1.3.6 Act of Grace Payments

What is an act of grace payment?

An act of grace payment is a special 'gift of money' by the Commonwealth akin to the historical Royal Prerogative for 'grace and favour payments'. They are payments that fall outside statutory entitlements.

Generally, act of grace payments are a last resort means of providing compensation to persons who may have been unfairly disadvantaged by the Commonwealth but who have no legal claim against it.

When is an act of grace payment made?

The act of grace mechanism may be appropriate in relation to special circumstances that have occurred as a direct result of:

• the involvement of an agency of the Australian Government, where that involvement had an unintended outcome in the applicant's circumstance, or
• the application of Commonwealth legislation or policy, which has resulted in an unintended, inequitable or anomalous effect on the applicant's particular circumstances (including in cases where the agency has acted correctly in administering the legislation involved), and
• where the paramount obligation to the applicant is moral, rather than legal.

When can an act of grace payment NOT be made?

An act of grace payment CANNOT be made if:

• the case relates to defective administration, OR
• the matter CAN be justly or legally considered under any enactment.

Example: Any case that can be settled under FMAA regulation 9 CANNOT be paid as an act of grace payment.

For further explanation of this topic, refer to the Finance Circular 2009/09: Discretionary Compensation and Waiver of Debt Mechanism.

Act reference: Financial Management and Accountability Regulations 1997

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Last reviewed: 20 September 2012