The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

5.4.1.50 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 cannot 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 deductions from the recipient's fortnightly social security entitlements. A person can choose to 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 no longer qualifies for a social security entitlement (1.1.S.200) and there is 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 continues to be recovered.

Example: Monies advanced while a recipient is in receipt of JSP can continue to be recovered if the recipient transfers to Age.

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 so 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 worked out by dividing the full amount of the advance payment by 13, 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 rounded up to the next whole cent.

Act reference: SSAct section 1206J Amount of advance payment deduction—basic calculation

SS(Admin)Act section 54 Rounding off instalments of social security payments

Rate variations - changes in circumstances

In some instances, due to the income test or non-payment periods the recipient's social security entitlement may be below the repayment rate. When this happens, the full amount is deducted to cover the repayment rate and the person does not receive payment. If the full repayment amount is not met, the number of fortnights used to recover the debt will increase.

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.

Act reference: SSAct section 1206N Provisional payment rate insufficient …

Rate variations - at recipient's request

A person may request in writing, to DECREASE the rate of repayments or stop repayments for a period of time due to severe financial hardship. 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 were to continue.

The 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.

Act reference: SSAct section 1206K Person may request …, section 1206L Reduction of advance payment …

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 8.4.2.10 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.

Last reviewed: