18.104.22.168 Backdated Start Days - Transitional Arrangements for Pension Claims from 20/09/2007 to 20/12/2007
Note: THESE ARRANGEMENTS CEASED on 20/12/2007 and the following INFORMATION IS FOR HISTORICAL PURPOSES ONLY.
Better superannuation reforms
As part of the Government's Better Superannuation reforms, from 20 September 2007 the pension assets test taper rate is being halved from $3.00 to $1.50 per fortnight for every thousand dollars of assessable assets above the allowable assets limit for full pension. Many people who were previously unable to receive a pension because of the level of their assets will be eligible for a part pension.
Transitional backdating arrangements accompanying the halved taper rate are authorised by clause 20 of the amending legislation for the Better Superannuation reforms - the Tax Laws Amendment (Simplified Superannuation) Act 2007. These arrangements modify the start day (the earliest day for which pension may be paid) for social security pension claims made during the 13 weeks from 20 September 2007. These special arrangements have been introduced to:
- assist claimants who do not claim by 20 September 2007, and
- help manage the expected large number of claims resulting from halving the taper rate.
These arrangements do not apply to claims made after 20 December 2007.
Scope of the transitional backdating arrangements
Application of the transitional backdating arrangements
The key rule is that the start day for claims lodged up to 20 December 2007 will be deemed to be 20 September 2007, unless the person first became qualified for a pension after 20 September 2007.
Payment cannot be made for any period prior to the claimant satisfying the qualification requirements (for Age, age and residence) and payability requirements (e.g. means test).
For simplicity the examples below all refer to Age. The principles in the examples also apply to other pensions such as DSP.
Scenario 1: Claimants who qualified for a pension on or before 20 September 2007, to whom a pension is payable from 20 September 2007 will have their start day backdated to 20 September 2007. It is anticipated that this will be by far the most common backdating outcome.
Example: Gary claimed Age on 1 November 2007. Prior to 20 September Gary reached age pension age and had accrued 10 years Australian residence. Since 20 September his income and assets have been below the allowable limits for a pension. Gary's Age start day is backdated to 20 September. The authority for this is Tax Laws Amendment (Simplified Superannuation) Act 2007 subclause 20(1)(c)(i).
Scenario 2: Claimants who qualify for a pension after 20 September 2007 may have their start day backdated. The start day is the first day on which the claimant meets the qualification and payability requirements.
Example: Greg claimed Age on 3 December 2007. On 1 October 2007 Greg reached age pension age and had accrued 10 years Australian residence. Since 1 October 2007 his income and assets have been below the allowable limits for a pension. Greg's Age start day is backdated to 1 October 2007. The authority for this is Tax Laws Amendment (Simplified Superannuation) Act 2007 subclause 20(1)(c)(ii).
Scenario 3: If applying the 'normal' start day rules in the SS(Admin)Act results in a start day earlier than 20 September 2007, the claimant's start day will be that earlier date. This ensures that claimants are not disadvantaged by the transitional backdating arrangements.
Example: Jane contacted Centrelink on 17 September 2007 about making a claim for Age. She lodged her claim on 27 September 2007. On 17 September Jane was over age pension age and had accrued 10 years Australian residence. Since 17 September her income and assets have been below the allowable limits for a pension (i.e. assets below the limit applicable on 17 September 2007). Jane's Age start day is backdated to 17 September 2007. The authority for this is Tax Laws Amendment (Simplified Superannuation) Act 2007 subclause 20(1)(d)(in conjunction with SSAct section 13).
Scenario 4: People who claim a pension after they cease to qualify for the payment or it ceases to be payable to them may be able to have their start day backdated. It is anticipated that this scenario will not arise often.
Example: Joe claimed Age on 10 November 2007. On 20 September 2007 Joe was over age pension age, had accrued 10 years Australian residence and his income and assets were below the allowable limits for pension. On 10 October Joe received a windfall which took the level of his assets over the limit for a pension. Joe's Age start day is backdated to 20 September and Age is payable from 20 September to 9 October. The authority for this is Tax Laws Amendment (Simplified Superannuation) Act 2007 subclause 20(2)(f)(i).
These backdating arrangements are not limited to claims from people who become eligible for payment solely as a result of the halved taper rate. This is to reduce complexity. There would be a number of difficulties in attempting to define and identify people who became eligible for payment solely because of the taper rate reduction.
The backdating arrangements do not apply to people already receiving a pension who may become qualified for another pension during the period.
Example: A DSP recipient reaches age pension age on 1 November 2007 and transfers to Age from that day, the Age start day is not backdated to 20 September 2007.
Due to the deemed claim rules in SS(Admin)Act section 13, the transitional backdating arrangements can apply where:
- the claimant contacted Centrelink in relation to a claim in the fortnight ending 20 December 2007,
- the claimant meets the conditions for a deemed claim and therefore is taken to have made the claim on or before 20 December 2007, and
- the claim is lodged after 20 December 2007 and within 14 days of the contact.
Act reference: SS(Admin)Act section 13 Deemed claim-person contacting Department about a claim for a social security payment
Tax Laws Amendment (Simplified Superannuation) Act 2007 Schedule 8 Item 20