Document ID: chunk:federal_register_of_legislation:C2004A01310:clause:1_34zs:p1
Version: federal_register_of_legislation:C2004A01310
Segment Type: clause
Provision Reference: sch 1 cl 34ZS (pt 1/2)
Character Range: 37527–40390

34ZS  Total run‑off cover credits
 (1) This is how to work out an affected practitioner's total run‑off cover credit:

           Method statement
           Step 1. For the first financial year after 30 June 2004 in which a medical indemnity insurer provided medical indemnity cover for the practitioner under a contract of insurance, multiply:

                (a) the practitioner's run‑off cover credit for the financial year; by
                (b) the interest rate adjustment for the financial year (see subsection (4)).

           Step 2. For each subsequent financial year (if any) until the financial year in which the termination date occurs, multiply:

                (a) the sum of the practitioner's run‑off cover credit for the financial year and the amount worked out, under Step 1 or this Step, for the immediately preceding financial year; by
                (b) the interest rate adjustment for the financial year (see subsection (4)).

           Step 3. Add together:

                (a) the practitioner's run‑off cover credit for the financial year in which the termination date occurs; and
                (b) the last of the amounts worked out under Step 1 or Step 2.

            The result is the practitioner's total run‑off cover credit.

 (2) The practitioner's run‑off cover credit for a financial year is the sum of all run‑off cover support payments paid or payable to the extent that they are attributable, under subsection (3), to the practitioner in relation to the financial year.

 (3) Run‑off cover support payments are attributable to the practitioner in relation to the financial year to the extent that they relate to premiums paid during the financial year to a medical indemnity insurer for medical indemnity cover provided for the practitioner by one or more contracts of insurance with the insurer.

 (4) The interest rate adjustment for a financial year is the number worked out as follows:
where:

applicable interest rate is:
 (a) the rate of interest, for the financial year, specified in the regulations for the purposes of this paragraph; or
 (b) if no rate is so specified—the short‑term bond rate for the June quarter immediately preceding the financial year.

June quarter means a period of 3 months commencing on 1 April.

short‑term bond rate, for a June quarter, means:
 (a) if:
 (i) the Reserve Bank of Australia has published, in respect of one or more days in the last 2 weeks of the quarter, an indicative secondary market mid‑rate yield for Australian Government fixed coupon Treasury bonds; and
 (ii) the maturity date of the bonds is the third anniversary of the 15th day of the quarter or (if there are no bonds with that maturity date) the closer or closest date to that date within 2 years after it;
  the yield referred to in subparagraph (i) in respect of the day referred to in that