126.96.36.199 AoS - Release of Security
The purpose of the security, which is also known as the bank guarantee, is to ensure that the Australian Government can recover any AoS debt incurred by the assurer under the terms of the AoS. Centrelink will recover the amount of any AoS debt from the term deposit in the first instance. Centrelink will then request the CBA to 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, Centrelink will authorise the CBA to release the term deposit to the person or organisation who obtained the term deposit and the bank guarantee.
The CBA can be authorised to release the term deposit in the following circumstances, provided the assuree has not received a recoverable social security payment during the AoS period:
- At the end of the term of the AoS (1 year, 2 years, 4 years or 10 years).
- 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 X, 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 Y who is the secondary applicant for a contributory parent visa. If X, the primary applicant dies the $10,000 term deposit lodged for X (who is deceased) can be released. The term deposit for $4,000 remains.
Release of security in special circumstances
A full or partial release of security may be considered in special circumstances without cancellation of the AoS where the delegate may decide that 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 and a Centrelink social worker. In addition, evidence of depletion of funds will be required to be produced.
- The assuree is entitled to and is receiving a non-recoverable income support payment or pension.
- Example: X had been residing in Australia for a period of 12 years from 1968 to 1980 on a UK passport. In 2010 X is sponsored by her son and returns to Australia on a contributory parent visa which is subject to an AoS and a security. The 12 year period of residence in Australia from 1968 to 1980 can be counted for the purposes of meeting the 10 year residence requirement for Age even though she returned to Australia as a new migrant in 2010. X applies and is paid Age. The security can be released in this case 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.
Act reference: SSAct section 1061ZZGD(3)(b) Value of securities