Commonwealth Consolidated Acts

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SOCIAL SECURITY ACT 1991 - SECT 1061ZZCN

Effect of making a repayment during contract period

Application

             (1)  This section applies if a person, at a time (the repayment time ) during the contract period of a financial supplement contract made by the person with a participating corporation, makes a repayment (the relevant repayment ) in respect of the amount outstanding under the contract. For the purposes of this section, it is first necessary to work out whether an indexation amount is taken to have existed in respect of the contract immediately before the repayment time.

When an indexation amount is taken to have existed

             (2)  For the purposes of this section, an indexation amount is taken to have existed in respect of the contract immediately before the repayment time if:

                     (a)  an amount outstanding under the contract existed immediately before the repayment time under section 1061ZZCH; and

                     (b)  that amount outstanding exceeds the amount worked out using the formula:

Meaning of expressions used in formula

             (3)  For the purpose of applying the formula in subsection (2) immediately before the repayment time:

"amounts previously notionally repaid" means the total of the amounts notionally repaid under the contract before the repayment time because of the application of this section in respect of previous repayments.

"amounts repaid" means the total of the amounts repaid under the contract before the repayment time.

"principal sum" means the principal sum immediately before the repayment time.

What constitutes indexation amount

             (4)  The indexation amount referred to in subsection (2) is the amount of the excess referred to in paragraph (2)(b).

If no indexation amount

             (5)  If no indexation amount existed in respect of the contract immediately before the repayment time, the person is taken to have repaid to the corporation at the repayment time an amount (an amount notionally repaid ) equal to the discount to which the person is entitled in respect of the relevant repayment.

If discount does not exceed indexation amount

             (6)  If:

                     (a)  an indexation amount existed in respect of the contract immediately before the repayment time; and

                     (b)  the discount to which the person is entitled in respect of the relevant repayment is equal to or less than the indexation amount;

the amount outstanding under the contract is taken to be reduced by the discount.

If discount exceeds indexation amount

             (7)  If:

                     (a)  an indexation amount existed in respect of the contract immediately before the repayment time; and

                     (b)  the discount to which the person is entitled in respect of the relevant repayment exceeds the indexation amount;

the following paragraphs have effect:

                     (c)  the amount outstanding under the contract is taken to be reduced by the indexation amount;

                     (d)  the person is taken to have repaid to the corporation at the repayment time an amount (an amount notionally repaid ) equal to the excess.

Commonwealth to pay corporation amounts notionally repaid

             (8)  The Commonwealth must pay to the corporation an amount equal to any amount notionally repaid.



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