensioner in receipt of a British DSS pension is holidaying outside Australia, in any country other than Canada, South Africa or New Zealand, they are eligible for the increase.  The increase will only be paid if the British DSS is aware of the pensioners whereabouts.  On their return to Australia these pensioners should be sent an income review to reassess their pension payment.

Service pensioners in receipt of a British Indexed pension will have their British pension increased regardless of the country of residence.  These cases should all be recorded as British Indexed pension.  All such pensions should be reassessed with an effective date of 16 April 2002.

Contact officer

The Income support Branch contact officer for the exercise will be:

Nasreen Haque — Telephone:(02) 6289 1125

ROGER WINZENBERG

Branch Head

Income Support

12 April 2002

C12/2002 GENERAL INCREASE TO BRITISH PENSION PAID IN AUSTRALIA

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DATE OF ISSUE:  15 APRIL 2002

GENERAL INCREASE TO BRITISH PENSION PAID IN AUSTRALIA

Advised by:

The British Department of Social Security (BDSS) have advised that British pensions paid in Australia will rise by  1.7%, in line with their Retail Price Index and will come into effect from the payday in the week commencing

8 April 2002.

New Percentage Rate

The National Insurance Benefit will increase by 1.7% in line with their Retail Price Index.

Effective Pay Day

This exercise is a manual process and arrears are to be paid to EATS/Composite cases, so the timetable is at your discretion.  However, the variation should be put into effect on payday  2 May 2002. In service pension rent assistance, age pension cases and overpayments should not be raised.

Cases Affected

These changes will affect the EATS/Composite cases and any case where service pension is also in payment.  Age pension (BeB) cases will also be affected.  The new rates should be applied to EATS, Composite, all service pension and age pension cases where British disability pension is in payment.

Rates Charts

A selection of rates converted to $A at both old and new rates are attached.

Manual Examination

There will be no cases processed automatically.  All cases will be listed for manual examination.


Changed Arrangements

Since the introduction of IPS extraction of cases can only be obtained through the AD Hoc Inquires System (AIS). A list of cases has been emailed to all the Income Support Managers and System Support Officers.  There have been occasional problems with the AIS results. If for any reason the list provided appears inconsistent with your expectations please contact the Income Support Officers listed below.

Service Pension Cases where British Disability Pension is in Payment

Action schedules of cases requiring manual examination and variation are made up of the following groups.

  • Composite cases (with or without SP)

  • EATS cases (with or without SP)

  • Other overseas pensions (that may be affected)

Miscellaneous and joint cases

PIPS/PC

For all cases involving EATS, COMPOSITE or SERVICE PENSION, whether automatic or manual method of assessment, the new rate of pension must be updated via PIPS/PC.

Contact Officers

The Income Support contact officers for this exercise will be:

Nasreen Haque (02) 6289 1125

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

12 April 2002


CURRENT EXCHANGE RATE $A2.75

OTHER RANKS - DISABILITY PENSION-EFFECTIVE 8-Apr-02

OLD

NEW

CLASS

%

RATE

RATE

V, IV, III, II, I, WO1

P.F.

P.F.

20%

133.98

133.98

30%

200.97

200.97

40%

267.96

267.96

50%

334.95

334.95

60%

401.94

401.94

70%

468.93

468.93

80%

535.92

535.92

90%

602.91

602.91

100%

669.90

669.90

OFFICER - DISABILITY PENSION - EFFECTIVE 8-Apr-02

Exchange Rate $A

2.75

RANK

1 Midshipman or Comm Off Navy

  2 Lt. Army

    3 Capt. Army

OLD

NEW

      4 Major Army

RATE

RATE

         5 Lt. Col Army

%

P.F.

P.F.

20%

134.06

134.06

30%

201.15

201.15

40%

268.13

268.13

50%

335.21

335.21

60%

402.30

402.30

70%

469.28

469.28

80%

536.36

536.36

90%

603.34

603.34

100%

670.43

670.43

OFFICERS

SERVICE RETIRED PAY OR SERVICE PENSION - EFFECTIVE 8-Apr-02

EXCHANGE RATE $A2.75

OLD

NEW

RATE

RATE

P.F.

P.F.

20%

134.06

134.06

30%

201.15

201.15

40%

268.13

268.13

50%

335.21

335.21

60%

402.30

402.30

70%

469.28

469.28

80%

536.36

536.36

90%

603.34

603.34

100%

670.43

670.43

SUPPLEMENTARY  ALLOWANCES

OFFICERS and OTHER RANKS - DISABLEMENT

   EXCHANGE RATE  $A2.75

Effective

8-Apr-02

Effective

8-Apr-02

UNEMPLOYABILITY SUPP.

OFFICERS

OTHER RANKS

OLD RATE

NEW RATE

OLD RATE

NEW RATE

P.F.

P.F.

P.F.

P.F.

Personal Allowance

407.26

414.22

407.00

413.88

Wife or Adult dependant

229.84

233.64

229.63

233.48

1st eligible child

54.22