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.

5.4.6.50 Repayment of special employment advance payments

Recipient obligations & consequences

When a person qualifies for a SEA, 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, and
  • the rate of repayment cannot be reduced unless the recipient experiences a special and unusual change in circumstances.

Claimants should be given the opportunity to withdraw their application, before signing it, if they are not confident of meeting these obligations.

Recovery of SEAs

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. Recipient's who are paid a SEA should be encouraged to repay the SEA as soon as possible.

Act reference: SSAct section 23(1)-'social security entitlement'

Rate of repayment of SEA - recipient continues to receive income support

The rate of repayment is 15% of the recipient's MBR of entitlement (1.1.M.53). The amount of withholdings does not increase if the recipient has any earnings. Recipients should be encouraged where possible to make additional repayments, particularly where they have an additional source of earned income.

Rate of repayment of SEA - recipient's payment reduced because of parental income

Where a YA recipient's MBR of entitlement is reduced because of parental income, the rate of repayment is 15% of the recipient's MBR of entitlement less the reduction due to parental income), that is, 15% of the recipient's parental income test reduced rate (see SSAct section 1067G-A1 for the calculation of the recipient's parental income test reduced rate). The amount of withholdings does not increase if the recipient has any earnings.

Act reference: SSAct section 1067G-A1 Method of calculating rate

Rounding of withholdings

The rate of repayment by withholdings is rounded to the nearest cent (rounding 0.5 cent upwards).

Recipients paid a SEA - earnings not received

A person who receives a SEA for earnings not received should be encouraged to repay the SEA in a lump sum when the earnings are received.

Commencement of repayments

The first repayment will be made on the payday after the SEA payment is made. In cases where a SEA is made on successive fortnights, deductions will continue to be recovered from the first advance made.

Recipients with a normal advance as well as a SEA

For recipients with both a SEA and a normal advance, recovery of the SEA will take precedence over recovery of the normal advance, regardless of whether the recipient claimed the normal advance first. The recipient will make a repayment on the SEA first and will then also make a contribution towards the normal advance repayment.

The SEA will be recovered at 15% of maximum basic entitlement regardless of the level of the recipient's earned income. When a SEA is being recovered in conjunction with a normal advance, breach or debt recipients will not have more than 25% of their maximum basic entitlement deducted as advance repayments. This may mean that where recipients have more than one advance, the normal advance fortnightly repayments will be lower than usual.

Example: A single recipient entitled to $325.70 basic JSP has a normal advance of $500 and a SEA of $500.

  • The SEA is recovered at 15% of MBR of entitlement = 15% × $325.70 = $48.86.
  • The normal advance would usually be recovered at a rate of $500 ÷ 13 = $38.46 per fortnight. However as deductions for advances can never exceed 25% of $325.70, the normal advance deductions can only be made at 10% × $325.70 = $32.57.

Rate variations: at persons 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 will suffer severe financial hardship (1.1.S.125) if the repayment rate is 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 person 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 8.4.2 Immediate 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.

Effect of cancellation of allowance or pension on the SEA

A SEA becomes a debt when a person loses entitlement to their allowance, pension or benefit. If a SEA becomes a debt it is recovered the same manner as all other debts.

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