An overpayment of a pension, allowance or benefit may result in a debt being owed to the Commonwealth.
Chapter 5 SS Act
Where a person is paid a pension, benefit or allowance to which they are not entitled, a debt may be owed to the Commonwealth.
A 10 per cent penalty may be added to debts resulting from refusing or failing to provide information about employment income, or the knowing or reckless provision of false or misleading information without a reasonable excuse.
If the person is still receiving a social security payment, a debt can be recovered by withholding part of that payment. If the amount being withheld is causing hardship, Centrelink can reduce the withholding amount either temporarily or indefinitely. A person would need to provide details of their financial circumstances.
The Commonwealth Government can also recover an overpayment by civil court proceedings. Other means of recovery include:
• garnishee order (an order that may allow money to be deducted from wages, bank accounts, tax returns and lump sum Centrelink payments);
• repayment by instalments; and
• recovery from a third party.
Where a person is receiving income other than a government benefit, Centrelink will often refer a debt to private debt collectors. They must comply with the Australian Securities and Investments Commission/Australian Competition and Consumer Commission debt collection guidelines.
In some circumstances, Centrelink may write-off or waive recovery of the debt. Centrelink may only waive recovery of a debt in certain defined circumstances (s 1237–1237AB) including where:
• the debt has been caused 100 per cent by an error made by Centrelink, and the person received the payment in good faith;
• the person with the debt has special circumstances, and the debt was not caused by a person knowingly giving false information;
• a person is prosecuted and sent to jail for the debt, and the judge or magistrate actually says that they are going to jail for longer because they can’t or won’t pay the debt; and
• the debt is less than $200.
Centrelink may also write-off a debt but only in limited circumstances, such as when there is no proof of the debt or if a person is not receiving a social security payment and it would be too expensive for Centrelink to recover the debt. Write-off criteria are contained in section 1236. Any person who is faced with a demand for recovery of debt should immediately seek legal advice (see Legal representation, and Legal services that can help) and consider whether to lodge an appeal (see “Social security appeals process”).
Similar provisions relating to Family Assistance overpayments are in part 4 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).
Section 66A of the SSA Act requires the recipient to inform Centrelink if an event or change of circumstances occurs that “might affect the payment of their social security payment or the person’s qualification for the concession card”. While this section will have most relevance to criminal prosecutions, it may also have implications for overpayments. The requirement has been made retrospective to 20 March 2000. The High Court of Australia has handed down decisions clarifying the scope of these legislative obligations.
Any person who is faced with a criminal charge for overpayments concerning a failure to inform Centrelink of their change in circumstances affected by the retrospective legislation should immediately seek independent advice (from a community legal centre, Victoria Legal Aid or a solicitor, see Legal representation, and Legal services that can help, for further information).