Capacity to Repay Advance Payments - Benefits & Pensions

Interviewing applicants for advance payments

When there is a question about the person's capacity to repay an advance, an interview should be conducted. The purpose of an interview is to satisfy the assessor that an application considered 'doubtful' would NOT result in the applicant suffering hardship from repaying the advance. An interview should be conducted when:

  • the income left after deducting expenses does not cover the rate of repayment, OR
  • there have been instances of misrepresentation or problems repaying an earlier advance payment, OR
  • amounts owed are high and may affect capacity to live on reduced fortnightly payments.

Circumstances of family violence

Where there is family violence present, the prior receipt of an urgent payment or a crisis payment should not result in an automatic rejection of an applicant's claim for an advance payment. In these circumstances, the applicant's capacity to repay the advance should be assessed according to the following guidelines.

Guidelines for assessing capacity to repay

When assessing a recipient's capacity to repay an advance, the following 3 issues are involved:

  • assessing hardship,
  • considering changed or reorganised circumstances, and
  • considering a partner's financial circumstances.

The rest of this topic provides guidelines for dealing with each of these issues.

Assessing hardship

An advance CANNOT be made if there is reason to believe that hardship would result from repaying it. It is NOT necessary to leave an amount aside to allow for possible emergencies.

The amounts quoted by the recipient should provide sufficient information on which to base a decision on a recipient's capacity to repay, unless the recipient:

  • states unreasonable amounts,
  • has a history of hardship applications or referrals to external agencies for help, or
  • has a history of problems associated with repaying an earlier advance payment.

The circumstances above may indicate the recipient has difficulty with budgeting. Careful assessment of the recipient's circumstances should avoid these problems. The recipient has the right of reply before this information is relied on to make a decision.

Accessible assets (1.1.A.290) or amounts owed, which could affect the likelihood of hardship arising, should be considered after calculating the gap between income and expenses. If realising an asset involves incurring a significant financial loss, it should NOT be included as an accessible asset.

Example: Early surrender of a long-term financial product such as superannuation or a life insurance policy.

Recipients with debts (1.1.D.40) not owed to the Commonwealth should have their fortnightly net income, minus any debt repayments, taken into account when assessing capacity to repay.

Assessing hardship: terms

When assessing hardship, the following explanations of terms apply:

The term… Includes…
Income payments from social security and any other income a recipient personally receives.
Regular payments

all ongoing costs, essential and non-essential.


  • rent or mortgage,
  • loan repayments,
  • electricity, gas and telephone,
  • council, land and water rates,
  • transport,
  • insurance, and
  • groceries.
Other monies available
  • savings in the bank, or
  • other financial products that can be easily accessed without incurring financial loss.
Amounts owed

amounts for which the recipient is personally responsible.


  • outstanding bills,
  • credit cards,
  • charge cards,
  • store accounts, or
  • overdrafts.

Act reference: SSAct section 13(1)-'rent'

Changed or reorganised circumstances

Generally, rejecting an application for an advance because of inability to repay should only occur if the recipient is not left with enough to repay the advance after paying expenses that are largely beyond their control. In these cases, recipients should be given the opportunity to reorganise their finances to see if they can meet the repayments. Recipients must explain how any changes are reasonable and achievable. Where the changes are neither reasonable nor achievable, the application should be rejected.

Example: A recipient undertakes to:

  • reduce household expenditure on food by a large amount, or
  • stop driving their car.

Recipients rejected on hardship grounds, who apply again with changed income and expenses, should be treated in the same way as those who choose to reorganise their finances.

Considering a partner's financial circumstances

Capacity to repay is based only on the RECIPIENT'S financial circumstances. Amounts recorded on the application form for income, regular payments, accessible assets and amounts owed, refer only to the recipient, not their partner, unless the couple pools their income and expenditure. A partner's financial circumstances should only be considered if they could improve or reduce the recipient's ability to repay the advance.

Example: The recipient's partner can pay more of their joint expenses.

If a recipient shares expenses with another person, only consider the actual amount paid by the recipient. If it is NOT possible to identify a recipient's individual expenditure because they pool their income, consider the household's entire income and expenses.

Last reviewed: 19 September 2014