6.4.8 Compensation Recovery - Historical Information

Summary

This topic contains general information on the effect of some key legislative changes. It contains information on:

  • Family and Community Services Legislation (Simplification and Other Measures) Act 2001,
  • effect on PP before 1 July 2000, and
  • when non-benefit PPP can be recovered.

Family and Community Services Legislation (Simplification and Other Measures) Act 2001

The Family and Community Services Legislation (Simplification and Other Measures) Act 2001 repealed SSAct Part 3.14 and substituted a new Part 3.14. In doing so it introduced a number of changes to the assessment of compensation and also substantially changed the make-up and numbering of Part 3.14. The date of effect for most of the changes in that Act was 20 September 2001.

Transitional and savings provisions in SSAct Schedule 1A clause 134 ensure that, amongst other things:

  • preclusion periods in force prior to 20 September 2001 remain in force as if they had been calculated under the new Part 3.14,
  • recovery notices issued to recipients under the old provisions remain in force,
  • preliminary and recovery notices issued to compensation payers and insurers under the old provisions remain in force,
  • applications for review that are not determined before 20 September 2001 are still able to be determined according to the provisions in place at the time of the decision (this applies to a specific number of provisions that are listed in clause 134 subclause(8)),
  • determinations made in respect of contraventions that have occurred because a recipient failed to comply with a notice issued before 20 September 2001, are determined in accordance with the Act in force immediately before the end of that notification period.

Act reference: SSAct Part 3.14 Compensation recovery, Schedule 1A clause 134 Transitional and saving provisions-substitution of Part 3.14

Effect of periodic compensation payments to members of a couple before 20 September 2001

The following table shows the general effect of periodic compensation payments on the rate payable to members of a couple prior to 20 September 2001. There are special rules that apply where the compensation recipient or partner receives a CAP (1.1.C.250) which was granted prior to that payment becoming compensation affected. These rules are discussed further in 4.13.1.30.

If a CAP is… Then the amount of the periodic compensation is deducted from the rate payable to…

claimed or paid to:

  • BOTH members as a pension, OR
  • one member as a pension and the other as a benefit,

each member, after dividing the compensation amount by 2.

Example: If a periodic compensation payment is $200 per fortnight, $100 per fortnight is deducted from each member's CAP.

  • claimed or paid to one member, AND
  • a non-CAP is claimed or paid to the other,

the CAP compensation recipient and any excess is ignored.

Exception: If the CAP rate is nil before direct deduction, the compensation payment is treated as ordinary income for the non-CAP member.

claimed or paid to BOTH members as a benefit, the compensation recipient and any excess is deducted from the partner's rate.
NOT claimed or paid to the compensation recipient,

the partner if they claim or are paid a CAP.

Exception: If the partner claims a non-CAP, the compensation payment is treated as ordinary income.

Effect of periodic compensation payments to members of a couple before 20 September 2001 where compensable event occurred while CAP paid

If the compensable event occurs while a compensation recipient or their partner is receiving a CAP, any periodic compensation paid in respect of that event is assessed under the ordinary income test for the couple, rather than as a direct deduction. For this concession to apply, a compensation recipient or their partner MUST:

  • be qualified for payment, AND
  • ALREADY be receiving the payment at the time of the event.

If it is determined that the income test concession should not have been applied due to a contravention of the SSAct or the SS(Admin)Act, (i.e. the compensation recipient or their partner was not entitled to receive the CAP at the time of the compensable event), the income test concession is stopped and direct deductions are applied.

For the effect of periodic compensation payments to members of a couple from 20 September 2001 see the references below.

Act reference: SSAct section 1173 Effect of periodic compensation payments on rate of person's compensation affected payment, section 1174 Effect of periodic compensation payments on rate of partner's compensation affected payment

Policy reference: SS Guide 4.13.3.20 Effect of Periodic Compensation on a Compensation Recipient, 4.13.3.30 Effect of periodic compensation on the partner of a compensation recipient

Effect on PP before 1 July 2000

Prior to 1 July 2000, the principle that a partner's income should not reduce benefit PPP to a rate below that of non-benefit PPP was also applied to compensation payments. This principle is explained in the following table.

If the partner of a PPP recipient… Then…
was paid a lump sum compensation payment BEFORE 20 March 1997, the preclusion period applied to the partner's benefit PPP BUT NOT to non-benefit PPP.
was paid a lump sum compensation payment AFTER 20 March 1997, entitlement to benefit PPP was not directly affected, although income derived from investing the lump sum may have affected the rate payable.

was receiving :

  • periodic compensation, AND
  • a social security benefit (or was qualified to receive one),
the periodic compensation was deducted from the PARTNER'S benefit first. Any remaining compensation then reduced the rate of benefit PPP by direct deduction (before 20/9/01). Compensation payments received by the partner DID NOT affect non-benefit PPP, nor could they reduce the rate of benefit PPP to less than the non-benefit PPP rate.
was not qualified for a social security benefit or pension, the entire amount of the compensation was deducted from the rate of PP, regardless of which member of the couple received the compensation (before 20/9/01). Compensation payments received by the partner however, DID NOT affect non-benefit PPP rate.

was receiving a:

  • social security pension, or
  • a rehabilitation allowance, or
  • a DVA service pension,
half of the periodic payments were deducted from each member of the couple (before 20/9/01). This rule applied regardless of which member of the couple was the compensation recipient. Compensation payments received by the partner DID NOT affect non-benefit PPP, nor could they reduce the rate of benefit PPP to less than the non-benefit PPP rate.

When non-benefit PPP can be recovered

Where a lump sum or periodic payments are received by a PP recipient in respect of a period prior to 1 July 2000, any payments of PP received during the period must be recovered - including any payments of non-benefit PPP (1.1.P.50).

Last reviewed: 7 November 2016