126.96.36.199 Repayment of advance payments - benefits & pensions
Recipient obligations & consequences
When a recipient qualifies for an advance, it is important that they clearly understand their obligations and the consequences of receiving an advance. In particular, they need to understand that:
- their fortnightly entitlement will be reduced to recover the advance during a repayment period of 13 fortnights, and
- the rate of repayment can't be reduced unless the recipient experiences a special and unusual change in circumstances.
Recipients should be given the opportunity to withdraw their application if they are not confident of meeting these obligations.
Recovery of advances
Advances are recovered through repayments from the recipient's fortnightly payments of social security entitlements. A person can, however, make a cash refund to repay any amount of an outstanding advance at any time. Normal cash refund procedures need to be followed.
If a person is no longer entitled to any payment of a social security entitlement (1.1.S.200) and there is a balance of an outstanding advance, the balance becomes a debt to the Commonwealth (1.1.D.40).
Note: Due to the DVA system limitations, there could be differences in the rates of recovery between a DVA recipient and their social security partner when both access multiple advances.
Act reference: SSAct section 23(1)-'social security entitlement', section 1061EL Repayment of advance payment
Transfer between payments
Where a recipient transfers from one social security entitlement to another the outstanding balance of the advance payment transfers to the new payment and continues to be recovered as an advance.
Where a recipient transfers to a payment other than a social security entitlement, the balance of the advance becomes a debt to the Commonwealth.
Example: A person on JSP turns age pension age and does not meet the residence requirements for Age. They transfer to SpB. SpB is not a social security entitlement, therefore the balance of the advance becomes a debt to the Commonwealth.
Act reference: SSAct section 23(1)-'social security entitlement', section 1206H Advance payment deduction
Rate of repayment of advances
The first repayment will be made on the payment delivery day (1.1.D.55) after the advance payment is made. The rate of repayment is one thirteenth of the full amount of the advance, EVEN if the advance is made in instalments.
The rate is rounded to the nearest whole cent.
Example: An approved advance of the maximum of $500 would result in a fortnightly payment of:
$500 ÷ 13 = $38.46, rounded to the nearest cent.
Exception: Where the amount ends in 0.5 cent it is always rounded up to the next whole cent.
Act reference: SS(Admin)Act section 54 Rounding off instalments of social security payments
Rate variations: changes in circumstances
In some fortnights, applying the income test or non-payment periods may bring the recipient's payment below the repayment rate. Where this happens, the person receives no payment in that fortnight as the full amount is deducted to cover the repayment rate. As the full repayment has not been made, the number of fortnights over which the debt is recovered will increase in this case.
A permanent change in a person's circumstances will not change the repayment rate.
Example: A single recipient who becomes partnered will retain the same repayment rate.
Exception: If a change in circumstances disqualifies a recipient, normal recovery procedures apply. This may involve a change in the repayment rate.
Rate variations: at recipient's request
A request to DECREASE the rate of repayments or stop repayments for a period of time must be made in writing. It can only be approved if:
- the person's change in circumstances is special and unusual, AND
- they would suffer severe financial hardship if the repayment rate was not reduced.
A new repayment rate should allow the person to meet their necessary living expenses. Any decreases should be approved for a specific period, based on when the recipient's circumstances will return to normal. If a new rate is approved, a review should be set for when the recipient is expected to settle their existing commitments. At the end of the period, repayments will revert to the original rate unless a time extension has been approved.
Recipients may request that the rate of repayment be INCREASED. This request must also be in writing and will only be approved if the recipient will not suffer severe financial hardship.
Special & unusual circumstances
For circumstances to be special and unusual, a specific event must have happened since the advance was paid, which the recipient could not have anticipated. Examples of these circumstances, and circumstances NOT considered special and unusual, are contained in the referenced topic.
Policy reference: SS Guide 188.8.131.52 Urgent payments
Rate reductions & financial hardship
The following guidelines apply when assessing requests for reductions in the repayment rate of an advance because of financial hardship.
- Approval for a reduction in the rate of repayment is based on a comparison of the recipient's original application statement with their later statements. The recipient's NEW financial circumstances will determine whether the current rate of repayment would cause financial hardship.
- If a recipient incurs additional expenses as a result of an unexpected event, these should be verified.
- Consider whether temporary additional expenses are reasonable, necessary and unavoidable and disregard any that aren't.
- Consider the recipient's domestic situation and whether other income earners in the family group, including non-dependent family members, can contribute to household expenses.