Document ID: chunk:federal_register_of_legislation:C2024C00458:section:42af
Version: federal_register_of_legislation:C2024C00458
Segment Type: section
Provision Reference: s 42AF
Character Range: 138910–141375

42AF  Compliance action for mutual obligation failures

Usual rule
 (1) If a person commits a mutual obligation failure (the relevant failure), the Secretary may:
 (a) determine that the person's participation payment is not payable to the person for a period (see section 42AL); and
 (b) take action under subsection (2) (if applicable).
Note: The person may be eligible for back pay once the payment suspension period ends (see subsection 42AL(4)).

Special rule—persistent mutual obligation failures and no reasonable excuse
 (2) If:
 (a) the Secretary is satisfied in accordance with an instrument made under subsection 42AR(1) that the person has persistently committed mutual obligation failures; and
 (b) the person does not satisfy the Secretary that the person has a reasonable excuse for the relevant failure (see sections 42AI and 42AJ);
the Secretary may determine:
 (c) that an instalment of the person's participation payment for an instalment period is to be reduced (see section 42AN), in addition to making a determination under paragraph (1)(a) of this section; or
 (d) that the person's participation payment is cancelled (see section 42AP).
Note 1: For paragraph (c), the person may be eligible for back pay once the person's payment suspension period ends (see subsection 42AL(4)). However, the back pay may be reduced (including to nil) if the instalment period for which an instalment is to be reduced under paragraph (c) overlaps with the payment suspension period.
Note 2: For paragraph (d), a further consequence is that participation payments will not be payable to the person for the person's post‑cancellation non‑payment period (see subsection 42AP(5)).
 (3) A determination made under paragraph (2)(d) for the relevant failure has effect despite any determination made under paragraph (1)(a) for the relevant failure.

Action not to be taken—instalment already reduced to nil for instalment period when failure committed
 (4) Despite subsections (1) and (2), the Secretary must not make a determination under this section for the relevant failure if:
 (a) the Secretary has previously determined under paragraph (2)(c) that an instalment of the person's participation payment for an instalment period is to be reduced; and
 (b) the instalment for the instalment period is reduced by the whole of the amount of the instalment (see paragraph 42AN(3)(b)); and
 (c) the person commits the relevant failure during that instalment period.