9.4.4 AoS securities

Summary

If a person has applied for a visa which requires a mandatory AoS, the prospective assurer must provide a security. For visas that are discretionary there is no requirement for any security.

This section contains information on the lodgment, value and release of securities.

Lodgment of security

If the assuree has applied for a visa with a mandatory AoS which would require a security, a bank guarantee to cover the relevant amount of the security must be obtained by the assurer, and must be lodged with the CBA. The CBA will require a term deposit to the value of the required security to issue the bank guarantee. Evidence of the bank guarantee and term deposit must be provided by the assurer to Services Australia before the AoS can be approved. Only the assurer's name must appear on the term deposit. If it is a joint assurance, at least one of the assurer's names must appear on the term deposit. For an AoS provided by a corporation or unincorporated body, the term deposit will be given in the name of the corporation or unincorporated body.

Values of security

The amount of the security is determined by the number of adult visa applicants, and the visa subclass applied for by the visa applicant.

Note: Some visas have discretionary AoS. No security is required for these visas:

• Subclass 117 (Orphan Relative visa)
• Subclass 837 (Orphan Relative visa)
• Subclass 101 (Child visa)
• Subclass 102 (Adoption visa)
• Subclass 151 (Former Resident visa)
• Subclass 802 (Child visa)
• Subclass 202 (global Special Humanitarian visa issued under the Community Support Programme).

Release of security

The purpose of the security is to ensure that the Australian Government can recover any AoS debt incurred by the assurer under the terms of the AoS. Services Australia will recover the amount of any AoS debt from the term deposit in the first instance. At the end of the AoS period, Services Australia will request the CBA release the remainder (if any) of the term deposit to the account holder and cancel the bank guarantee. Where the term deposit does not fully cover the amount of the AoS debt any balance outstanding must be repaid by the assurer.

If the assuree does not receive a recoverable social security payment during the AoS period, Services Australia will authorise the CBA to release the term deposit to the account holder in full at the end of the AoS period.

Any interest that is accrued on the term deposit is not considered as part of the security, and is paid to the assurer by the CBA regardless of what happens to the capital amount.

Note: The assurer nominates an arrangement to receive interest from the CBA when he/she obtains the term deposit. It is not always paid at the end of the AoS period. It is usually paid periodically throughout the AoS period, either into the term deposit account or into any other account the assurer nominates.

The CBA can be authorised to release the term deposit in the following circumstances before the end of the AoS period, provided the assuree has not received a recoverable social security payment:

• If there is a single bank guarantee secured by a term deposit and the sole assuree or sole assurer dies.
• If there is a single bank guarantee secured by a term deposit in respect of 2 assurees and one dies, the relevant portion of security can be released.
  
  • Example: A term deposit of $10,000 has been lodged to secure a bank guarantee for Susan, who is the primary applicant for a contributory parent visa and an additional term deposit of $4,000 has been lodged to secure a bank guarantee for Mark who is the secondary applicant for a contributory parent visa. If Susan, the primary applicant dies the $10,000 term deposit lodged for Susan (who is deceased) can be released. The term deposit for $4,000 remains.

A full or partial release of security may be considered in special circumstances without cancellation of the AoS where the delegate is satisfied there is a special reason to release the security. This is discretionary and should only apply in limited situations. The following special circumstances may justify the release of a security:

• A severe illness or disability afflicting the assurer that has critically affected the assurer's ability to provide adequate support to the assuree and where the assurer is in need of financial assistance. Any such illness or disability needs to be supported by medical evidence. In addition, evidence of depletion of funds will be required.
• The assuree is entitled to and is receiving a non-recoverable income support payment or pension.
  
  • Example: Martha is a Canadian citizen and has resided in Canada all her life. Her son has moved to Australia and become an Australian citizen. In 2010 Martha is sponsored by her son and migrates to Australia on a contributory parent visa, which is subject to an AoS and requires a security. After 3 years in Australia, Martha reaches Age Pension age. She is able to use the Social Security Agreement with Canada to combine periods of contributions in Canada with her 3 years of residence in Australia in order to meet the 10 year residence requirement for the Age. Martha applies for and is paid Age under the Agreement. She is also able to claim and receive a Canadian pension. The security can be released in this case (as Martha is not likely to receive a recoverable payment) but the AoS is to be retained.

Financial hardship alone on the part of the assurer will not be considered a special circumstance to justify a partial release of security.

When the security is released due to special circumstances the relevant AoS cannot be cancelled unless the circumstances fall within the provisions for cancellation of an AoS (9.4.6).

Example