18.104.22.168 Arrears, embargoes & exchange rates for overseas income
This topic covers the following matters:
- arrears and embargoes
- the 'appropriate market exchange rate', and
- exchange rate reviews.
Arrears & embargoes
Special arrangements exist under international agreements for the processing of pension arrears from agreement countries, including the application of exchange rates.
The appropriate market exchange rate
The appropriate market exchange rate to be used to assess a recipient with overseas income, for all the paydays in a calendar month, is the CBA's on-demand airmail buying rate, current on the fifth working day before the first business day in that month.
The Secretary may determine the use of exchange rates from other sources.
SSAct section 1100 applies to any foreign currency amount received by a recipient that has to be taken into account to calculate the rate of social security payment/s (1.1.S.210) a person receives. Calculation of foreign currency amounts for the purposes of family assistance is governed by family assistance legislation.
Explanation: Automatic monthly updates of the exchange rates are used to convert to Australian dollars the overseas income and assets held on a recipient's records, including UK pounds.
Act reference: SSAct section 1100 How value of a payment received in a foreign currency is to be determined
Policy reference: FA Guide 1.1.F.02 Family assistance
Exchange rate reviews
A recipient may request a review of the exchange rate used to assess their overseas income. An exchange rate review is only conducted where the rate the recipient actually received is shown to differ by more than 5% to the rate set. The recipient must provide documentary proof (such as bank statements) of the rate received.
- An appropriate market exchange rate of $A1.00 = $US0.72 is set under SSAct section 1100. The recipient requests a review and provides evidence to show that a rate of $US0.75 was received. Being a variation of 4%, the SSAct section 1100 rate must continue to apply and the request for an exchange rate review is declined.
- Using the same SSAct section 1100 rate as above, if the recipient were to provide evidence that the rate actually received was $US0.78 (a variation of around 8%), a reassessment would be conducted. The rate that the recipient actually received would be used to calculate the foreign income and appropriate arrears paid.